International Financial Management: A Case Study of Diageo Company

Diageo company

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The modern business environment has made it quite easy for businesses to expand their
operations as globalization has facilitated the world economies to be interconnected when it
comes exchange of goods and services across borders. Multinational companies which regularly
look towards aggressive expansion strategies to be successful and profitable in several locations
have access to a huge pool of resources but they also face many problems, the most typical being
of financial nature (Young and Legister, 2018). International financial management (IFM) is the
process of conducting financial management in an international environment related to foreign
factors such as currency and political situations. This report will highlight the challenges faced
by MNC's in a global environment along with discussion on major factors such as dividend
distribution policy, project appraisal methods and use of models like efficient market hypothesis.
This report will be executed in the organizational context of Diageo company which is a British
multinational beverage alcohol company which was founded in 1997 and is currently
headquartered in London while being a major producer of spirits and the second largest distiller
on the planet.
MAIN BODY
International financial management is a key concept in the routine working of
multinational companies like Diageo which operates in more than 180 countries as constantly
updating and regulating business variables in separate locations on a daily basis is a very tough
job. This field of financial management is quite different from domestic operations conducted by
Diageo in London as there are many new challenges present in the international arena such as
foreign exchange risks and problems related to political factors. Diageo is a major player in the
alcohol industry and it has diversified its operations in a major way as it has expanded into more
than 180 global markets and this makes it key for their managers to properly understand financial
management and its international aspects (Arnold and Lewis, 2019).
The element of currency is very important part of IFM and is also critical for the
operational working of Diageo as a major part of it's income comes from its non-domestic
markets and each and every country has its own economic conditions which governs and
influences the value of its currency and the ongoing exchange rate in the open international trade