Current Multinational Challenges and the Global Economy
I define globalization as producing where it is most cost-effective, selling where it is most profitable, and sourcing capital where it is cheapest, without worrying about national boundaries.
—Narayana Murthy, President and CEO, Infosys.
The subject of this book is the financial management of multinational enterprises (MNEs). MNEs are firms—both for profit companies and not-for-profit organizations—that have operations in more than one country, and conduct their business through foreign subsidiar- ies, branches, or joint ventures with host country firms.
MNEs are struggling to survive and prosper in a very different world than in the past. Today’s MNEs depend not only on the emerging markets for cheaper labor, raw materials, and outsourced manufacturing, but also increasingly on those same emerging markets for sales and profits. These markets—whether they are emerging, less developed, developing, or BRICs (Brazil, Russia, India, and China)—represent the majority of the earth’s population, and therefore, customers. And adding market complexity to this changing global landscape is the risky and challenging international macroeconomic environment, both from a long- term and short-term perspective, following the global financial crisis of 2007–2009. How to identify and navigate these risks is the focus of this book.