INTRODUCTION A process of implementing and managing financial control systems, collecting financial data, analyzing financial reports, and making sound financial decisions based on the analyses....

Three key elements to the process of financial management Financial Planning Financial Control Financial Decision-making

INTRODUCTION Global cash flows Foreign exchange risk management Capital expenditure analysis Capital budgeting Objectives of international financial management

Determining Parent- Subsidiary Relationships Polycentric solution Ethnocentric solution Geocentric solution

Managing Global cash Flows Internal funds flows Funds positioning techniques

Common example of internal sources and flows of funds Parent MNE Chilean subsidiary German subsidiary Loan Interest payments Loan Interest payments Dividends, Royalties and Fees Equity capital invest ments

Multilateral Dollar Flows Between Subsidiaries

International Business Strategy in Action (NON-TRIAD) Tax heavens Fronting loans Multilateral netting

Foreign Exchange Risk Management Inflation Addressing exchange rate fluctuations –Translation exposure –Transaction exposure –Economic exposure Hedging strategies –Operating financial strategies –Forward exchange contracts –Currency options Developing forecasting and reporting systems

Inflation

Capital Expenditure Analysis And Capital Budgeting Use of net present value Institutional features –Government subsidies and controls –Political risk insurance

Capital Budgeting: Eight Steps

Strategic International Finance Establishing overseas operations Reducing financial risk –Alliances –Cost-cutting

Conclusion International finance has an additional layer of complication that involves currency risk and conversion, different laws, regulations, languages, and business practices Today, however, world production and trade are global in nature Therefore, financing is also global This leads to less market segmentation, more liquidity, and greater efficiency in world capital markets