International financial management, also known as international finance is a well-known term in today’s world. It simply means financial management in an international business environment. It is different than financial management because of the different factors involved like currency, political situations, imperfect markets, and diversified opportunity sets.
Four Facets to Understand the Concept of International Financial Management in India:
1. Foreign Exchange
Foreign exchange is an additional risk that a finance manager is required to cater to in an international setting. Foreign exchange risk refers to the risk related to fluctuating prices of currency that has the potential to convert a profitable deal into a loss-making one.
2. Political Risks
Political risks may include any change in the business economic environment of the country. These changes can include Taxation Rules, Contract Act, or any unforeseen government action. It pertains to the government of a country that can change the rules of the game anytime, in an unexpected manner.
3. Market Imperfection
Due to market and product integration, the world economy faces a lot of differences across the countries in terms of transportation cost, different taxation systems, etc. Imperfect markets force the finance manager to strive for the best opportunities across international borders.
4. Enhanced Opportunity Set
By taking the business across national borders, a business expands its chances of reaping fruits of a different taste. Not only does it enhances the opportunity for more business but also diversifies the overall risk of business to various nations.
Objectives of International Financial Management
● Acquisition of Funds
This objective involves generating funds from internal as well as external sources. The goal of international financial management is to acquire funds at the lowest possible cost.
● Investment Decisions
International financial management is concerned with the investment of acquired funds in an optimum manner in order to maximize shareholders’ as well as stakeholders’ wealth.
Compared to national financial markets, international markets have different analytics and dynamic. Proper management of international finances can help the organization to achieve the same level of efficiency and effectiveness in all the markets. Hence, without international financial management, sustaining in the market can be extremely strenuous. Organizations are motivated to invest capital in international markets for the following reasons:-
● Efficiently produce products in international markets
● Obtain the essential raw material needed for production
● Broaden and diversify markets
● Yields will be high
International financial management is no different than financial management despite the fact that financial decisions made are taken in the area of international business. The international financial activities help the organizations connect with foreign dealings along with international business partners including customers, suppliers, lender, etc.
An online financial management certification can help you immensely to understand the concept of international financial management. An online financial management course is designed to help you gain an understanding of advanced concepts and techniques required to solve the financial challenges of an organization. An online financial management certification structures in such a way that it exposes participants to factors affecting the financial performance, modes of capital management, risk minimization strategies, and guiding principles on investment decisions. So, if you want to excel in the discipline, an online financial management course is recommended.