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.