Professional Documents
Culture Documents
◻ Absensi 10%
◻ Tugas Individual & diskusi
kelompok 20%
◻ Ujian Tengah Semester (UTS)
30%
◻ Ujian Akhir Semester (UAS)
40%
Total 100 %
Ouline
◻ Overview
◻ The Definition of Multinational
Companies (MNCs)
◻ The Goal of MNC
◻ Theories of International Business
◻ International Business Methods
◻ The Globalization Process
The International Financial Environment
Dividend
Remittance
& Financing Investing
Exporting & Financing
& Importing
Environmental constraints
Regulatory constraint
Ethical constraint
Theories of International Business
Translatio
Operating
n
Exposure
Exposure
Transactio
n
Exposure
Consider the following exchange
rates
US $ to buy 1 unit
Japanese yen 0.009
Australian dollar 0.650
Price = (1.75)(1.50)(111.11)
= 291.66 yen
Orange juice project:
Determining profitability
◻ The product will cost 250 yen to produce and
ship to Australia, where it can be sold for 6
Australian dollars. What is the U.S. dollar
profit on the sale?
Cost in A. dollars = 250 yen (0.0138)
= 3.45 A. dollars
A. dollar profit = 6 – 3.45 = 2.55 A. dollars
U.S. dollar profit = 2.55 / 1.5385 = $1.66
What is exchange rate risk?
◻ Austria ■ Ireland
◻ Belgium■ Italy
◻ Finland ■ Luxembourg
◻ France ■ Netherlands
◻ Germany■ Portugal
◻ Greece ■ Spain
■ Notable European Union
countries not in the EMU:
■ Britain, Sweden, and
Denmark
What is a convertible currency?
e0 = Ph/Pf
$0.6500 = $2.00/Pf
Pf = $2.00/$0.6500
= 3.0769 Australian dollars.
What impact does relative inflation have
on interest rates and exchange rates?
◻ Cash management
Distances are greater.
Access to more markets for loans and for
temporary investments.
Cash is often denominated in different
currencies.
Impact of multinational operations
◻ Credit management
Credit is more important, because commerce to
lesser-developed countries often relies on
credit.
Credit for future payment may be subject to
exchange rate risk.
◻ Inventory management
Inventory decisions can be more complex,
especially when inventory can be stored in
locations in different countries.
Some factors to consider are shipping times,
carrying costs, taxes, import duties, and
exchange rates.