Going Global: The Importance of International Finance
An MBA gives degree holders a broad base of knowledge, enabling them to move into management and leadership positions and to understand how the different parts of a business interact with each other. One of the critical areas that MBA students explore is finance, and with so many businesses growing to serve customers in more than one country, international finance is of particular importance in today’s business environment.
At Concordia University Chicago, we understand the importance of being able to manage an international business successfully. Our MBA with a specialization in finance includes understanding the basics of international finance so that more opportunities are open to our graduates. The Bureau of Labor Statistics cites globalization as a major factor in projected job growth for business and financial occupations, particularly for accountants and auditors.
The issues affecting international businesses
Working in an international financial market, as opposed to the domestic financial market, requires a unique set of skills and knowledge. Businesses operating in more than one country face different financial constraints and have to reconcile currency exchange. Dealing with taxes, shipping goods, paying employees, and financial reporting are all different for international businesses, and those things can have a significant impact on a business’s budget. Additionally, fluctuating exchange rates that are affected by national and international politics can positively or negatively impact a business’ bottom line even though it’s something they have virtually no control over.
The laws governing investments, financial contracts, and taxes for international businesses also require careful consideration. Every country has its own set of unique rules and regulations that interact with and impact global companies. Businesses that don’t have a firm grasp on how international finance affects their company will encounter issues that can cost time, money, and the opportunity to do business with new nations.
How currency rates affect business
Some of the biggest challenges facing international businesses today revolve around currency exchange. Companies operating in multiple countries not only have to worry about the costs and profits associated with their goods or services in the US but also about the costs and profits in other countries, especially if they are operating in markets with weaker or more unpredictable currency than the US.
Leaders in international businesses need to be able to juggle operating costs and changes that will affect profit margins both in the US and abroad. Also, they need to understand how the economies of the other countries where they operate will ultimately affect their bottom line.
There are several strategies for addressing the issues of currency exchange. These strategies include paying suppliers in the same currency you’re selling in and agreeing on—and putting in writing—a price with international clients ahead of time.
A high-level leader in international business has to be able to determine what the best course of action is and make decisions about how their company will manage global financial decisions.
How international banking affects business
Banking is a complex issue for businesses regardless of where they operate. What banks will give them the best investment and interest rates? Where is their money safe, and how can they put it to the best use? What regulations require the business’s compliance?
These issues are more complicated when a business is operating internationally. Each country has its banking and investment regulations, and there are more variables to consider when trying to answer the questions asked above.
Realistically, international companies can’t avoid international banking. Therefore, leadership in those businesses needs to understand the ins and outs of global banking to efficiently manage the risk inherent in moving and storing money across the globe.
How to develop international financial knowledge
If you’re interested in being a competitive candidate in the world of finance or financial management, an MBA with a specialization in finance is a great way to set yourself apart.
Choosing a degree that incorporates learning about international finance will make you more attractive to potential employers. You’ll be able to address some of the biggest financial challenges international businesses are facing today while still understanding how all of the other parts of a company interact with and affect a business’s finances.
At Concordia University Chicago, our MBA with a specialization in finance allows working professionals to further their careers with an in-depth understanding of finance. Included in our program is a course on international finance that gives students a foundational knowledge of the global monetary system, foreign trade and investments, international markets and banking, and international taxation.
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