Samsung's International Financial Management: Analysis & Strategy

This essay provides an overview of international financial management, focusing on the challenges faced by Samsung Electronics as a multinational corporation. It discusses the complexities of managing finances in a global environment, including currency fluctuations, diverse taxation policies, and geopolitical factors. The essay also examines Samsung's dividend distribution policy, highlighting its transparency and impact on investor decisions. Furthermore, it explores the efficient market hypothesis and its relevance to Samsung's stock prices, as well as the various project appraisal techniques used by the company to ensure profitable investments and future growth. The report concludes that effective financial management is crucial for profitability and sustainability in the international market.

International Financial
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Financial management refers to the function in the organization through which the
business manages its profitability, cash, credit and expenses. It helps in ensuring that decisions
are well made in the business and the finances of the organization are well managed by the
finance manager of the company (Al Muhairi and Nobanee, 2019). International financial
management is one of those areas in the business where the managers face several types of
challenges in handling the finances. In this report, Samsung Electronics company is taken which
is a South Korea based multinational electronics corporation. This essay revolves around the
challenges faced by the corporation along with the dividend distribution policy used by the
company. Further the efficient market hypothesis and the management theories are discussed in
this essay.
MAIN BODY
International financial management refers to managing the finance in the international
business environment so that business can effectively continue their operations. International
financial activity must be carried put in a right manner as it ensures the sustainability of the
business in the environment. Samsung electronics company is an international company that
carries out their operations on a global scale. They need to well manage their funds and accounts
as most of their revenue is generated from outside of the home city. Finance is one of the most
essential area of the business which helps the company in ensuring that they generate good
revenue over the time.
The organization faces several types of international market as they start expanding their
operations in different countries. Further every country has different types of taxation policies
and financial structure and hence the business must adopt to the financial strategies in order to
effectively manage the revenue and profitability of the business (Bananuka and et. al., 2019).
Samsung is running their operations in around 74 countries and every one of these country has
different taxation and financial problems. There is a finance team for the company in every
country so that they can well manage the ways in which they can deal with the financial position
of the company in that particular country. One of the major challenge that Samsung faces in the
organization is in managing their international finance is because of the international currencies

as setting of prices of services and the products become difficult. Further the foreign politics,
relations and policy is another major criteria due to which the business faces challenges in the
international market. The international market is filled with a lot of complications and challenges
and the firms who are able to deal well with these challenges has the potential to sustain in the
environment.
Dividend is one of the major factor of the business on which the investors decides if they
want to invest in the stocks of the company or not. Dividend is given to the shareholders in
which the equity share holders get the preference of divided allotment. Dividend is considered as
a major source of return on the investment in the financial market. Samsung is one of those
company that keeps their dividend policy transparent so that the shareholders of the company are
well aware about the company (Grafova and et. al., 2017). They followed a three year of
dividend policy that was started from the year 2019 and ended in the year 2021. They started this
policy in their course by maintaining a payout ratio of over 25% until 2021. Further they
announced that dividend per share is KRW 2400 for the year 2019 , which makes the YoY of
almost 20% and the payout ratio of the company around 25.2% (Three-year Dividend Policy
(2019-2021), 2020).
Efficient market hypothesis is one of the major hypothesis that is used in the financial
economics which helps in setting the assets prices (Malo-Alain and et. al., 2021). The efficient
market hypothesis states that the stocks trade at the fair values on the exchanges which helps the
shareholders and investors of the company in purchasing the undervalued stocks and further
selling that stocks on an inflated prices. This is one of the component that is used in the market to
ensure that no bad practices are conducted in the financials of the respective company.
According to this theory the share prices of the company reflects all the required information and
this is majorly used by several investors who are looking for buying shares of the respective
company. Samsung is one of those company that holds a good market share in the electronics
industry and the information that comes out of the company regarding their operations directly
impact the stock prices. Though fundamental and technical analysis are one of the major factors
on which the investors invest their money but in some cases the information is so strong that it
neglects the other factors and the impact can be easily seen in the share price of the company.
Though Samsung electronics company has a strong efficiency which states that the past price
actions of the share, historical values, trends, fundamental analysis and technical analysis helps

the investor in predicting the future prices which makes it easy for investors to put their money
in the organization. But the overall market being efficient, there are certain times when
information and news plays out a major role in reflecting the value of the stocks.
Project appraisal refers to the position of the business in which the organization compares
two or more projects on several basis. These basis are dependent on the type of the project that
the company is going to introduce in their business operations (Mishra, 2018). Every
organization has their own project appraisal technique through which the business decides that
which project will be most profitable for the business and will further have more growth
prospects. Samsung Electronics company is a very big electronics company in terms of market
share, growth and brand value. They use different project appraisal technique in the course of the
business to ensure that they choose the best project in the organization which will help the
organization to grow in future. Samsung electronics first do an economic analysis of the projects
that they have shortlisted for the process, this analysis consists of analysing the requirements of
the raw material and capacity at which the organization can work for that particular project. In
this analysis, the business anticipates the sales structure along with profit and expenses of that
particular project.
The second type of analysis that is conducted by Samsung electronics company for the
project appraisal is the financial analysis in which the business evaluates the several aspects such
as the cost of the project, working capital requirement and further such financial aspects of the
different projects are compared (Moșteanu, 2019). Further the finance team of Samsung applies
the discounted technique in which the time value of the money is also included in order to get
more accuracy in choosing the project. The organization applies the net present value method
and the internal rate of return to see how the project will do few years down the line. The value
of the current investment in the project after few years down the line is calculated and compared.
This helps in choosing the project that has more future potential and that will give more return on
investment in the future (Jones, 2018). Few other methods are also used along with the above
stated methods such as life cycle segmentation analysis, technical feasibility and the competence
of the project. The factors such as availability of the required inputs, power and servicing
facilities is checked. The growth of the project, maturity and the saturation period of the project
is evaluated critically along with other projects. The company uses these methods and the project
that tops every one of these technique is chosen in the business.

CONCLUSION
From the above report it can be concluded that financial management is one of the most
essential area of the business which needs to be well manage in order to ensure profitability in
the business. While operating in an international market, the organization faces several
challenges while managing the finds and financial performance of the company. The dividend
policy of the company is a major aspect on which the investors decides their investment structure
in the company and hence the organization must be transparent about the policies that are going
to use in their upcoming financial years. Further the company uses different types of project
appraisal techniques in the business to ensure that the organization chooses the best project
which will help the company in increasing the growth prospects along with the profitability.
These appraisal methods are also helpful in choosing the project that has good capability of
giving high return on investment in the future.

REFERENCES
Books and Journals
Al Muhairi, M. and Nobanee, H., 2019. Sustainable financial management. Available at SSRN
3472417.
Bananuka, J., and et. al., 2019. Audit committee effectiveness, isomorphic forces, managerial
attitude and adoption of international financial reporting standards. Journal of
accounting in Emerging Economies.
Grafova, T.O., and et. al., 2017. Tools of financial management of reputational risks.
Jones, B., 2018. Central bank reserve management and international financial stability—some
post-crisis reflections. International Monetary Fund.
Malo-Alain, A., and et. al., 2021. Measuring the effect of international financial reporting
standards on quality of accounting performance and efficiency of investment
decisions. Accounting, 7(1), pp.249-256.
Mishra, S., 2018. Financial management and forecasting using business intelligence and big data
analytic tools. International Journal of Financial Engineering, 5(02), p.1850011.
Moșteanu, N.R., 2019. International Financial Markets face to face with Artificial Intelligence
and Digital Era. Theoretical & Applied Economics, 26(3).
Online
Three-year Dividend Policy (2019-2021). 2020. [Online] available through:
<https://www.samsungsds.com/en/investor/disc/content/1214370_4315.html>./