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Foundations of Multinational Financial Management 5 th Edition Alan Shapiro J.Wiley & Sons

Foundations of Multinational Financial Management 5 th Edition Alan Shapiro J.Wiley & Sons. Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton. Chapter 1 : Introduction. Multinational Enterprise and Multinational Financial Management. PART I. The Rise Of

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Foundations of Multinational Financial Management 5 th Edition Alan Shapiro J.Wiley & Sons

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  1. Foundations of Multinational Financial Management5th EditionAlan Shapiro J.Wiley & Sons Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton

  2. Chapter 1 : Introduction Multinational Enterprise and Multinational Financial Management

  3. PART I. The Rise Of Inter-modal International Trade

  4. A. CHANGES IN WORLD TRADE 1. Role of Containerization a. Containers (20’ and 40’) b. Inter-modal transport possible 2. Less risk to transport 3. More efficient methods of shipping

  5. PART II. The Rise Of The Multinational Corporation

  6. The MNC(Multinational Corporation) A. Definition • A company engaged in producing and selling goods or services in more than one country. • A company with production and distribution facilities in more than one country. * parent company * foreign subsidiaries * home country * host country

  7. The MNC(Multinational Corporation) B. Why it is so important • Most of these firms which Fortunes publishes the 10 most admired U.S. corporations are MNCs.

  8. The MNC(Multinational Corporation) C. Traditional Economic Theory 1. Classical Theory: a. Smith and Ricardo b. Comparative Advantage 2. MNC supercedes theory: a. different costs/skills between nations b. mobility of factors c. prime transmitter of competitive forces

  9. Comparative Advantage • U.S. 1 ton wheat = 2 tons coal • U.K. 1 ton wheat = 0.75 tons coal

  10. Comparative Advantage 1. Goods and services can move internationally. 2. Factors of production, such as capital, labor, and land, are relatively immobile. 3. It ignores the roles of economies of scale, transaction costs, and technology in international trade. 4. It is static rather than dynamic.

  11. The MNC(Multinational Corporation) D. Evolution Of The MNC Reasons to Go Global: 1. raw materials 2. more markets 3. minimize costs of production

  12. Reasons to Go Global 1. Raw Material Seekers * exploit material in other countries * historically first to appear * modern-day counterparts Anaconda Copper, Standard Oil British Petroleum

  13. Reasons to Go Global 2. Market Seekers *produce and sell in foreign markets * heavy foreign direct investors IBM, MacDonald’s, Coca-Cola, 康師傅

  14. Reasons to Go Global 3. Cost Minimizers *seek lower-cost production abroad * motive: to remain cost competitive * representative firms: 台商的西進與南進 台塑, 臺積電, Motorola 等

  15. The MNC(Multinational Corporation) E. The Global Manager 1. Understands political and economic differences; 2. Searches for most cost- effective suppliers; 3. Evaluates changes on value of the firm.

  16. The MNC(Multinational Corporation) F. Advantages Of The MNC • Arbitrage • Tax • Financial • Regulatory

  17. PART III. Multinational Financial Management: Theory And Practice

  18. The Multinational Financial System A. Main Objective of MNC: Maximize shareholder wealth B. Other Objectives Reflect Ability to Link : Via Affiliate transfer mechanisms C. Mode of Transfer : Reflects freedom to select a variety of financial channels.

  19. Functions Of Financial Management A. Two Basic Functions: 1. Financing 2. Investing B. Additional Factors Facing the MNC Executive 1. Political risk 2. Economic risk

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