INTERNATIONAL FINANCIAL MANAGEMENT: GOAL OF MULTINATIONAL COMPANIES(MNCs)

Multinational Financial Management: an overview

Goal of multinational companies(MNCs):

Wealth maxmization of share holders

There are two way to maxmize the wealth:

Capital Gain
Dividend Increase

MNCs Defination:
When the domestic company started its business in different countries is called MNCs.

Parent Company: Domestic branch is called main or parent company.
Subsidires Company: In other countries branches is called subsidires company.

Conflicts with Goal:
            Agencies problems
            Management and share holders problems
How to remove conflicts:
            Stock offer
            Centralized decision
            Threat of job
  Monetary
Constraints with MNCs Goal:

Environmental issues
Regulatory constraints
Ethical

International Business Theories:

Comparative Advantage: Which area the company is stronger than other company and its competitor is weak in that area
Theory of Imperfect Market: Get the benefit of factor of production because the factor are not equal in the world the business man can get the befit of that inequality.
Product Life cycle Theory: first of all fulfill domestic demand and after fulfill MNCs demand.