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INTERNATIONAL FINANCIAL

MANAGEMENT
• IS THE ART OF MANAGING MONEY ON A GLOBAL SCALE

• THE MAIN OBJECTIVE


THE MAIN OBJECTIVEOFOF
INTERNATIONAL
INTERNATIONALFINANCE
FINANCE
MANAGEMENT IS TO
MANAGEMENT IS “MAXIMIZE
TO “MAXIMIZESHAREHOLDER’S
SHAREHOLDER’SWEALTH”
WEALTH”
• The international financial activities help the organizations to
connect with international dealings with overseas business
partners- customers, suppliers, lenders. It is also used by
government organization and non- profit institutions.

• International Financial Management came into existence when


the countries of the world started opening their doors for each
other. This phenomenon is well known by the name of
“liberalization”

• Due to the open environment and freedom to conduct business in


any corner of the world, entrepreneurs started looking for
opportunities even outside their country boundaries.
SOURCES OF INTERNATIONAL
FINANCIAL MANAGEMENT
Licensing
Franchising
Exporting
Outsourcing
LICENSING
License- means to give permissions. A license may be
granted by a party (‘licensor”) to another party
(“license”) as an element of an agreement between
those parties.

A license may be issued by authorities to allow an activity


that would otherwise be forbidden. It may require paying
a fee and or proving a capability. The requirement may
also serve to keep the authorities informed on a type of
activity, and to give them the opportunity to set
conditions and limitations
ADVANTAGES
• Licensing is a rapid entry strategy, allowing almost instant
access to the market with the right partners lined up.
• Localization is a complex issue legally, and licensing is a
clean solution to most legal barriers to entry.

DISADVANTAGES

• Lower revenues due to relying on an external party is also a key


disadvantage to this model.
FRANCHISING
It is practice of selling the right to use a firm’s successful
business model. For the franchisor, the franchise is an
alternative to building ‘chain stores’ to distribute goods
that avoids the investments and liability of a chain. The
franchisor’s success depends on the success of the
franchisees. The franchisee is said to have a greater
incentive than a direct employee because he or she has a
direct stake in the business.

The franchisor is a supplier who allows an operator, or a


franchisee, to use the supplier’s trademark and distribute
the supplier’s goods. In return, the operator pays the
supplier a fee.
ADVANTAGE
• For the franchiser include low costs of entry, a localized
workforce (culturally and linguistically), and a high
speed method of market entry.

DISADVANTAGE
• Loss of some organizational and brand control
EXPORTING
Exporting is the practice of shipping goods from the
domestic country to a foreign country.

Export of commercial quantities of goods normally


requires the involvement of customs authorities in both the
country of export and the country of import.
OUTSOURCING
• Outsourcing business functions to developing foreign
countries has become a popular way for companies to
reduce cost

• Outsourcing is the contracting of business processes to


external firms, usually in developing countries where
labor costs are cheaper.