24-2 What is a multinational corporation? u A corporation that operates in two or more countries. u Decision making within the corporation may be centralized in the home country, or may be decentralized across the countries the corporation does business in.
24-3 Why do firms expand into other countries? u To seek new markets. u To seek new supplies of raw materials. u To gain new technologies. u To gain production efficiencies. u To avoid political and regulatory obstacles. u To reduce risk by diversification.
24-4 What are the major factors that distinguish multinational from domestic financial management? u Currency differences u Economic and legal differences u Language differences u Cultural differences u Government roles u Political risk
24-5 Part I The International Financial Environment
24-17 International Capital Budgeting Example u A firm is considering an investment in Freedonia, and the initial cash outlay is 1.5 million marks. u The project has 4-year project life with cash flows given on the next slide. appropriate required return is 18% u The appropriate required return for repatriated U.S. dollars is 18%. expected exchange rates u The appropriate expected exchange rates are given on the next slide. International project details:
24-26 Faktor Yang Mempengaruhi Kurs Valas 1.Permintaan dan Penawaran Valas 2.Posisi Neraca Pembayaran Internasional 3.Tinkat Inflasi 4.Tingkat Pendapatan 5.Tingkat Bunga 6.Kebijakan dan Pengawasan Pemerintah 7.Ekspektasi/Spekulasi Masyarakat – Country Risk
24-34 5. Kebijakan dan Pengawasan Pemerintah Kebijakan lalu lintas devisa Peningkatan hambatan perdagangan Kebijkan suku bunga, dll. 6. Ekspektasi dan Spekulasi / Kondisi kestabilan politik / Isu / Rumor Country Risk Adanya spekulasi terjadinya devaluasi Pemerintahan yang selalu berganti / tidak stabil Isu pergantian kepemimpinan nasional Isu sakitnya pimpinan nasional Isu dijualnya aset penting nasional
24-35 Corruption Index Ratings for Selected Countries Maximum rating = 10. High ratings indicate low corruption.
24-39 Actual Country Risk Ratings Across Countries
24-40 Cougar Co.: Determining the Overall Country Risk Rating
24-41 Cougar Co.: Derivation of the Overall Country Risk Rating
24-42 Types of Exchange-Rate Risk Exposure u Translation Exposure u Translation Exposure -- Relates to the change in accounting income and balance sheet statements caused by changes in exchange rates. u Transactions Exposure u Transactions Exposure -- Relates to settling a particular transaction at one exchange rate when the obligation was originally recorded at another. u Economic Exposure -- u Economic Exposure -- Involves changes in expected future cash flows, and hence economic value, caused by a change in exchange rates.
24-43 Meskipun penerimaan subsidiary di UK meningkat 20% (dari GBP 5 ke 6 M) namun consolidated income statementnya mengalami penurunan sebesar $ 5,1 M.