Manajemen Keuangan Internasional | Multi National Corp

Summary

The video covers the topic of international financial management, specifically focusing on multinational corporations (MNCs). It explains why companies expand abroad, including the search for new markets, cheaper production costs, and technology. The discussion includes business methods like trade, licensing, franchising, joint ventures, acquisitions, and establishing subsidiaries. The video also highlights risks like currency fluctuations, political instability, and economic conditions that affect international business. Ultimately, it provides an overview of how MNCs operate and the challenges they face in managing finances globally.

Takeaways

• 😀 International financial management focuses on multinational corporations (MNCs) that have subsidiaries, branches, and affiliates in other countries.
• 😀 MNCs expand internationally for several reasons, including seeking new markets, sourcing raw materials, reducing costs, acquiring new technologies, improving production efficiency, and diversifying risks.
• 😀 MNCs aim to maximize shareholder wealth, measured by profits, capital, and dividends, while minimizing risks to ensure steady returns for shareholders.
• 😀 Managers of multinational corporations face various challenges such as environmental constraints, regulatory issues, and ethical dilemmas when managing international businesses.
• 😀 Environmental constraints vary across countries, including waste disposal laws, pollution control regulations, and other local environmental policies that can increase operational costs for subsidiaries.
• 😀 Regulatory challenges involve tax laws, currency conversion rules, and profit repatriation policies that can affect cash flow and business operations in foreign countries.
• 😀 Ethical challenges arise when certain business practices, like bribery or corruption, are considered normal in some countries but are unethical or illegal in others, potentially harming a company's reputation.
• 😀 There are six main methods for expanding a business internationally: export-import trade, licensing, franchising, joint ventures, foreign acquisitions, and establishing new subsidiaries abroad.
• 😀 Export-import trade is a conservative method for entering foreign markets, involving either exporting goods or importing raw materials.
• 😀 Joint ventures and franchises allow businesses to enter new markets by partnering with local companies or allowing others to operate their business under specific conditions, often sharing profits and responsibilities.
• 😀 Risks of international expansion include fluctuations in currency exchange rates, political risks, and economic instability in foreign markets, all of which can affect profitability and operations.

Q & A

What is International Financial Management (IFM)?

International Financial Management (IFM) focuses on the financial activities of multinational corporations (MNCs) and their subsidiaries in different countries. It involves managing financial risks, investments, and transactions across borders.

What is the primary reason companies expand internationally?

Companies expand internationally to explore new markets, obtain cheaper raw materials, reduce production costs, acquire new technologies, improve production efficiency, and diversify risks.

What is the definition of a multinational corporation (MNC)?

A multinational corporation (MNC) is a company that owns subsidiaries, branches, or affiliates in multiple countries. These companies engage in business activities across national borders.

How do MNCs differ from local companies?

MNCs operate internationally, whereas local companies focus on domestic markets. MNCs often have a broader strategy, including production in foreign countries and international investment.

What are the main challenges that MNCs face when managing their finances internationally?

MNCs face environmental challenges, regulatory constraints, and ethical dilemmas. They must navigate different laws, taxes, and regulations in each country they operate in, and manage financial risks related to currency fluctuations and political changes.

What is the concept of 'shareholder wealth maximization' for MNCs?

Shareholder wealth maximization refers to the goal of MNCs to increase the value of the company for its shareholders. This is achieved by maximizing profits and returns while minimizing risks, measured by profits, capital, and dividends.

What are the key methods for international business operations?

The main methods include export-import, licensing, franchising, joint ventures, acquisitions, and the establishment of new subsidiaries in foreign countries.

What is the purpose of a joint venture in international business?

A joint venture involves two or more companies collaborating to operate a business together in a foreign market. It allows them to share resources, expertise, and risks while accessing new markets.

How does licensing work as an international business strategy?

Licensing involves an agreement where a local company produces goods based on the specifications of a foreign company. The local company pays a fee or shares profits with the foreign company, typically for the use of trademarks, patents, or other intellectual property.

What are the risks associated with international expansion?

The risks include currency fluctuations, political instability, changes in economic conditions, regulatory changes, and ethical issues such as corruption. These factors can impact the profitability and stability of operations in foreign markets.