Did you know 102-year-old American General Motors sells more cars and trucks in Asia than anywhere else in the world? This has allowed the company to add workers at its Michigan plant to meet the expanded international market for its products. General Motors, like many US-based firms, found itself in a saturated domestic market with fierce competition and made the decision to expand its market overseas, a move that has resulted in increased revenues.
While becoming a multinational corporation (MNC) has many benefits beyond increased revenues, such as low-cost resources and a competitive advantage, there are unique issues faced by MNCs that domestic-only firms avoid. Acclimatization to foreign cultures and politics are common constraints, as are management control concerns between subsidiaries and the home office. Operating in other countries and selling to foreign markets carries specific financial concerns such as currency exchange and sources of investment funds for international operations.
To be a successful global firm, an organization needs to understand the goals and constraints of an MNC, particularly the financial issues involved in the foreign venture. If the firm does not have in-depth knowledge in dealing with international markets, it might miss threats or opportunities in the globalized business world, and there is a possibility the company’s expansion strategy in the foreign market may fail, causing large losses. As a consultant, financial analyst, or manager in charge of foreign expansion or advising on foreign venture, it is crucial to have a thorough knowledge of what it takes to operate and manage a MNC.
Is it a wise move for your company to expand to foreign markets and go global, or should your company stay home? The Accenture Academy course, Defining Multinational Financial Management will help you answer that question. Through the eyes of a prospective MNC, this course explores the challenge of aligning organizational goals and management across an MNC and identifies the unique financial management issues facing MNCs.