21 August 2015
Article Analysis; Week 3
Who are the authors and what are their educational and professional backgrounds?
Mihir A. Desai, the author of “The Finance Function in a Global Economy” received his bachelor degree in history and economics from Brown University, his MBA from Harvard Business School, and his Ph. D. in political economics from Harvard. Mr. Desai is currently a professor of law at Harvard Law School, and has more than enough knowledge to educate the masses on finance in global corporations.
What are the main points of the article?
The main point in the article “Finance Function in a Global Corporation” is presented as the opportunities that arise for global corporations to take advantage of financial gain, or tax protection, due to the changes in various markets involved in their business. CFO’s can create value by exploiting diverse conditions in various markets. They do this in three ways: 1. Financing in the internal capital market. 2. Managing risk Globally. 3. Global capital budgeting. Although each of these strategies can benefit global corporations, each has its downside that CFOs’ must be careful to avoid.
How is it relevant to the course topic?;
Each country has its own laws, rules, regulations etc. when it comes to allowing business to be conducted across its borders. Part of international business is knowing how to maneuver those obstacles, and sometimes how to benefit from them. When a corporation does business domestically, only one set of rules abides, but when that company goes global, the two nations rules must mesh in a way that is acceptable to both parties.
How it is relevant to the weekly theme and other reading assignments;
This week we read about exchange rates, monetary systems and all the different ways they fluctuate. All the reasons behind fluctuations in exchange rates (monetary policies, fiscal policies, the law of one, arbitrage, the fisher affect...