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INTRODUCTION

• Definition: International Finance

• It is an extension of corporate finance to a

global context and fundamentally involveste management of international business

related financial functions!

•

IF means international trade of goods andservices" FDI and contractual

collaborations

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INTRODUCTION

• Definition: International #usiness

• It is essentially carrying on te international trade of

goods and services and international production of

goods and provision of services!• Definition: International Trade

• IT involves export and Import of goods and services!

Firms export to penetrate te mar$et and import to

obtain supplies at a lo%er cost!

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INDI& : 'xports ())*

+a,or commodities exported %ere petroleum products" +acinery" Iron

and steel" cemicals" automobiles" apparel" %ite goods and precious

stones and metals!

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INDI& : I+-ORT. ())*

 

10.8 6.9 

6.7  6.7 4.2 

0 2 4 6 8 10 12 in % 

China Saudi  Arabia

USA  UAE Iran

India: Imports 2009 

+a,or commodities imported %ere precious stones" fertili/er" iron and steel"

gold and silver" electronic goods" macinery" organic and inorganic

cemicals" metalliferous ores and products" coal and transport e0uipment!

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I+-ORT. '1-ORT. ()23

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Direct and Indirect 'xports

• Definition: Direct 4Indirect 'xports

• Direct export means tat a firm ta$es

direct responsibility for ma$ing its goodsavailable in te target mar$et by selling

directly or troug its agents!

•

Indirect export means %en te enterprisesells its product to te end users troug

its intermediaries!

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#ilateral Trade

• #ilateral trade also $no%n as counter

trade is bartering of goods and services!

•

5lobal Trade Ratio:• 6alue of a country7s overall trade 4 5D-

• &bout 238 as compared to Cinas 3)8

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.cope of IF+

• .cope of International financial management can be

outlined as follo%s:

• IF+ fundamentally is involved %it te management of

international business related financial functions

• IF+ deals %it multiple currencies and ence as tomanage te fluctuations in te forex mar$et including te

mar$et for derivatives

• IF+ as to design and manage te excange rate ris$"

interest rate ris$" inflation rate ris$" credit ris$ and te

political ris$

• IF+ as to address te issues pertaining to te foreign

direct investment and te foreign portfolio investment

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.cope of IF+• Te scope of IF+ also covers te international securities mar$et"

international excanges and bourses

• Cross border financing and investment enances te scope of IF+

to international accounting practices and set global accounting

standards

• .imilarly IF+ enances te scope of tax la%s and taxation strategyof not only te ome but also te ost country

• .cope of IF+ also covers te diverse %or$ing capital management

of +NCs

• IF+ is concerned %it te balance of payments in internationaltransactions of a country

• IF+ addresses te multiplicity of regulatory environment and aids

in te decision ma$ing process of bourgeoning and increased

complexities of international business

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.cope of IF+

• Case .tudy 2!2

• 9al+art is te largest retail store in te U.! It operates over ;"))) retailfacilities globally! &lso" te company is te dominant retail store in Canada"+exico" and te United <ingdom! &ccording to te Fortune =)) index of te

 %ealtiest and most po%erful corporations in te %orld" 9al+art olds tenumber one spot" ran$ed by its total sales!

•Te company>s competitive strategy is to dominate every sector %ere itdoes business! It measures success in terms of sales and dominance over

competitors! Its strategy is to sell goods at lo% prices" outsell its competitors"

and to expand! & typical 9al+art model is to build more stores" ma$eexisting stores bigger" and to expand into oter sectors of retail!

•Te company is proud of its strategy and even incorporates it %itin itsmoni$er ?&l%ays @o% prices" &l%ays!? 'very step of te %ay" it strives to

ma$e money and dominate its competitors" to te point of putting some of

tem out of business!

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.cope of IF+

• Case .tudy 2!2

• Te year ())A mar$ed te most significant retrencment for9al+art since it undertoo$ its international expansion in te

early 2**)s" in an effort to re,uvenate sales gro%t! 9al

+art" te %orld>s largest retailer" admitted defeat in its long

standing effort to penetrate successfully te 5erman retailmar$et!

• On Buly 3)" ())A" te company announced tat it %as

selling its operations in 5ermany to 5erman retailer +etro

&5! 9al+art ad been trying to ma$e its 5erman storesprofitable for eigt years! 9al+art announced a pretax loss

on te sale of 2 billion!

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.cope of IF+

• uestions:

• 9at %ere te reasons for te failure of 9al+art in itsambitious plans to capture te 5erman mar$etE

• 9al+art also experienced a loss of seasoned executives

 %en it ac0uired several 5erman retailers! 9y did te

executives leave rater tan relocateE

• 9al+art>s 5erman operations ad four presidents in eigt

years! 9as it a uman failure tat 9al+art found te going

toug in 5ermanyE