Professional Documents
Culture Documents
Multinational
Financial Management:
An Overview
1
Managing the MNC
Multinational Company (MNC):
firms that engage in some forms of international
business have subsidiaries
small firms that conduct international business are
also categorized into International Financial
Management.
Strategies:
Expansion within a local area
Penetration of foreign markets
3
Goal of The MNC
I.e. to maximize shareholders wealth
maximizing value vs maximizing earnings
parent control of agency problems
5
Management Styles of MNC
Centralized vs Decentralized
6
Management Styles of MNC (cont.)
7
Why Firms Pursue International
Business
8
Why Firms Pursue International
Business (cont.)
9
Why Firms Pursue International
Business (cont.)
10
Why Firms Pursue International
Business (cont.)
Product Cycle Theory
It may recognize additional (selling)
opportunities outside its home country.
11
How Firms Engage in International
Business
International Trade
A relatively conservative approach to
penetrate markets (by exporting) or to obtain
supplies at a low cost (by importing).
Licensing
Obligates a firm to provide its technology
(copyrights, patents, trademarks, or trade
names) in exchange for fees or some other
specified benefits.
12
How Firms Engage in International
Business (cont.)
Franchising
Obligates a firm to provide a specialized
sales or service strategy, support
assistance, and possibly an initial
investment in the franchise in exchange for
periodic fees.
Joint Ventures
A venture that is jointly owned and operated
by two or more firms.
13
How Firms Engage in International
Business (cont.)
14
How Firms Engage in
International Business (cont.)
15
Valuation Model for an MNC
Domestic Model
16
Valuation Model for an MNC
(cont.)
17