Finance Policies and Strategies of Multinational Enterprise Essay

finance Policies and Strategies of Multinational Enterprise - Essay ExampleActively managing financial risks allows us to continue doing what we do best designing and selling vast products instead of just reacting to problems linked to events beyond our control. These risks arise due to the unavoidable make that some political and natural events have on currency throw and interest rates. When one of the countries where we operate slides into an economic crisis, for example, a government might impose exchange or currency controls, affecting our cash flow, profits, and funds polish off mechanisms and creating potentially adverse effects on our finances and declension price. These risks arise both from the likelihood that something good will not happen or that something no-count will happen (Read and Kaufman, 1997, p. 112). Financial risks ar those that threaten the efficiency of the worldwide movement of money and profits amongst our affiliated companies through internal trans fer mechanisms (Shapiro, 2003, p. 26). We are exposed to this risk that has several types, amongst which the most relevant given the events just outlined are currency, credit, inflation, and market risks. Although most of the critical events are non-political in nature, their effects on the respective national economies may cause political risks that we must address. Our cost of capital and debt is affected by fluctuations in exchange and interest rates, inflation, and stock market volatility. We also need to manage transaction exposures, the possibility of incurring gains or losses on sales, purchases, and investment decisions entered into and denominated in outside(prenominal) currencies (Eiteman et al., 2004, p. 155-176). International Finance Strategies Risks are uncertainties and sources of anxiety we need to deal with. Most business and financial risks are caused by outside events and changes in economic variables (GDP growth, commodity prices, interest rates, foreign exchang e rates, and stock prices) over which we have virtually no control (Froot et al., 1994). Our inability to control these events, however, does not mean we cannot manage their effects.We manage the consequences of financial risks by adjusting our operational, financial, and investment strategies. Some risks we can take and others we cannot.