Download - ch01 multinational finance
![Page 1: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/1.jpg)
1
Multinational Financial Management Alan Shapiro
7th Edition J.Wiley & Sons
Power Points byJoseph F. Greco, Ph.D.California State University, Fullerton
![Page 2: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/2.jpg)
2
CHAPTER 1
Introduction: Multinational Enterprise and Multinational Financial Management
![Page 3: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/3.jpg)
3
CHAPTER OVERVIEW:
I. The Rise of the Multinational Corporation
II. The Internationalization of Business and Finance
III. Multinational Financial Management: Theory and Practice
![Page 4: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/4.jpg)
4
PART 1 THE RISE OF THE MULTINATIONAL CORPORATION
I. The MNC: Definitiona company with production and distribution facilities in more than one country.
![Page 5: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/5.jpg)
5
THE RISE OF THE MULTINATIONAL CORPORATION
A. Forces Changing Global MarketsMassive deregulationCollapse of communismPrivatizations of state-owned industriesRevolution in information technologyWave of M&AEmergence of free market policiesRise of Big Emerging Markets (BEMs)
![Page 6: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/6.jpg)
6
THE RISE OF THE MULTINATIONAL CORPORATION
B. Prime Transmitter of Competitive Forces in the Global
Economy:The MNC emphases group performance
such asGlobal coordinated allocation of resources Market – entry strategyOwnership of foreign operationsProduction, marketing and financial activities
![Page 7: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/7.jpg)
7
THE RISE OF THE MULTINATIONAL CORPORATION
C. EVOLUTION OF THE MNCReasons to Go Global:
1. More raw materials2. New markets3. Minimize costs of
production
![Page 8: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/8.jpg)
8
THE RISE OF THE MULTINATIONAL CORPORATION
RAW MATERIAL SEEKERSexploit markets in other countries
historically first to appearmodern-day counterparts
British PetroleumExxon
![Page 9: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/9.jpg)
9
THE RISE OF THE MULTINATIONAL CORPORATION
MARKET SEEKERSproduce and sell in foreign marketsheavy foreign direct investorsrepresentative firms:
IBMMacDonald’sNestleLevi Strauss
![Page 10: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/10.jpg)
10
THE RISE OF THE MULTINATIONAL CORPORATION
COST MINIMIZERSseek lower-cost production abroad
motive: to remain cost competitiveTexas InstrumentsIntelSeagate Technology
![Page 11: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/11.jpg)
11
THE RISE OF THE MULTINATIONAL CORPORATION
D. THE MNC: A BEHAVIORAL VIEW1. State of mind:
committed to producing,undertaking investment
andmarketing, and financing globally.
![Page 12: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/12.jpg)
12
THE RISE OF THE MULTINATIONAL CORPORATION
E. THE GLOBAL MANAGER1. Understands political and economic differences;
2. Searches for most cost- effective suppliers;3. Evaluates changes on
value of the firm.
![Page 13: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/13.jpg)
13
Part II The Internationalization of Business and Finance
I. GlobalizationA. Political and Labor Union
Concerns
![Page 14: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/14.jpg)
14
The Internationalization of Business and Finance
B. Consequences of Global Competition
Acceleration of the global economy
![Page 15: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/15.jpg)
15
PART III. MULTINATIONAL FINANCIAL MANAGEMENT: THEORY AND PRACTICE
I. THE MULTINATIONAL FINANCIAL SYSTEM
A. Main Objective of MNC: Maximize shareholder
wealthB. Other Objectives Reflect
Ability to Link:via affiliate transfer mechanisms
![Page 16: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/16.jpg)
16
THEORY AND PRACTICE
C. Mode of Transfer: Reflects freedom to select a
variety of financial channels.D. Timing Flexibility:
Most MNC have some flexibility in timing of fund flows.
![Page 17: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/17.jpg)
17
THEORY AND PRACTICE
E. ValueThe ability to avoid
national taxes has led to controversy.
![Page 18: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/18.jpg)
18
THEORY AND PRACTICE
II. FUNCTIONS OF FINANCIAL MANAGEMENT
A. Two Basic Functions:1. Financing2. Investing
![Page 19: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/19.jpg)
19
THEORY AND PRACTICE
B. Additional Factors Facing the MNC Executive
1. Political risk2. Economic risk
![Page 20: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/20.jpg)
20
THEORY AND PRACTICE
III. THEORETICAL FOUNDATIONSA. Useful Concepts from
Financial Economics:
1. Arbitrage2. Market Efficiency3. Capital Asset Pricing
![Page 21: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/21.jpg)
21
THEORY AND PRACTICE
B. Importance of Total Risk1. Adverse Impact
lower sales and higher costs
2. Justifies hedging activities of MNC
3. Diversification reduces risk
![Page 22: ch01 multinational finance](https://reader033.vdocument.in/reader033/viewer/2022051001/5695d0451a28ab9b0291c1bf/html5/thumbnails/22.jpg)
22
THEORY AND PRACTICE
IV. THE GLOBAL FINANCIAL MARKET PLACEA. Inter-linkage by
ComputersB. Market Acts as A Global
Referendum Process:Currencies may rise or fall