FINANCIAL REPORTING

Financial Reporting

Financial Reporting

This paper will analyze the drivers and consequences of globalization, describe the risks associated with global investing, and explain the importance of cultural sensitivity and ethics in global finance. However, there first must be an understanding of what globalization entails. Globalization is the expansion of companies and entities into the international market; working, manufacturing, and selling or buying from two or more countries. Companies that sell to other countries or buy from other countries are not a good example, but those that have investment, manufacturing, or other divisions of the company in another country is definitely globalization.

Drivers of Globalization

Many drivers of globalization affect an organization financially. Improvements in communication and transportation such as internet, emails, mobile phones, formation of trading blocs, depletion of trade restrictions and creating of new trade agreements among nations, comparative and competitive advantage being offered by certain nations and markets are all driving globalization and increasing trade among nations. Today, countries are increasingly becoming dependent on each other and companies are making a foray into global markets, either to increase their sales or to achieve comparative advantage in terms of production and thus satisfying the needs and wants of ever increasing demands of customers.

These changes are increasing the resource requirements of global corporations who require more resources, financial as well as non-financial today than ever before to compete in this globally competitive scenario and to support the increasing scale of business. Some of the most important drivers of globalization are the elimination of trade barriers and establishment of free trade agreements: This has been one of the most important drivers of globalization as the removal of trade barriers and establishment of trade agreements opened up huge markets for global corporations and significantly increased bilateral trade. For our money transfer business, the increasing trade between nations has proved to be a boon as such increase in bilateral trade means increasing need of transferring funds from one country to another.

Another major driver is improvement in communication technologies, such as the internet. The significant improvement in communication technologies has been cited as one of the most important innovations of all time as it has completely shrunk the geographical distances between nations and have redefined the physical boundaries of trade. Such technologies have made the world a global village. In today's world, one can use the benefits of internet and ecommerce to trade anywhere in the world as well as communicate with people all over the world at almost zero costs. These technologies have proved to be a backbone for our business as well. The money transfer business heavily relies on internet and other modern communication technologies for transfer of funds. One can now instantly transfer funds between two countries at the click of a button. Our business cannot be possible on such a large scale without the use of these technologies.

Another key driver of globalization is cost related drivers. The increasing need among companies to seek low cost source of production or sourcing ...