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International Financial Management
International financial management is related to the decision related to international business. In the era of globalization it is important to make these financial decisions carefully; this decision has a huge impact in the progress of the company on a long term. Import and export is the main result of globalization. Import and export need not just be the product in finished level; it includes even services as well as technology. In this case there is two way fund flow. The fund which enters the country is inflow, whereas those which move out of the country are outflow. It is therefore important to manage these funds. It is more difficult than managing the funds within the country. Various factors are to be taken into consideration before making decision. These factors were not there in case of domestic industries. The various problems that are there as an added headache in International businesses are,
- Investment decision which includes selection of location, mode, type of investment. It is more complex because the new country or zone which is being considered for investment is completely new to the investors.
- Policy formation is one of the biggest problems as policy of the parent company might not suit the subsidiary company in another country. Some big companies try to adopt a single policy through out its entire subsidiary this type of policy formation is called centralized policy whereas when companies adopt different policy for different subsidiary then it is called decentralized policy.
- Taxation is another problem in international business because different country adopts different taxation policy.
Post world war various world countries came together to form an institutes that help in developing global trade. Some of those institutes that contribute in the development of world trade are,
- International monetary fund also popularly know as IMF. Its main function is to maintain the balance sheep of the member countries. Help the member countries with financial support during the crisis.
- World Bank acts as a bank for world countries. It function is similar to that of local Indian bank, however its customers being world countries.
- World Trade Organization also popularly known as WTO. It mainly deals with the entire dispute between the countries in the international trade arena.
Thus financial management in case of international business is more complex than the domestic business. It is therefore important for the financial manager to take many factors into consideration before making any international financial decision.
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