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Financial Management in Multinational Organizations - Research Paper Example

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Financial Management in Multinational Organizations

In addition, it becomes convenient for an organization to draw additional funds from the shareholders if it supports shareholder wealth maximization. Financial management also helps organizations in financial planning and controlling, and evaluation of risks. It has been rightly argued that maximizing shareholder value perhaps only most effective method to benefit every stakeholder. Table of Contents Executive Summary 2 Introduction 4 Maximizing Shareholder Value 5 Financial Planning and Control 6 Forecasting 7 Investment 7 Exchange Risk 7 Credit Risk 10 Conclusion 10 References 13 Introduction Multinational organizations are firms that take part in some type of global business. Their financial management involves global investing as well as financing choices that are planned to capitalize on the worth of the multinational organization. Firms may primarily try to sell products abroad to a specific nation or trade supplies in from an overseas producer. However, in due course a number of them identify further prospects and finally start subsidiaries within foreign nations. International financial management is vital even for firms that have no global dealings. These firms are required to be familiar with how their overseas rivals will be influenced by activities within “exchange rates, foreign interest rate, labor costs” (Kyaw et al, 2011, p. 21), and price rises. ...
Therefore, the contradictory goals increase the issue of setting priorities. When tough competition exists within the home country, a business may rely on entering or expanding its overseas base. Nonetheless, if a corporation is ineffective within the home market, it is expected to have difficulties in a foreign country also. Additionally, the controller should be aware of local traditions as well as risks within the global markets. A large, stable corporation with considerable global experience may ultimately have completely owned subsidiaries. On the other hand, a small business with restricted foreign understanding functioning in uncertain fields may be limited to export and import operations. If the corporation`s sales force has nominal knowledge in export sales, it is wise to employ foreign agents when expert understanding of foreign markets is considered necessary. When adequate amount exists, the corporation may set up a foreign branch sales office together with sales group as well as technical service workers. When the function establishes, manufacturing services may be positioned within the foreign market. Nonetheless, a number of foreign nations need authorization earlier than foreign sales and production can go on; here, a “foreign licensee sells, and produces the product” (Li & Tallman, 2011, p. 56). A setback with this is that classified data and understanding are provided to the licensees who can then turn into a rival at the termination of the contract. Maximizing Shareholder Value The generally acknowledged purpose of a multinational organization is to capitalize on stockholder capital on an international basis, as revealed by stock value. The stock value shows the market’s appraisal of the firm’s likely ...Show more


Running Head: Financial Management in Multinational Organizations Financial Management in Multinational Organizations Executive Summary The key purpose of financial management in multinational organizations is to maximize shareholder wealth…
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