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International Finance III

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17 views10 pages

International Finance III

Uploaded by

seniortravelusa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Presentation on

Made By:
Nilesh A Ghosalkar
MBA (3rd Semester)
Presentation Topics

 Meaning of International Finance Management


 History of International Business Finance
 Difference between Domestic and International Finance
 Sources of International Financial Management
- Listening
- Franchising
- Subsidaries and Acquasitions
- Strategic Alliances
- Exporting
 Conclusion
Meaning of International Financial Management

 International Financial Management is the art of managing money on a global


scale.
 The main objective of international financial management is to maximize
shareholder wealth.
 IFM - is a popular concept which means management of finance in an
international business environment, it implies, doing of trade and making money
through the exchange of foreign currency.
 The international financial activities help the organizations to connect with
international dealings with overseas business partners-customers, suppliers,
lenders. It is also used by government organization and non profit institutions.
History of International Business Finance

 International Financial Management came in to existense when the countries of


the world started opening their doors for each other. This phenomenon is well
know by the name of “liberalization”.
 Due to the open environment and freedom to conduct business in any corner of
the world, entrepreneurs started looking for opportunities even outside their
country boundaries.
 Apart from everything else, we cannot forget the contribution of financial
innovations such as currency derivatives; cross-border stock listings, multi-
currency bonds and international mutual funds.
Difference between International & Domestic Financial
Management

 Four major facts which differentiate international financial management from


domestic financial management.

1. Foreign Exchange: Its an additional risk which a finance manager is required


to cater to under an International Finance Management setting. Foreign exchange
risk refers to the risk of fluctuating prices of currency which has the potential to
convert a profitable deal into a loss making one.

2. Political Risks: Political risk may include any change in the economic
environment of the country viz. Taxation Rules, Contract Act etc. It is pertaining to
the government of a country which can anytime change the rules of the game in an
unexpected manner.
Contd....

 Market Imperfection: Having done a lot of integration in the world economy, it


has got a lot of differences across the countries in terms of transportation cost,
different tax rates, etc. Imperfect markets force a finance manager to strive for
best opportunities across the countries.

 Enhanced Opportunity Set: By doing business in other than native countries, a


business expands its chances of reaping fruits of different taste. Not only does it
enhances the opportunity for the business but also diversifies the overall risk of a
business.
Sources of International Financial Management

 There are many sources through which a company can increase its capital by
doing business in foreign countries through foreign companies

1. Licencing
2. Franchising
3. Subsidiaries & Acquisitions
4. Strategic Alliances
5. Exporting
Licencing :

 Licence - means to give permission. A licence may be granted by a party (“licensor”) to


another party (“licensee”) as an element of an agreement between those two parties.
 A license may be issued by authorities, to allow an activity that would otherwise be
forbidden. It may require paying a fee and proving a capability. The requirement may also
serve to keep the authorities informed on a type of acitivity, and to give them the
opportunity to set conditions and limitations.

Franchising :

 Franchising is the practice of selling the right to use a firm’s successful business model.
For the franchisor, the franchise is an alternative to building chain stores to distribute
goods that avoids the investments and liability of a chain. The franchisor’s success
depends on the success of the franchisees. The franchisee is said to have a greater
incentive than a direct employee because he or she has a direct stake in the business.
 The franchisor is a supplier who allows an operator, or a franchisee, to use the supplier’s
trademark and distribute the supplier’s goods. In return, the operator pays the supplier a
fee
Subsidiaries and Acquisition :

 A subsidiary is a company that is completely or partly owned by another corporation that


owns more than half of the subsidiary’s stock and which normally acts as a holding
corportation which is atleast partly or a parent corporation, wholly controls the acitivities
and policies of the daughter corporation

 Mergers and acquisitions are both aspects of corporate strategy,corporate finance and
management dealing with the buying, selling, dividing and combining of different
companies and similar entities that can help an enterprise grow rapidly in its sector or
location of origin, or a new field or new location, without creating a susidiary, other child
entity or using a joint venture.
Conclusion

 Compared to national financial markets, international financial market have a


different shape and analytics. Proper management of international finances can
help the organization in achieving same efficiency and effectiveness in all
market, without IFM sustaining in the market can be difficult.

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