Caselet- Shaileshbhai MBA’s Dilemma!

Shaileshbhai is having sleepless nights. He has just completed his MBA from D.K.
School of Management and joined his father’s business. His father, Hirenbhai is a
traditional businessman quite unaware of modern management techniques. In order to
assess his son’s managerial skills, Hirenbhai has made him in-charge of his newly
acquired mango orchard in Saurashtra. Shailesh is keen to make a good impression on
his father. Shailesh is troubled by potential threats to mango production from strong
winds, untimely rainfall and diseases. His worry is compounded due to fluctuations in
mango prices every year. While he was looking for a solution to manage his risks he
came across a news item which announced that a commodities exchange has
introduced futures in Mangoes. Fortunately, one of Shailesh’s subjects at business
school was Risk Management. Shailesh felt very relieved. He decided to use futures
to hedge his risks. However, being a novice he sought his father’s advice about
hedging. “Yeh hedging-hedging kya hai? Dhande mein dhyan lagao, real life is quite
different from classroom knowledge”, was Hirenbhai’s response to Shailesh’s query.
Shailesh was yet again confused. To hedge or not to hedge, was the question.