International financial management Essay Example | Topics and Well Written Essays - 2000 words - 4

International financial management - Essay Example This is supposed to help their managers to know exactly what to do as and when they are in a situation where they have to make a critical decision about a big risk such as the one that Herr Ruhnau took. If such policies existed at Lufthansa, it would be easy to know whether the actions of Herr Ruhnau were careless and if he ignored standards in and to follow his gut feeling to make such a big decision (what kind of policies, list some of it). For instance, like having a limit on how must risk in terms of the amount of money involved a manager can take without involving the board of management. I have also talked about this in the conclusion) Herr Ruhnau’s decision can be viewed in two main perspectives. First it can be viewed from the perspective of the fact that as a manager, he had to take the action he thought was beneficial for the firm. Punishing him for making such a decision would be considered to be unfair in that when he took the role of the CEO of the firm, he took the responsibility to be making such decisions. As Ayse (212) says, it is not good for executive managers to be limited with regard to how they make their decisions. As a result, in determining whether Ruhnau’s actions were careless or necessary in that situation, it is necessary to tread carefully on the line and make sure that all factors are considered. Ruhnau decision was to leave fifty percent of the risk that the firm was taking with regard to buying the Boeing planes in advance and offering o pay later when the airplanes were delivered. This left the firm exposed to a risk of over 2.5 million dollars not covered. He also refused to consider other alternatives to cover the risk, such as forward contracts in order to protect Lufthansa from the risk of shifting exchange rates. He had analyzed that the dollar could only rise for a short time and so it would be expected that it could only go down from there. In