This document provides an introduction to international financial management. It explains that international financial management is crucial for multinational corporations to understand how international events may affect their business and how to take advantage of opportunities in foreign markets. It also discusses how changes in foreign exchange rates, interest rates, stock markets, and other financial factors in one country can impact others in today's globalized and interdependent financial world. Finally, it outlines three key aspects of international financial management that managers of multinational corporations must understand: the international financial system, foreign exchange markets, and factors of the host country's business environment.

1. INTERNATIONAL
FINANCIALMANAGEMENT
SCOPE
V S SARMA ,PROF, MBA VJIT
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2. MNC
- Company involved in producing and selling goods
in more than one country
- Parent company in one country subsidiaries in
other countries
INTERNATIONAL FINANCIAL MANAGEMENT
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3. NEED TO UNDERSTAND INTERNATIONAL FINANCE
- As Business expands awareness of opportunities
in foreign market increases
- This helps enjoy the benefits of international
business opportunities
- Hence sound knowledge of international finance is
crucial
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4. SOUND KNOWLEDGE OF INTERNATIONAL FINANACE
HELPS IN TWO WAYS
FIRST:
- To decide how the international events affect the firm
- Reap gains from development and insulate from
harmful ones
- As Business expands awareness of opportunities
in foreign market increases
- This helps enjoy the benefits of international
business opportunities
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5. SECONDLY:
TO KNOW THE AFFECT OF :
- Foreign Exchange movements
- Interest rate changes (affect on other countries)
- Inflation and changes in assets value
- Consequent affect on stock market
- Hence sound knowledge of international finance is
crucial
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6. - Changes in interest rates, stock markets, FE
fluctuations in one country affects other countries
- This is due to integrated and interdependent
Financial environment and
- There has been close links between Money
markets and Capital markets
- Hence necessary to every MNC and Managers to
take close look at the ever changing and dynamic
fields of IFM
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7. GLOBAL LINKS
- Globalization high lights ability of a firm to business
across national boundaries
- Barriers to cross boundaries coming down
- Delays are disappearing – money/goods transfers
- This leads to opening of new opportunities for every body
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8. GLOBALISATION NOT RISK FREE
- National Governments especially small developing
countries face frustration in dealing with globalization
- But small developing countries are first benefited
from international trade and finance than large ones
- Large countries require large resources and large
market size.
- Foreign trade grown more quickly than world
economy recently. This trend continue
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9. OBJECTIVES OF IFM
- Maximization of share holders wealth
- To achieve this objective the managers of
MNCs must be in the know of THREE functions viz,
(1) The international Financial System
(2) Foreign exchange Markets
(3) Host country’s environment
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10. 1) The international Financial System
- Consists of two segments
- Official part -International Monetary
system(IMS) - Accepted code of
behavior by Govts
- Private part – International banks and
Multinational institutions that
participate in international money and
capital markets
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11. 2) FOREIGN EXCHANGE MARKET
- Consists of international banking
FE dealers
- 24 hours trading at organized exchanges
around the world
- Here currency future, options and derivatives
are regularly traded
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12. 3) HOST COUNTRY’S ENVIRONMENT
- Consists of aspects such as :
- Political
- Socio economic system
- Peoples’ cultured
- Understanding the host country’s
environment is crucial successful operations
and assessment of risk
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