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Industrias del Norte, S.A.

Posted: 24 Aug 1998  

Ahmad Rahnema

University of Navarra - San Sebastian Campus

Date Written: February 27, 1998


SUBJECT AREAS: Management of currency exposure, introduction of the "Euro," European Monetary Union, currency swaps, financial structure.
CASE SETTING: September 1997, Spain, capital goods manufacturing and mechanical engineering services. (Publication is in English.)

REQUEST FOR COPIES: To receive a copy of this case please contact Ahmad Rahnema via e-mail at

Situation: In September, 1997, the financial manager of Industrias del Norte, S.A. (INSA) one of the largest manufacturers of capital goods and providers of mechanical engineering services, was examining the possible effects that European Monetary Union (EMU) and the introduction of the single currency (the Euro) might have on INSA's financial structure. Given the high probability that the market was placing on Spain's joining the proposed EMU from its initiation date (about 97% probability, given in Exhibit 3 of the case) the analysis of the introduction of the Euro and its possible financial side effects received considerable top manaement attention because of its potential impacts on the INSA competitive position in an ever-increasing competitive industry.

The task for the student is to dissect and examine the possible financial effects of the arrival of EMU and change over to a single currency for a company with about 80-% of its revenue from export activities. The primary objectives for the case are:

1. to provide background information and analysis on the process of introduction of EMU and the conversion of the national currencies to Euro.

2. to consider the impact of the EMU on the financial industry and the capital markets of the participating countries.

3. to introduce students to the posssible financial opportunities and pitfalls presented by EMU for industrial companies of the participating countries.

4. to examine the possible effects of the EMU on the firm's actual debt portfolio and the related derivatives.

5. to explore issues related with the possible effects of the EMU on the different financial policies of the firm such as risk management, financing, investment.

Suggested Citation

Rahnema, Ahmad, Industrias del Norte, S.A. (February 27, 1998). 2-298-028, F-669-E. Available at SSRN:

Ahmad Rahnema (Contact Author)

University of Navarra - San Sebastian Campus ( email )

San Sebastian
+ 343 253 42 00 (Phone)
+ 343 253 43 43 (Fax)

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