LCBB6002 - International Financial Management: Guess Company Analysis

This essay provides a detailed analysis of international financial management (IFM) in the context of Guess, a multinational corporation. It explores the importance of IFM for the company, the challenges it faces in international financial markets, and relevant IFM theories. The essay also critically evaluates Guess's dividend distribution policy, analyzes the efficient market hypothesis in relation to the company's operations, and assesses its methods for appraising projects. The report concludes that international financial management is essential for MNCs like Guess to grow their business and improve their sustainability in the international market.

Financial
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Importance of International Financial Management...................................................................3
The challenges faced by Guess company in the international market are:.................................4
Following is the discussion regarding the divided distribution policy of Guess company:- .....5
Discussion related to Efficient Market Hypothesis theory in context to Guess:- ......................5
Different Methods of appraising projects in response to Guess company:- ..............................6
TASK...............................................................................................................................................6
CONCLUSION ...............................................................................................................................6
REFERENCES:...............................................................................................................................8
Books and Journals:....................................................................................................................8

INTRODUCTION
Financial management may be define as the process of planning, organizing, controlling
and all the activities of business which is related to finance. In simple terms the procurement and
utilization of the funds in a very effective manner within or outside the business is called
financial management(Breiki and Nobanee, 2019). International financial management is the
process of utilization of fund at the international level. With the help of globalisation and
liberalization the different types of organisation is able to raise the fund and deal with the more
customer base at the global level. The organisation who basically manage their finance at the
international level mainly focus on managing the global financial market. Due to this country
who needed the fund most can take the fund from other country for development. The following
report is based on Guess company which is a multinational brand of United States. This report is
going to cover he importance financial management in relation to the chosen company and in
what ways, which help the Guess company in sustaining in the international market.
MAIN BODY
According to the theories of management, financial management is the process of
procuring and utilizing all the financial activities of business not only at the national level but
also at the international level too.
Importance of International Financial Management
International financial system is basically a passage of channelizing the funds, which are
used by all the firm who work at the international level (Birkenmaier and Fu, 2019). With the
help of this system the organisation is able to connect with potential investor at the global level.
In context to the Guess company the importance of the managing the international financial
management has been discussed below:-
 Different types of financial disputes has been arise between the corporation of different
countries. With the help of financial management system these conflicts can be solved in
a very effective manner. International authorities like IMF, world bank and many more
taken care of this system.

 Different countries are able to determine the currency rates in vary effective manner and
along with this clear differentiation has been established by them of their own currency
in the market(Keown and et. al., 2020).
 Different types of monetary firms who operate their function at the international level
can maintain a effective balance between themselves and those who needed the fund
most with the help of this system.
 Along with this, this also helps the organisation in determining the investing power of
the public in the international market and inflation rate of an economy.
 The economic stability of a country can also be determine in the international market.
The challenges faced by Guess company in the international market are:
Guess is a American clothing brand who deals in the clothing of men and women and
also offer the fashion accessories like jewellery, bags, perfumes, shoes and many more items.
The respective company have 484 outlets all over the globe. Different types of customer has seen
in the international market who have diversified demand of fashion and preferences. To
overcome from the challenges which are faced by the Guess company, they use the “fast
fashion” strategy. With the help of this strategy the organisation is able to focus on reducing the
time which is taken by trend to travel from ramp to showrooms. Diversified business models like
outsourcing the production units has been followed by the company in order to make this
strategy successful. Immense competition has been faced by the Guess in the international
market. As the fashion industry is being considered as one of the most evolving industry so,
Guess company is required to hold such power which helps them in influencing the purchasing
power of the consumer (Block, Hirt and Danielsen, 2018). This directly reflects on increasing the
customer base for the company. In addition to this the direct expansion strategy has been
followed by the respective company in order to encourage their business in many countries. For
expanding their business they start using the franchising system. Changes in the technology is
being considered as one of the most important challenge which have been faced by the company.
If any advance technology has been followed by their competitor , would result in attracting their
buyer to competitor products. It is very important for the business organisation who operated
their business at the international level must have to understand the needs of their investor i.e.
return on their investments. If company wants to maintain their market share they must have to
maintain their quality of products.

Following is the discussion regarding the divided distribution policy of Guess company:-
Dividend distribution policy refers to all the financial decision which are taken by the
board members of the company in relation to the payment of dividend to the shareholder of the
company. With the help of this policy the organisation is able to focus on the rate of dividend
which have been provided to their shareholders and their other investors of the company. This
policy also help in analysing the trends of earned profit, financial position, interest to their
shareholders and many more (Young and Legister, 2018). The dividend policy of the company is
totally depends on the profits earned by the them. The strategic managers of the company have to
generate a suitable decision because the shareholder of the company wants return on their
investment and business wants to to retain the profit within the company. In context to Guess
company, on 19 April 2019 the board of directors of the company has decided to reduce their
quarterly dividend because of the Covid 19 . The dividend has been reduces from $0.225 per
share to $.01125 per share. According to their financial statements dividend paid for the year
ended on Feb 1, 2020 is $ 42135.
Discussion related to Efficient Market Hypothesis theory in context to Guess:-
Efficient Market Hypothesis (EMH) is one of the most widely used strategy which are
used by the organisation. This theory states that how single element in the market explain about
all the information of market. The element may be the asset price of company or price of share.
If the share price of the company is high then their working is good and visa-versa. This theory
states that marketplace is being considered as productive factor for the companies because this
does not required additional earnings and due to no changes in the investment price. In addition
to this this theory also states that share prices of the company explain all the facts and figure. As
prices of the companies shares has changes on regular basis and due to this it very difficult for
the traders to buy the shares whose prices has been changes on regular basis. The market study
for Guess is being considered as one of the most important component for the stakeholders of the
company(Burtonshaw-Gunn, 2017). This helps them in making decisions and strategies for the
business. As the management of the Guess company focus on prices of its shares. If the prices of
the company share is less fluctuating then it attract more investor towards the organisation. EHM
theory helps the business organisation in this.

Different Methods of appraising projects in response to Guess company:-
 Financial Analysis: this method is being considered as one of the most important element
for the entrepreneur because this not only helps the in investing their funds but also help
them raising the raw material for the company which further convert into finished goods
(Kembauw and et. al., 2020). The management of the Guess company operates their
different business functions in a very effective manner as they satisfy their consumer by
providing quality products to them. But due to the unavailability of the raw material or
other factor they fails to generate the projected level of production.
 Economic Appraisal:- this method is totally related to the projected sales, profit, expenses
and requirements of the raw materials. An entrepreneur must have to be clear in the
amount of profit which have been earned by them. This helps the company in
determining the different economic factor like purchase, sale, expenses and many more.
In context to Guess company budgetary policy has been followed by them in order to
determines the same (Dwiastanti, 2017).
 Market analysis:- organisation must have to determined the target market. It is very
important for the business to identify the market which helps them in selling their product
in the market. Afterwords they have to determined their potential customer and work
accordingly to their need and demand.
TASK
CONCLUSION
From the above report it has been concluded that domestic financial market is totally
different from the international financial market. With the help of internation financing the
MNCs are able to grow their business and improve their sustainability in the international market
because of the availability of the fund in a very easy manner. This report concluded the
importance of international financial management in respect to the Guess company and their
dividend policies of business in regarding to their shareholders wealth. After words this report
concluded the different methods for appraising the project managers of the company.

REFERENCES:
Books and Journals:
Breiki, M. and Nobanee, H., 2019. The role of financial management in promoting sustainable
business practices and development. Available at SSRN 3472404.
Birkenmaier, J. and Fu, Q.J., 2019. Does consumer financial management behavior relate to their
financial access?. Journal of Consumer Policy. 42(3). pp.333-348.
Block, S.B., Hirt, G.A. and Danielsen, B.R., 2018. Foundations of financial management.
McGraw-Hill Education.
Burtonshaw-Gunn, S.A., 2017. Risk and financial management in construction. Routledge.
Dwiastanti, A., 2017. Analysis of financial knowledge and financial attitude on locus of control
and financial management behavior. MBR (Management and Business Review). 1(1).
pp.1-8.
Kembauw, E. and et. al., 2020. Strategies of Financial Management Quality Control in
Business. TEST Engineering & Management. 82. pp.16256-16266.
Keown, A.J and et. al., 2020. Financial management. Prentice Hall.
Young, J.H. and Legister, A.P., 2018. Project-based learning in international financial
management. Journal of Teaching in International Business. 29(1). pp.76-87.