Financial Management For A Multinational Firm Essay

Financial Management For A Multinational Firm Essay

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In this article we are going to discuss the financial management for a multinational firm. Multinational firms are those firms, which have operations in more than one country, and therefore it requires a higher level of management due to the vastness of the company’s operations and presence. These companies expand due to reasons that would include the need to enter and explore new markets, acquiring cheaper resources and labor for production purposes, for reducing operational costs and all of these would significantly have an effect on the financial management of the organization. However, these engagements would also increase the risk factor for the organization. In the following paragraphs we are going to discuss how financial management affects multinational organizations (Gordon, n.d.).
• Legal and economic structure – When multinational organizations expand its operations in different countries, it has to take into account the different laws and regulations of these specific countries and therefore their operations can become quite complicated due to the legal and economic structures of the specific countries. It may even be the case that the practices in the home country might be illegal in another country and therefore the company would need to adapt their legal and economic structures in order to be able to expand its business in different countries. An example for the same would include the payments made in order to fast forward a licensing contract in one country and this could be considered to be a bribe in another country. Therefore these companies need to learn to adapt to the legal and economic structures of different countries and incorporate the same into their own business structures. Often it occurs that these co...

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...t to the standards of the International Monetary Fund and this could prove to be a hindrance for the business organization, operating in foreign countries.
• Credit – Multinational organizations often take large loans in order to finance their businesses and therefore it is vulnerable to the lending rates offered by various banks in the different countries that they are operating in. Therefore, this is one factor that could have a large impact on the profitability of the multinational organization and as a result would cause distress to the financial management of the company.
Thus, in this paper, through above-mentioned points, we have discussed financial management for multinational corporations and how certain factors can have a large impact on the financial management, revenue, profitability and operations for the company, engaged in business operations overseas.

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