This project discusses the meaning of international financial management and its aspects. It also explores the success of mergers and acquisitions in Germany-Japan and UK-USA. Additionally, it examines the possibilities of international harmonisation in the merger and acquisition field.
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INTERNATIONAL FINANCIAL MANAGEMENT
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Table of Contents INTRODUCTION...........................................................................................................................3 a) The success of mergers and acquisitions of Germany-Japan & UK-USA.............................3 2) Possibilities of international harmonisation occurring in the merger and acquisition field. . .4 CONCLUSION................................................................................................................................6 REFERENCES................................................................................................................................7
INTRODUCTION The meaning International Financial Management can be defined by the term itself. The management of financial resources in a business environment at an international ground is known as international financial management. They are absolutely different from the normal business environments as there are variety of currencies of different countries, political situations withdissimilarities,marketswhicharenotperfectandadiversesetsofopportunities. Globalization is what opened the doors of many countries for each other to come up with international financial management. The vaster progression in the sector of telecommunication and technologies of transportationhad a great increase in accessibility causing regular drop in prices due to liberalization (Madura, 2011). This project will be dealing with the international financial management of some of the major mergers and acquisitions in the global economy: UK & USA, and Germany-Japan. a) The success of mergers and acquisitions of Germany-Japan & UK-USA Germany is the largest economy in Europe and the largest European trade partner is no country other than Japan. The European continent's largest market is the German market. The advantage of being in such an amazing geographic position has owed the country to be free from trade obstacles from the side of European Union and Germany has been excellently emerging as a place for the Japanese to expand their business in Eastern Europe (Bekaert and Hodrick, 2009). A legal system with high reliability and potentially stable along with the presence of an efficientadministrationprovidesthetradertherewithhighdegreeofsecurityfortheir investments. German companies are worldwide known for their efficiently costed products with high quality. Many of the leading companies have emerged from the market of Germany, mostly, in the fields of mechanical and electrical engineering, automobile industry and sector of medical equipments. Here the foreign traders also receives the advantage of excellent human resources as the effective education system turns to create competent professionals. Japanese products are also some of the most demanded articles that are hold reputation in the German market. Japanese productsarepopularfor theirintelligentdesigns,advancedcuttingedgetechnologyand reliability to solutions. The German consumers are attracted towards the products manufactured by the Japanese companies (Bodie, 2013). These are the major reasons why there are a high
number of steadily growing Japanese firms being established with their presenceby opening their own subsidiaries in the German market, mainly in the areas of Dusseldorf, Frankfurt, Cologne and Munich. The investment friendly climate they are benefited with, the availability of skilled and well trained human resourcesand a highly aware market in case of quality of the products and strength in terms of finance (Titman, Keown and Martin, 2011). During the period of October to December in the year of 2016, the estimated total number of domestic companies and cross border mergers consisting the acquisitions, which have been successful are involving UK companies, that are relatively remaining flat when compared with the performance in the quarter 3 of the same year.During the whole year of 2016, the number of successful inward and domestic mergers and acquisitions with the involvement of the companies in United Kingdom have been showing notable hikes with the exhibition of highest level of mergers and acquisition activities in the year of 2008 and 2011. In the year of 2016, there were 227 mergers and acquisitions that were inward and are worth £187.4 billion. It made the highest annual number since the year of 2011 and with the most above value in the annum since the first published mergers and acquisitions data and statistic since the the year of 1969. during 2016, there were a number of total 400 companies which are domestic mergers and acquisitions with a total of a successful £23.9 billion (Iatridis and Rouvolis, 2010). It was a highest valued number since 2008. Since the year of 1985, more 0.3 million transactions from the side of mergers and acquisitions have been announced within a value which is known and is almost about $33,200 billion. In 2015, there has been one morenew record broke with the transaction terms being valued at $2,410 billion which is at a rate of 12% increase over 2014. the recorded number of deals that took place in the year of 1998 where there were more than 14,800 transactions that had already been announced. The compound annual growth rate for the number of deals for the year of 1985 to 2015 was of 4.63% while there was a growth in the value at the rate of 6.51%. the current situations and trends in 2016, suggests that there will be a decrease in mergers and acquisitions in the year. 2) Possibilities of international harmonisation occurring in the merger and acquisition field The number of merger and acquisitions activity is usually visible as a benchmark for the whole economy's health, so there would be no surprise for such deals are at highest point than
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any duration since there was a downturn struck in the year of 2007. the following are some major benefits occurred in the industries and economy in the economy: ï‚·The mergers and acquisitions volume are in the process of growth, meaning more Human Resources and teams are benefited with thoughts about integration and benefits to have above propositions (Atkinson and Messy, 2011). ï‚·And once a business is left aloneafter leaving it being acquired by an organization, the benefits are with the left alone firm, in case now this is less common. ï‚·Integration is a decision taken by employees and they will need to decide how the harmonization is to be done, up or down, or use utilize this opportunity for all the benefits to be reviewed and a new suite to be implemented. ï‚·Communication is important tobe effective, certainly with those people who would be acting worse under the new system (Ageron, Gunasekaran and Spalanzani, 2012). There has been a lot of differences made in the world since the nations are being liberalized. The liberalization has introduced the freedom to be open for the foreign countries welcoming them to start-up their operations in the country which has been liberalized. There had been a lot of struggles for some particular nation to introduce liberalization in the national economy. In some nations liberalization was introduced with the process of globalization, where the nations were suggested to communicate with the economies of every nation and fulfil their demandsbybringingandtakingthemfromthecountrieswhoproducedtheproducts. Globalization showed some countries the face of development and growth in the forms of the national economy and it helped in bringing up with a lot of changes in the markets in various countries. Since, the international financial management term has been popularized among the economies of the nations, the national economies of many nations got a chance to introduce their major sector of industry where they could emerge in international trade. The nations which are geographically located in two different corners of the globe are alsocommunicatingandcontactingeachotherinrelationtotheinternationalmarketing strategies amongst them. The nations have been signing contracts with each other so that the trade market and national economy could upgrade giving more options to the consumers in the country. Choices provided to the customers in a sector of national market will be increased in numbers as there would be new firms introducing the products in the market soon as the process
of globalization is applicable in the economy. The nations will start organizing summits and meetings at different venues in both the countries in order t discuss the lack and surpluses in their own home countries and strategies in order to meet the needs of the customers in both the nations. The nations are proving to be in friendly relations and are considered to be trading partners in such cases where they are a part of international financial management. The nations in such cases get closer and start helping each other in other sectors too, like as education and other social matters. They start organizations that are to accomplish targets of making a better environment, not just in terms of money but in terms of social effectiveness too. The citizens of both the countries will have government assistance to employment in both the countries. There will be a form of peaceful relationship between both the nations and the citizens in the countries would lead a harmonious life. CONCLUSION The points to be known related to the international finance management have been discussed in the project. The meaning of the term 'international financial management' and its aspects have been included in the discussion too (Jarvis, 2011). The trade regarding relations between Germany and Japan is also in a part of the project. Germany and Japan are having wonderful opportunities of serving the consumers in each other countries with advantages of vast geographicalcoverage,technologicaladvancementandwelleducatedandtrainedhuman resources available for the companies. The people have been benefited in various ways in concern in financial matters and social effects.
REFERENCES Books and Journals Madura, J., 2011. International financial management. Cengage Learning. Bekaert, G. and Hodrick, R.J., 2009. International financial management (p. 809pp). Upper Saddle River, New Jersey, NJ: Pearson Prentice Hall. Bodie, Z., 2013. Investments. McGraw-Hill. Titman,S.,Keown,A.J.andMartin,J.D.,2011.Financialmanagement:Principlesand applications. Iatridis,G.andRouvolis,S.,2010.Thepost-adoptioneffectsoftheimplementationof InternationalFinancialReportingStandardsinGreece.Journalofinternational accounting, auditing and taxation. 19(1). pp.55-65. Atkinson,A.andMessy,F.A.,2011.Assessingfinancialliteracyin12countries:an OECD/INFE international pilot exercise. Journal of Pension Economics and Finance. 10(04). pp.657-665. Ageron, B., Gunasekaran, A. and Spalanzani, A., 2012. Sustainable supply management: An empirical study. International Journal of Production Economics. 140(1). pp.168-182. Jarvis, D.S., 2011. Race for the money: international financial centres in Asia. Journal of International Relations and Development, 14(1), pp.60-95.