UV0265
This case was prepared by Susan J. Chaplinsky, Associate Professor of Business Administration, and Amy Sarasohn
Spurr (MBA ’97). It was written as a basis for class discussion rather than to illustrate effective or ineffective
handling of an administrative situation. Copyright © 1999 by the University of Virginia Darden School Foundation,
Charlottesville, VA. All rights reserved. To order copies, send an e-mail to [email protected] No part of
this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or
by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the
Darden School Foundation. Rev. 4/00.
DIVA SHOES, INC.
In April 1995, Lisa Stone ended a conversation with Benjamin Bisno, the president and
chief executive officer of Diva Shoes, Inc., concerning his firm’s growing exchange rate
exposure. Since joining the foreign exchange desk at Merrill Lynch three years ago, Stone had
worked with Bisno in executing relatively simple “forex†transactions for the company. She
provided information and advice on the firm’s decision to increase purchases of materials from
Italian suppliers and to expand into the Canadian and Japanese markets. Diva Shoes, a U.S.-
based company, had first introduced its products in Japan in June 1993, and sales had reached an
unexpectedly high level of (Japanese yen) JPY2.47 billion (USD25 million) the following year.
Although Bisno was pleased with his initial success, he questioned how long this demand—and
the strong yen that had accompanied it—would last.
Background
Benjamin Bisno, a native Italian, left his home country during World War II to move to
Brazil and then to the United States. For most of his adult life, he managed small companies in
the fashion and design industry that specialized in luxury goods. While in Brazil, he became
familiar with shoe manufacturing and assembly and developed an interest in the design of luxury
goods. After the Bisno family moved to the United States, he started Diva Shoes, a company that
designed and manufactured high-quality women’s shoes and sandals. Although Diva Shoes
began as a small operation in New York City, it quickly developed a national reputation and its
own market niche. The company’s products, designed by Bisno’s daughter, gained notoriety as
imaginative, elegant footwear. The shoes commanded an unusually high price of (in U.S. dollars)
$400 to $600 per pair and were sold only in the most exclusive boutiques. The company had
recently seen an increase in orders after actress Daryl Hannah wore a pair of Diva shoes to the
Academy Awards.
The shoes were manufactured primarily from leather. Diva sourced leathe
