International Finance

International Finance

Introduction

As Company is going to setup its new manufacturing plant in Ruritania, this means that company is going to become a multinational now , so here are some issues which a multinational have to face in order to establish itself in other country. As overall company annual growth is satisfactory, company can expand itself in new direction, for which company is going to invest GBP 55 million for its new manufacturing plant in Ruritania.

Below is the outline of different financial issues with its advantages & disadvantages.

Benefits of Operating In Ruritania

Operate and control the production units in more than one country. 

Combine the centralization of property with a geographical spread internationally.

Constitute a series of companies belonging to different countries and legal ties units of different nature.

Generated strategy for all companies that seek to achieve the maximum overall profit and growth and development.

There are substantial flows of goods and services and financial flows.

The huge amount of their magnitudes.

The multinational groups are not completely identified with the state, but maintain a relationship with him.

Theories that define multinational company

Legal status theory: It is an economic unit but extra-legal character. Consider a multinational company characterized by having multiple nationalities, aims and objectives by establishing subsidiaries in different countries to benefit in law and citizenship.

Direct Investment Criteria: Those companies making direct investments on the basis of their expertise in more than one country.

Command and control theory: Not only does foreign direct investment, but there may be other investments and also be made ??by other economic subjects. Moreover, the multinationals are understood in a broader sense as covering the control and command of all its production facilities.

Quantitative theories: The degree of multinationality will depend on the nature, size and stability of their production operations.

Management theory of the global organization: based on the possession of monopoly advantages in the factor market and the existence of internal economies, external scale and government restrictions.

Sectors in Which we may Involved

Our Company can go for other sector too like in

1.)  Mining 2) Agriculture and Fisheries, 3) High-tech Industrial, 4) Services.

Financial Investment Decisions

 The structure of assets in Ruritania, is determined by 4 factors:

Reasons for deployment overseas.

Performance of the companies in risk-return terms.

Way of setting up outside their country.

Transmission and protection of knowledge.

Financing structure : Force to consider the risks and financial costs of obtaining external funds. This decision determines the company's financial policy.

Forms Of Investment In Ruritania In Term Of Multinational

The main one is the subsidiary.

the others are grouped into two main

The establishment of a branch (which is a company which has legal status as that of the matrix).

The creation of a legal entity (which is similar to a company but to be unfinished and is called pseudosociedades. Would apply to society atypical or irregular). In Spain, the subsidiary is enjoying the best legislative treatment.

International Finance Risk

Political risk or country:

Although Ruritania does not have a long tradition of democracy, Governments have been democratically elected for the last twenty years, recent survey shows that the existing government has much chances of re elected which is better for our company ...