International Financial Management

International Financial Management

Introduction

With increased globalization companies are expanding their operations across the domestic borders to exploit the opportunities that prevail in the international market. Recently there has been rapid increased in the emergence of multinational corporations (MNCs) these are the companies that are somehow involved in international business, they export goods to foreign markets, or companies may establish their subsidiaries in the foreign countries. Most of the sales revenues of these companies are generated from their business operations in the international markets. Larger companies operate in the international market to get benefited with the advantages that these companies provide however not only large companies but also certain small companies have expanded their operations in the foreign markets to exploit opportunities and increase their profits. However managing these multinational organizations is not risk free, companies need to reduce this risk and uncertainty associated with operating their business activities in foreign countries. However it is stated that higher the risk higher will be the returns (Gitman & McDaniel, 2008).

The most important goal of a multinational organization is to maximize the wealth of its shareholders, which can be achieved by having stock prices in the markets. It is the responsibility of managers from all the disciplines in the company to assure that the needs of the consumers are satisfied, marketing department should conduct survey to know about the consumers preferences as it may vary across different countries. Companies need to examine their operations in each of the countries to ensure if the businesses are performing well and they are able to achieve growth and are successfully in getting higher returns. Through the increase in MNCs not only the company has been benefited but also it has proven to be advantageous for the countries in which they operate as they create an opportunity for employment and simultaneously it also with increase competition domestic countries will be keen to improve their business operations and resulting in better quality for consumers with increase in choice (Drucker, 2004).

Discussion

Multinational organizations that operate in more than one country, they expand their business operations outside the domestic market as either their operations in the domestic market has been exhausted or they want to tap in the international market to exploit the opportunities in the emerging markets, however these benefits are achieved by the multinational corporations at the cost of certain risk and disadvantages that are associated with operating in the foreign market.

Companies that have businesses in more than one country often find it difficult to manage the organization and its divisions in different countries. By having business activities in countries other than home country firms may have to deal with the issues that may include risk of cultural, economic and political changes that will create an impact over the business operations. since the external environment is fluctuating it is difficult to determine these changes in the country and also companies will not be able to control these factors that affect business activities thus it is significant to ...