Ifm intro


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Ifm intro

  1. 1.
  2. 2. 1.Varied economic systems. 2.Tariff and non-tariff barriers. 3.Political risks. 4.Environmental safeguards. 5.Dumping. 6.Cultural differnces.
  3. 3. 7.Languages differences 8.Intellectual property rights. 9.Cyber crimes. 10.Transfer pricing. 11.International taxation. 12.Economic and currency crisis. 13.Interest Rates.
  4. 4. 14.Foreign exchange Risk. 15.Cold War. 16.International Business cycle. 17.Operational Risks. 18.Global Terrorism. 19.International cash management. 20.Credit worthiness. 21.Methods of payment. 22.Foreign exchange markets.
  5. 5. DOMESTIC FINANCE INTERNATIONAL FINANCE  It is not exposed to foreign exchange risk and political risks .  It is subject to market imperfections of one country.  International finance is related to cross border transactions and exposed to foreign exchange and political risks.  It is very much subject to market imperfections because MNC ‘s should operate in different economies.
  6. 6. DOMESTIC FINANCE INTERNATIONAL FINANCE  The availability of portfolio for investment is limited.  It has no scope for access to global markets.  It is limited in scope.  The availability of portfolios for investment is wide and large across the nations in the world.  The MNC’s venture into the arena of global markets and thereby benefit from an expanded business.  It has wider scope.
  7. 7.  Money acts as a medium of exchange both in domestic and international markets as well.  FE market is a market for converting the currency of one country in to that of another.  Without FE market, the international trade and investment on the scale that we see today would be impossible and countries would have to resort for barter.
  8. 8. 1. Exchange rate risk and its management 2. Foreign exchange market 3. Exchange rate determination and forecasting 4. MNC`s investment decision 5. International working capital management 6. International accounting and taxation 7. International financing decision 8. Macro economic analysis- b/p & external debt
  9. 9.  Domestic FM is concerned with raising and utilizing of funds for projects with positive NPV. The company wants to minimize the cost of capital and maximize the ROI  MNC operates in different economic, political, cultural, and tax environments.  They operate in various product factor markets  They trade in large number of currencies other than home currency- assets-liabilities-receivables and payables in different currencies.  They have easy access to domestic and international capital markets and access to different markets and instruments  They are exposed to foreign exchange and political risks in addition to interest rate and credit risks.  Investments can be made in different markets, instruments etc. and has wider choices.  So financial decisions are more complex than a purely domestic company.
  10. 10. IFM Internatio nal financial markets Internationa l financial systems Foreign Exchange market Currency convertibility BOP
  11. 11. DOMESTIC FINANCIAL MGT INTERNATIONAL FINANCIAL MGT  Single currency  Financial instruments use is limited.  Unique economic and legal systems.  Single language or few  Multiple  Large number of futures,interest rates,swaps etc  Different economic and legal systems.  Language differences are the core of the difficulties.
  12. 12. DOMESTIC FINANCIAL MGT INTERNATIONAL FINANCIAL MGT  Limited cultures and subcultures.  Country specific accounting standards and GAAP principles.  Risks are related to domestic country.  Multicultural ,different values, ethics and code of conduct.  Different accounting standards and GAAP principles in different countries .  Multiple risks such as interest rate risks,currency risk,political risks etc.
  13. 13.
  14. 14. 1.Transfer funds from one nation currency to another. 2.Transfer of purchasing power is necessary. 3.Import of food items,petroleum products,technology,life saving drugs from foreign countries. 4.For availing services like education,tourism,healthcare,insurance,banking,hospit ality,telecommunication,entertainment.