国际财务管理-Chapter 1

Chapter1ManagingFinanceinForeignSubsidiaries:AnOverview

Learningobjectives（教学目的）

Afterstudyingthischapter,studentsshouldbeableto:

IdentifythemaingoaloftheMNCandpotentialconflictswiththatgoal.

Describethekeytheoriesthatjustifyinternationalbusiness.

Explainthecommonmethodsusedtoconductinternationalbusiness.

Thearrangementofthischapter (教学安排)（3课时）

Importantanddifficultpoints(教学重、难点)

Importantpoints:

themaingoaloftheMNC

thekeytheoriesofinternationalbusiness

Difficultpoints:

1) cost-benefitevaluationforpurelydomesticfirmsversusMNCs

Thecontentofthischapter(教学内容)GoaloftheMNC

ThecommonlyacceptedgoalofanMNCistomaximizeshareholderwealth.

FinancialmanagersthroughouttheMNChaveasinglegoalofmaximizingthevalueoftheentireMNC.

ConflictswiththeMNCGoal

Subsidiarymanagersmaybetemptedtomakedecisionsthatmaximizethevaluesoftheirrespectivesubsidiaries.

ImpactofManagementControl

ThemagnitudeofagencycostscanvarywiththemanagementstyleoftheMNC.

Acentralizedmanagementstylereducesagencycosts.

Adecentralizedstylegivesmorecontroltothosemanagerswhoareclosertothesubsidiary’soperationsandenvironment.

TheoriesofInternationalBusiness

TheoryofComparativeAdvantage

Whenacountryspecializesinsomeproducts,itmaynotproduceotherproducts,sotradebetweencountriesisessential.Thisistheargumentmadebytheclassicaltheoryofcomparativeadvantage.Specializationbycountriescanincreaseproductionefficiency.

ImperfectMarketsTheory

Themarketsforthevariousresourcesusedinproductionare“imperfect.”Therealworldsuffersfromimperfectmarketconditionswherefactorsofproductionaresomewhatimmobile.Therearecostsandoftenrestrictionsrelatedtothetransferoflaborandotherresourcesusedforproduction.

Theremayalsoberestrictionsontransferringfundsandotherresourcesamongcountries.

ProductCycleTheory

Accordingtothistheory,firmsbecomeestablishedinthehomemarketasaresultofsomeperceivedadvantageoverexistingcompetitors.Afirmislikelytoestablishitselffirstinitshomecountrybecauseinformationaboutmarketsandcompetitionismorereadilyavailableathome.Asa firm matures, it may recognize additional opportunitiesoutside its home country.(Theinternationalproductlifecycleontransparency10)

InternationalBusinessMethods

Internationaltradeinvolvesexportingand/orimporting.

Licensingallowsafirmtoprovideitstechnologyinexchangeforfeesorsomeotherbenefits.

Franchisingobligatesafirm toprovideaspecializedsalesorservicestrategy,supportassistance,andpossiblyaninitialinvestment,inexchangeforperiodicfees.

Firmsmayalsopenetrateforeignmarketsbyengaginginajointventure(jointownershipandoperation)withfirmsthatresideinthosemarkets.

Acquisitionsofexistingoperationsinforeigncountriesallowfirmstoquicklygaincontroloverforeignoperationsaswellasashareoftheforeignmarket.

Firmscanalsopenetrateforeignmarketsbyestablishingnewforeignsubsidiaries.

InternationalOpportunities

Investmentopportunities

¤ ThemarginalreturnsonMNCprojectsareabovethoseofpurelydomesticfirmssinceMNCshaveexpandedopportunitysetsofpossibleprojectsfromwhichtoselect.

Financingopportunities

¤ MNCscanobtaincapitalfundingatalowercostduetotheirlargeropportunitysetoffundingsourcesaroundtheworld.

OpportunitiesinEurope

¤ theSingleEuropeanActof1987

¤ theremovaloftheBerlinWallin1989

¤ theinceptionoftheeuroin1999

¤ theexpansionoftheEuropeanUnion

OpportunitiesinLatinAmerica

¤ theNorthAmericanFreeTradeAgreement(NAFTA)of1993

¤ theremovalofinvestmentrestrictions

OpportunitiesinAsia

¤ theremovalofinvestmentrestrictions

¤