ABSTRACT
Even as statistics show that many international business (IB) graduates will end up working in customer-facing downstream functions, it is crucial that they (along with their upstream colleagues) develop a level of comfort with the main ways that financial considerations affect multinational decision-making, if only because of the recurring negotiations they can expect to have throughout their careers with their company’s treasury operatives. The chapter’s first section looks at foreign exchange, starting with an identification of the various origins of currency risk before moving on to review how such exposure can be managed: through natural hedging involving the wholesale modification of a company’s cross-border configuration, but more frequently (and less structurally), through financial hedging, usually with a bank counterpart. The second section studies international funding needs, beginning with an overview of external debt and equity sources before analysing internal cash movements between units in surplus and others in deficit. This lends itself to a final discussion of transfer price modalities, their performance assessment implications and, above all, their fiscal effects, a topic that returns the book’s focus to the interactions between corporate interests and the IB environment in general.
