tailieunhanh - Lecture International financial management - Chapter 1: Multinational financial management: Concepts

In this chapter, students will be able to understand: Identify the management goal and organizational structure of the Multinational Corporation (MNC), describe the key theories that justify international business, explain the common methods used to conduct international business, provide a model for valuing the MNC. | 1 Instructor: Ajab K. Burki MBA (Fin)- IBA Karachi, BSIT(Hons), BA (Economics) 1 2 2 Part 1 The International Financial Environment 2 3 1 Multinational Financial Management: Concepts International companies are importers and exporters; they have no investment outside of their home country. Multinational companies have investment in other countries, but do not have coordinated product offerings in each country. More focused on adapting their products and service to each individual local market. 3 3 4 1 Multinational Financial Management: Concepts Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency. Transnational companies are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market. 4 4 5 1 Multinational Financial Management: An Overview Identify the management goal and organizational structure of the Multinational Corporation (MNC). Describe the key theories that justify international business Explain the common methods used to conduct international business Provide a model for valuing the MNC 5 Chapter Objectives 5 6 Managing the MNC Managers are expected to make decisions that will maximize the stock price. Focus of this text: MNCs whose parents fully own foreign subsidiaries (. parent is sole owner of subsidiary.) Finance decisions are influenced by other business discipline functions: Marketing Management Accounting and information systems 7 Agency Problems The conflict of goals between managers and shareholders 8 Agency Costs Definition: Cost of ensuring that managers maximize shareholder wealth Costs are normally higher for MNCs than for purely domestic firms for several reasons: Monitoring . | 1 Instructor: Ajab K. Burki MBA (Fin)- IBA Karachi, BSIT(Hons), BA (Economics) 1 2 2 Part 1 The International Financial Environment 2 3 1 Multinational Financial Management: Concepts International companies are importers and exporters; they have no investment outside of their home country. Multinational companies have investment in other countries, but do not have coordinated product offerings in each country. More focused on adapting their products and service to each individual local market. 3 3 4 1 Multinational Financial Management: Concepts Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency. Transnational companies are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making,