INTERNATIONAL FINANCIAL MANAGEMENT

THE CHANGING IN INTERNATIONAL POLITICS

AND ITS EFFICTS ON INTERNATIONAL FINANCIAL
MANAGEMENT

DEPARTMENT OF PUBLIC ADMINISTRATION

UNIVERSITY OF SINDH, JAMSHORO
REPRESENTED BY;
MOHSIN ALI JATOI ; (2K18/MPA/24)
LEARNING OBJECTIVES
 MEANING OF INTERNATIONAL FINANCIAL MNAGEMENT
 POLITICAL ENVIRONMENT
 POLITICALS FACTORS THAT EFFECTS ON THE
INTERNATIONAL FINANCIAL MANAGEMENT
 TAX AND ECONOMIC POLICIES
 FOREIGN TRADE REGULATION
 EMPLOYMENT LAWS
 CHANGE IN REGULATION
 POLITICAL STABILITY
 MITIGATION OF RISK
 CONCLUSION
MEANING OF INTERNATIONAL FINANCIAL
MNAGEMENT
 International financial management is the art
of managing money on a global scale.
 The main objective of international financial
management is to maximize shareholder wealth.
 IFM- is a popular concept which means
management of finance in an international
business environment it implies doing of trade and
making money through the exchange of foreign
currency.
POLITICAL ENVIRONMENT
 Political environment is defined as the state,
govt, institutions and laws together with the public
and private stakeholders who operate and
influence that system.
 Political environment also include the political
culture which are views held about the govt should
act with relation to its citizens.
 Business managers will pay focus to political
environment to see how govt actions will influence
the company.
POLITICALS FACTORS THAT EFFECTS ON THE
INTERNATIONAL FINANCIAL MANAGEMENT
 Tax and economic policies
 Foreign Trade regulation
 Employment Laws
 Change in Regulation
 Political Stability
 Mitigation of Risk
 Impact on economy
 Federal Compliance
TAX AND ECONOMIC POLICIES
 Increasing or decreasing rate of taxes is a good
example of political component. Government
regulation may raise the tax rate for some business
and can lower the same for others due to specific
reasons.
 This decision will directly impact on IFM this is
why maintaining a strategy which can deal with
such situation is very important.
FOREIGN TRADE REGULATION
 Every business has a need to expand business
operation to other countries. However political
background of a country can influence the desire
for a business to expand its operation.
 Tax policies that are particularly controlled by the
govt can induce a particular business to expand at
international level.
EMPLOYMENT LAWS
 Employees laws are made to protect the right of
employs and include every aspect of employer/
employee relationship.
 Employment law is an aspect that is very complex
and involves several pitfalls as well.
 Employees are almost 98% of the company for the
accomplishment or lack will effect great impact on
the IFM.
CHANGE IN REGULATION
 Government could change their rules regulation
which could have an effect on a business.
 Every country has different laws, rules and
regulations of the country.
 Rules are changed in every country according to their
constitutions.
POLITICAL STABILITY
 The stability of political system can effect the
appeal of a particular local market.
 Govt view business organization as a critical
vehicle for social reform
 Govt pass legislation which impact the
relationship b/w the firm and its customers,
supplier and other companies.
MITIGATION OF RISK

 One way to manage political risk is to buy political

risk insurance.
 Organizations that have international operations
use this type of insurance to mitigate to their risk.
IMPACT ON ECONOMY
 The political environment in a country affect its
economic environment.
 The economic environment, in turn, affects the
performance of a IFM.
 Political factors influence economic development by
positively and negatively influence the process of
development.
CONCLUSION
 Political risk: political forces will cause a
drastic changes in a country business
environment which will have negative impact
on the profit and other goals of a business
enterprise.
 Economic risk: including economic miss
management will cause drastic changes in a
country business environment which will have
a negative impact on the profit an other goal of
a business enterprise.