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Multi National Corporations (MNCs) must Carefully Weigh their Options in Deciding on an International Expansion Strategy
Finance & Accounting
Pages 4 (1004 words)
Multi National Corporations (MNCs) Must Carefully Weigh Their Options In Deciding On An International Expansion Strategy. What Are Some Of The Factors Related To Finance That Must Be Considered? Overview A multinational corporation (MNC) is an organization that operates in diverse countries but often its operations are controlled from a single country.
For this reason, it is also referred as international group. The prime objective of a multinational enterprise is to expand the actions of the business outside the national boundaries in order to enhance its brand equity as well as its corporate image in global perspective. It also helps in augmentation of efficiency along with profitability of the organization. Hence, in order to fulfill these factors, the multinational organizations always aim to undergo international expansion strategies. Besides, in order to undertake internal expansion strategies, the multinational organizations must also consider certain financial factors as well, such as foreign exchange rate, conflicting interest rates from one country to the other, foreign tax rates, complex accounting methods for the foreign operators and foreign government interventions. Various Financial Factors In this era of globalization, the key motive of any organization is to expand its business operations in order to reduce the risks of the company and to augment its market potentials. In order to accomplish these objectives, foreign exchange rate offers significant influence over the organizational operations. Foreign exchange rate is referred to the rate at which the value of the currency of a specific country is transformed into another (Moles, Parrino, & Kidwell, 2011). ...
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