Finance Policies and Strategies of Multinational Enterprise Essay

Finance Policies and Strategies of Multinational Enterprise - Essay Exampleactively managing fiscal chances allows us to continue doing what we do best designing and selling great products instead of proficient reacting to problems linked to events beyond our control. These risks arise due to the unavoidable effects that some political and natural events fork up on currency exchange and interest rates. When one of the countries where we operate slides into an economic crisis, for example, a government baron impose exchange or currency controls, affecting our cash flow, profits, and funds transfer mechanisms and creating potentially ill effects on our finances and transmission line price. These risks arise both from the likelihood that something good will non happen or that something bad will happen (Read and Kaufman, 1997, p. 112). Financial risks are those that threaten the efficiency of the world-wide movement of money and profits amongst our affiliated companies through internal transfer mechanisms (Shapiro, 2003, p. 26). We are exposed to this risk that has several types, amongst which the most relevant given the events just outlined are currency, credit, inflation, and market risks. Although most of the deprecative events are non-political in nature, their effects on the respective national economies may cause political risks that we must(prenominal) address. Our cost of capital and debt is affected by fluctuations in exchange and interest rates, inflation, and stock market volatility. We similarly need to cover transaction exposures, the possibility of incurring gains or losses on sales, purchases, and investment decisions entered into and denominated in foreign currencies (Eiteman et al., 2004, p. 155-176). International Finance Strategies Risks are uncertainties and sources of anxiety we need to deal with. Most business and financial risks are caused by outside events and changes in economic variables (GDP growth, commodity prices, interes t rates, foreign exchange rates, and stock prices) over which we have virtually no control (Froot et al., 1994). Our inability to control these events, however, does not mean we cannot manage their effects.We manage the consequences of financial risks by adjusting our operational, financial, and investment strategies. Some risks we can take and others we cannot.