Discuss about the Business Finance for Reversals, and Fund Manager.
The role of the financial manager is not just limited to managing and arranging finances in any organisation, but there are other responsibilities that he has to take care of which includes the study of domestic and international business conditions. Both domestic and international businesses have a direct and indirect impact on the growth of any organisation[1]. The reason behind the success of any organisation depends on the understanding the social and business culture of another country.
Culture in terms of business means everything right from its business practices to its advertising and marketing to negotiating sales. The financial manager if is in a condition to understand these issues means he is better prepared before entering the market. Competition level that one experiences in the international market is much higher than the domestic market. The government in every country has its own rules and regulations when it comes to foreign products[2]. The financial manager is required to consult a legal counsellor to make sure to minimise the effect of these rules on the firm. The financial manager also takes care of international market if the technology used in the international market is much advanced than the technology used in the company the necessary steps should be taken to cope up with the standards[3]. Another important aspect that the financial manager should take care of is the exchange rate.
The financial manager is responsible for analysing the policies to check whether doing business in the international market will be profitable or not. The financial manager should take into consideration the legal and tax policies of a country. The tax will directly have an impact on the product so the financial manager will see where there’s whether the business will flourish in a domestic market or international market. The financial manager needs to understand the accounting standards of different companies. The financial manager also decides about the profit that has to be divided among the shareholders. He has to decide whether there’s enough revenue that covers the expenses and investments and still distributes the profit among equity investors.
The financial manager also is involved in risk management where is the company is insured or not has to be considered by the financial manager before the start of any business. Many people give credit to the customers[4]. The financial manager while dealing with the international and domestic business has to see as to how much credit has to be given to whom and ultimately he also has to take charge of the collection of unpaid debts. International business has different political and economic status, hence trade policies are different in all countries. Financial manager has to make a choice between doing business with the domestic market or international market, in other words, he has to see the feasibility of a project.
Financial manager and his team should be familiar with the accounting standards of other countries, he also is responsible for taking care of the capital management. How to select the right source of capital is a very crucial decision that has to be taken care of by the financial manager. Managing money is a key responsibility while doing business with the international market or the domestic market. In an international market, the related fields like psychology and sociology are a part of financial manager’s responsibility to understand the attitudes values and beliefs of that region. In dealing with both the markets the financial manager has to make sure to maximize the wealth of shareholders[5]. This means reducing the cost of capital and trying to balance the returns from the investments so as to have a share for the shareholders.
Other major issues dictating the job profile require the understanding of the following
Bankinsystems
Financial managers those who have to deal with the international market have to take into account the global banking system. Some banks encounter cash flow problems since their economic conditions are weak. While banks in other upcoming countries have to control their government policies that affect their interest rate[6]. There are some multinational companies working in certain countries where the bank sector industry is likely to experience policy of “International Monetary Fund” that looks at several companies unfriendly to their needs.
Government’s role
There are many countries that give importance to foreign investment by giving incentives. A Financial manager in a multinational company can to a great extent be influenced by dishonesty and inefficient bureaucrats when it comes to dealing with foreign officials[7]. The multinational companies are always spectacle about the fact that the rules and regulations that are applicable to them can change overnight which is not the case for domestic companies.
Risk at political level
Multinational companies operate in countries which experience political instability. Any change in the existing government may bring with them new policies which make it difficult to operate with huge amount of profit[8]. For instance, the new Government has brought certain plans of nationalization, which interferes with funds moving out of the country. This can be a real challenging situation for financial manager.
Credit
Huge debt can bring down the chances of the multinational company’s rate of expansion and growth in the international markets. Financial manager along with his team has to make sure that there is enough money for day to day activities of multinational business. The economic scenario and fixed conditions of the project based country have to nbe adhered to if funding has to be generated by the parent company[9].
The resulting from trade liberalization and technological progress is a vital international business environment today. Local business financial management and international business vary greatly depending on the opportunities available in both countries[10]. It is advisable not change the purpose and process of financial management dealing with in finances abroad management but the dimensions and dynamics of radical change.
The difference between domestic and international financial management: The four main aspects that characterize the international financial management of local financial management introduction to FX market imperfections and political risk and opportunity promotion group.
Foreign Currencies
Foreign currency fluctuation and economic scenario understanding and response is a major issue which needs addressing so as not to have adverse effects on business transactions.
Change in the political scanerio
The political risk may include any change in the economic set up of the country.s contract labour policies and taxes.
Labour Market Disadvantage
The selection process of labour is also made via looking at some criterias like gender, place of dwelling, the economic structure and level of education . This filters the requiremet suited best for the business in question.
Conclusion:
Diversifying the area of business to other countries enhances profit margins and reduces risk factor due to unfavourable conditions in different territories. [11]The aim of international finance manager is to maximize the wealth of the shareholder. The target is not just limited to the contributor but also stretches to customers, suppliers and employees.
You can achieve any goal without prosperity for shareholders. In other words, it would mean maximizing shareholder wealth in maximizing the stock price. Here comes again the question, whether the increased share value currency? This is an important decision of the management of the organization.
International finance has become important these days for all majority international companies[12].Managing the finance department properly can help any company to attain the same capability, impact and results in any of the markets.
References
Adebambo, B & X Yan, “Momentum, Reversals, and Fund Manager Overconfidence”. in Financial Management, , 2016.
Ang, J, I Hutton, & M Majadillas, “Manager Divestment in Leveraged Buyouts”. in European Financial Management, 20, 2013, 462-493.
Barone-Adesi, G, W Farkas, & P Koch-Medina, “Capital Levels and Risk-Taking Propensity in Financial Institutions”. in AFR, 3, 2014.
Girotti, R, “Sharing the financial responsibilities of being a professional”. in Veterinary Nursing Journal, 27, 2012, 264-266.
Hüpkes, E, “Rivalry in Resolution. How to reconcile local responsibilities and global interests?”. inEuropean Company and Financial Law Review, 7, 2010.
Mohamed, N & M Handley-Schachler, “Roots of Responsibilities to Financial Statement Fraud Control”. in Procedia Economics and Finance, 28, 2015, 46-52.
Nakuma, C, “Institutional Finance and the Role of the Foreign Language Department Chair as Financial Manager and Financial Leader”. in adfl, , 2006, 64-70.
Patro, P & P K. Gupta, “Impact of International Financial Reporting Standards on Cost of equity Capital for Asian countries”. in ijafr, 4, 2014, 148.
Stevanovic, N, “Financial reporting responsibilities in the context of EU, international and new domestic regulatory framework”. in Ekonomika preduzeca, 59, 2011, 227-242.
[1] B Adebambo & X Yan, “Momentum, Reversals, and Fund Manager Overconfidence”, in Financial Management, , 2016.
[2]R Girotti, “Sharing the financial responsibilities of being a professional”, in Veterinary Nursing Journal, vol. 27, 2012, 264-266.
[3] R Girotti, “Sharing the financial responsibilities of being a professional”, in Veterinary Nursing Journal, vol. 27, 2012, 264-266.
[4] J Ang, I Hutton & M Majadillas, “Manager Divestment in Leveraged Buyouts”, in European Financial Management, vol. 20, 2013, 462-493.
[5] N Mohamed & M Handley-Schachler, “Roots of Responsibilities to Financial Statement Fraud Control”, in Procedia Economics and Finance, vol. 28, 2015, 46-52.
[6] G Barone-Adesi, W Farkas & P Koch-Medina, “Capital Levels and Risk-Taking Propensity in Financial Institutions”, in AFR, vol. 3, 2014.
[7] C Nakuma, “Institutional Finance and the Role of the Foreign Language Department Chair as Financial Manager and Financial Leader”, in adfl, , 2006, 64-70.
[8] N Stevanovic, “Financial reporting responsibilities in the context of EU, international and new domestic regulatory framework”, in Ekonomika preduzeca, vol. 59, 2011, 227-242.
[9] P Patro & P K. Gupta, “Impact of International Financial Reporting Standards on Cost of equity Capital for Asian countries”, in ijafr, vol. 4, 2014, 148.
[10] R Girotti, “Sharing the financial responsibilities of being a professional”, in Veterinary Nursing Journal, vol. 27, 2012, 264-266.
[11] E Hüpkes, “Rivalry in Resolution. How to reconcile local responsibilities and global interests?”, inEuropean Company and Financial Law Review, vol. 7, 2010.
[12] N Stevanovic, “Financial reporting responsibilities in the context of EU, international and new domestic regulatory framework”, in Ekonomika preduzeca, vol. 59, 2011, 227-242.
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