1. Prepared by:
KARTIK PARASHAR
MBA 2nd SEM

2.  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.
 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.

3.  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.
 Apart from everything else, we cannot forget the contribution of
financial innovations such as currency derivatives; cross-border stock
listings, multi-currency bonds and international mutual funds.

4.  Four major facts which differentiate international financial
management from domestic financial management.
1. Foreign Exchange:
It’s an additional risk which a finance manager is required to
cater to under an International Financial Management setting.
Foreign exchange risk refers to the risk of fluctuating prices of
currency which has the potential to convert a profitable deal into
a loss making one.

5. 2. Political Risks:
Political risk may include any change in the economic
environment of the country viz. Taxation Rules, Contract Act etc.
It is pertaining to the government of a country which can anytime
change the rules of the game in an unexpected manner.
3. Market Imperfection:
Having done a lot of integration in the world economy, it has got
a lot of differences across the countries in terms of transportation
cost, different tax rates, etc. Imperfect markets force a finance
manager to strive for best opportunities across the countries.

6. 4. Enhanced Opportunity Set:
By doing business in other than native countries, a business
expands its chances of reaping fruits of different taste. Not only
does it enhances the opportunity for the business but also
diversifies the overall risk of a business.

7.  There are many sources through which a company can increase its
capital by doing business in foreign countries through foreign
companies:
 Licensing
 Franchising
 Subsidiaries and Acquisitions
 Strategic Alliances
 Exporting

8.  License -means to give permission. A license may be granted by a
party ("licensor") to another party ("licensee") 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.

9.  Franchising is the 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.

10.  A subsidiary is a company that is completely or partly owned by
another corporation that owns more than half of the subsidiary's stock,
and which normally acts as a holding corporation which at least partly
or a parent corporation, wholly controls the activities and policies of
the daughter corporation.
 Mergers and acquisitions are both aspects of corporate strategy,
corporate finance and management dealing with the buying, selling,
dividing and combining of different companies and similar entities that
can help an enterprise grow rapidly in its sector or location of origin, or
a new field or new location, without creating a subsidiary, other child
entity or using a joint venture.

11.  Compared to national financial markets
international financial market have a different
shape and analytics. Proper management of
international finances can help the organization in
achieving same efficiency and effectiveness in all
market. without IFM sustaining in the market can
be difficult.