INTERNATIONAL FINANCIAL

MANAGEMANTBY

BHAWANA BHARDWAJ

DEFINITION OF INTERNATIONAL FINANCIAL MANAGEMENT

INTERNATIONAL FINANCIAL MANAGEMENT DEALS WITH THE FINANCIAL DECISIONS TAKEN IN THE AREA OF INTERNATIONAL BUSINESS. I.F.M. HELPS IN TAKING APPROPRIATE AND TIMELY DECISIONS IN ORDER TO MAXIMISE PROFITS WHICH MAY BE DERIVED FROM INTERNATIONAL BUSINESS. THE DECISION MAY VARY FROM ONE MODE OF BUSINESS TO ANOTHER.

REASONS FOR THE EXITENCE OF GLOBAL FINANCIAL ENVIROMENT.

Some factors which have led to growth and development of multinational financial environment are

Specialization of nations and international trade.

Opening of economics.Globalization of firms.Emergence of new forms of business

organization.Growth of world trade.Need of the development process of nations.

ADAM SMITH THEORY

ADAM SMITH ADVOCATED THAT ECONOMICS SHOULD OPEN UP TO FULLY GAIN FROM INTERNATIONAL TRADE. HE SAID THAT NOT ONLY PROMOTION OF EXPORTS BUT ALSO THAT OF IMPORTS OF REQUIRED ITEMS NEEDS TO TAKE PLACE SO THAT ECONOMIC GAIN FROM EACH OTHER. BECAUSE AVAILABILITY OF RESOURCES IS DIFFERENT THEREFORE NO ONE COUNTRY CAN SPECIALISE IN THE PRODUCTION OF ALL GOOD AND SERVICES.

SPECIALIZATION OF NATIONS AND I.T.

Specialization of nations and international trade refers to reasons and the theories which lead to the specialization of countries in the production of all goods and services.

Multinational corporation:- A multinational corporation is one whose majority of the offices, plants or operations are located outside its own domestic country i.e. from outside across the globe to MNC is an enterprises that manages the production and services facilities outside the country in which it is based. The number of countries where the firm operates be at least six.

FACTORS WHICH FORM A PART OF GLOBAL FINANCIAL ENVIRONMENT

Multiplicity and complexity of the taxation system

Diversity of medium of financingPolitical riskForeign exchange riskDiversity of physical environmentConflicts with host country environment or

Government