Question

Refer to the scenario in the weekly written assignment to answer the discussion question. Would our goal of maximizing the value of the stock be different if we were thinking about financial management in a foreign country? Why or why not? minimum 350 words

Answer 1

The goal of any business is to maximize the profits or provide the maximum utilization of resources to allow a firm to increase the stock prices. Doing business in one’s own country or local area is a different ball game altogether. The local laws are different and the local policies and import and export law are different. The tax exemptions and brackets are different and based upon the growth in a company, expansion is a viable option. But, due to the trade laws and taxes in some countries, the current business model that the company follows changes, or has to change accordingly to incorporate the changes that occur in the structure of the functions of the company. Entering a new market has its own challenges along with benefits.

Financial management especially overseas can be a challenging task. Not only does it require change in the working operation of a company, it requires inter relations with other managing firms which would require the company to be well informed about the laws of business and partnership and management by other firms and their knowledge of criminal and judiciary laws that a country follows.

Also, for doing business and managing finances in another country by a subsidiary division, deep research of the market that you are going to trade services in needs to be done. This, combined with research relating to competition and market trend your business operates in. This would require a complete restructuring process which would take a considerable amount of time and planning combined with analytics from the market, finances, laws, taxes, currency conversion and judiciary values. Due diligence is always welcome in the case of expanding a business to another country.

A firm needs to evaluate the structure of their organization which is needed to successfully execute the strategy to implement changes in the infrastructure.

Policies need to be developed that would take into account the requirements of the local policies and procedures and that needs to be done to ensure that there is a harmony between a company’s existing structural policies and changes that are brought about by the inclusion of the new rules which need to be created to allow the company to function in any foreign economy. Following such changes, a company can monetize theri gain and maximize their financial gains and stock prices