Importance and Challenges of International Financial Management: A Case Study of Marks and Spencer

This article discusses the importance and challenges of international financial management with a case study of Marks and Spencer. It covers topics such as dividend policy, efficient market hypothesis, and methods for appraising project managers.

International
Financial
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION ...............................................................................................................................5
REFERNCES:..................................................................................................................................7
Books and Journals:....................................................................................................................7

INTRODUCTION
International financial management or international finance is simply the management of
finance in a global context which means making and trading finance through the exchange of
foreign currency. Activities involved in the international financial management aids the company
to associate with the global dealings with cross-borders business partners-suppliers, customers,
lenders and many more (Abdul‐Baki and Haniffa, 2020). This is also utilized by the non-profit
organisations and government organisations. The company which is selected to complete this
assignment is Marks and Spencer Company (M&S) which is multinational retailer in British
Administration. It is headquartered in London, England. It has allocated their business in selling
home products, clothing products and food products. It has 959 outlets throughout the UK. The
current assignment is consisting importance of international financial management, challenges
that are facing by the corporation in various financial markets with relevant and supportive
theories of international financial management.
MAIN BODY
As per the theories of management, " international financial management involves
various activities such as planning, organizing, controlling and directing of financial resources or
funds which are available to the organisations to work at international level. In simple words, it
is the management of finance in an international context.
International financial management is refers to a critical passage used by several MNCs
to channelizing the financial resources across the globe. This management supports the business
division to link with potential investors worldwide. It also helps Marks and Spencer to allocate
their funds smartly. Managing finance helps top address various financial disputes that may
increase among companies of different economies (Akgün and Karataş, 2020). these are
carefully taken by the global authorities such as World Bank, IMF and many more. It aids value
to the various monetary companies at global level to maintain the balance among them and
facilitate the corporations with required resources. It also helps to provide an overview to the
corporation to ascertain the inflation rate which is dogging an economy as well as the investing
power of the public. Moreover, it regulate the positional of local holds in the international
market.

There are various challenges that are facing by the Marks and Spencer in an international
market. As the company operates their activities in various countries with more than 900 outlets,
it has huge customer base in such countries with diversified demands of fashion. The company
sells their products from clothing to meals and so on through its television marketing. It also
likes to deliver food services through online method. It is seen that the brand has became the first
retailer in British Administration to generate pre-tax profit of over Euro 1billion. M&S faces a
tough competition in the marketplace due to which it faces several challenges and issues in
context of it. The fashion-retail industry is fast-changing sector and the brand is needed to hold
such position that can affect the customer base in shopping (Kaya, 2020). M&S exploited direct
expansion strategy which was not working well in some countries. Hence, to clarify this, the
company started exploiting franchise system which would develop value for the same in other
nations. The brand addressed several challenges such as technological issue which impose a
threat to the business working as new upgraded technologies followed by rivalries would attract
the shoppers to engage in brand and its offerings. The corporation requires to open up all the
information to the users of such information such as business entrepreneur. The brand is dealing
in global context and has investors world-wide which enables business to keep their needs in
mind such as dividends to investments. The competitors may mitigate the price of the items, the
brand should maintain the quality of the items to not decrease their marker share.
Dividend policy is meant by the amount of dividends paid out by the corporation to its
board members and frequency with which the dividends are carried out. When an organisation
generates profit, they required to make a decision on what and how it can allocate further. They
can either distribute in the form of dividends to the shareholders or retain profits on the balance
sheet in the corporation. This policy also supports in analysing the trends of financial profits,
earned profit, interest to their shareholders and so on (Le and Doan, 2020). The strategic
managers of the M&S Company have to make a smart decisions as the board members wants
return on their investment and company wants to generate profit.
It is found in a research that there will be no final dividend for the year 2019-20 and the
stakeholders does not expect to pay a dividend for the existing financial year, using the financial
resource instead for financial statements help in the region of Euro 340m (Mnif and Znazen,
2020). Due to Covid-19 pandemic, the cancellation of the final dividend of c.Euro130 m will
create further cash savings after the end of the year.

Efficient Market Hypothesis is the theory that explains how one factor of the market
clarifies all the information about the market. The factors or element can be price of the shares or
assets of the business. When the prices of share is greater then the company will be working
smoothly. EMH also defines that market is a very productive factor and does not need extra
income as the investments due to the no alterations in the prices. This hypothesis explains that
the price of the shares refers all the constants and facts. Under this theory, the share prices
changes constantly which makes it difficult for the traders as they are not likely to purchase those
shares which are based on the fluctuations. The market study of M&S is fundamental element for
many stakeholders of the corporation in making decisions of various organisations. The
management of the M&S tends to hold their share prices at a lesser rate of fluctuations as the
investors require to have guarantee about the returns (Oleghe, 2019). Therefore, EMH aid the
business owners in such way.
There are various methods that can be utilized by the M&S for appraising the project
managers of the business. Financial analysis, it is quite common but fundamental to the
business owner to consider the business finance as it aids them to invest and increase the raw
materials which would further converted into final products. The activity of M&S can be
represented as an efficient working as they match the product demands but yet fails to develop
desired level production due to the lack of raw materials and other variables. Market analysis,
the corporation requires to ascertain the market where company would sell its goods. They will
also ascertain the customers who will likely to buy the products. Therefore, working in such a
way would help in satisfying the wants. As the Marks and Spencer is a multinational business, it
is important to conduct market analysis (Treichl and Reinisch, 2019). Economic appraisal, it
requires raw materials, expected expenditures, income or sales. It is essential for the corporation
to be clear with the profit amount that would be earned by the business, which would in turn
realize the many economic factors such as purchases, expenses, sales and many more. In case of
M&S, they like to opt budgetary control which helps in the determination of the same.
CONCLUSION
It is concluded from the above discussion is that local financial markets are not similar at
all from international financial market. The global finance aids the larger or MNCs corporation
in accomplishing the required financial resources to grow, develop and sustain in the global
market. The essay has been taken into consideration of business of M&S which is multinational

fashion-retailer. The policies related with dividend have been highlighted with the value of the
same context to the wealth of the shareholders. Lastly, it also mentioned how well a manager
should be competent in order to increase the success of the business.

REFERNCES:
Books and Journals:
Abdul‐Baki, Z. and Haniffa, R., 2020. The impact of accounting reform on accounting quality:
Evidence from Nigeria. Journal of International Financial Management &
Accounting, 31(2), pp.169-190.
Akgün, A. I. and Karataş, A. M., 2020. Investigating the relationship between working capital
management and business performance: Evidence from the 2008 financial crisis of EU-
28. International Journal of Managerial Finance.
Kaya, A., 2020. BRICS and the international financial institutions: Voice and exit. In THE
POLITICAL ECONOMY OF THE BRICS COUNTRIES: Volume 2: BRICS and the
Global Economy (pp. 337-359).
Le, A. T. and Doan, A. T., 2020. Corruption and financial fragility of small and medium
enterprises: International evidence. Journal of Multinational Financial
Management, 57, p.100660.
Mnif, Y. and Znazen, O., 2020. Corporate governance and compliance with IFRS 7: The case of
financial institutions listed in Canada. Managerial Auditing Journal.
Oleghe, O., 2019. System dynamics analysis of supply chain financial management during
capacity expansion. Journal of Modelling in Management.
Treichl, C. and Reinisch, A., 2019. Domestic Jurisdiction over International Financial
Institutions for Injuries to Project-Affected Individuals: The Case of Jam v International
Finance Corporation. International Organizations Law Review, 16(1), pp.105-136.