International Business Finance

Many firms are interested in investing and seeking finance from foreign sources and exporting goods and services to foreign countries. Overseas involvement of firms is increasing, and this trend is expected to continue. This has been stimulated by a variety of forces. First is the change in the international monetary system from a fairly predictable system of exchange to a flexible and volatile system of exchange. Second is, emergence of new institutions and markets, particularly the Eurocurrency markets, and a greater need for international financial intermediation.

In 1971, the US dollar was unlinked from gold or allowed to "float". This brought about a dramatic change in the international monetary system. The system of fixed exchange rates where devaluations and revaluations occurred only very rarely, gave way to a system of floating exchange rates.

The distinguishing characteristics of international business finance are multiple currencies, differential taxation and barriers to financial flows. Of these, the multiple currency factor and the attendant issue of exchange rates has received considerable attention, particularly in recent years. An exchange rate represents the relationship between two currencies.

The procedure for evaluating a foreign investment in international business finance consists of identification of cash flows, choice of an appropriate discount rate and determination of net present value. Foreign investments generally involve higher risk, which arises from factor like changes in currency value, discriminatory treatment of a foreign company and threat of expropriation. Risk stemming from fluctuations in exchange rate looms constantly on the horizon of foreign investment. In addition, a foreign investment is subject to discriminatory treatment and selective control in various forms motivated mainly by political considerations. Finally, the threat of expropriation without adequate compensation may exist, particularly in countries where radical nationalistic sentiments are strong. In view of the higher risk associated with foreign investment, a firm contemplating foreign investment would naturally expect a higher rate of return.

Movies - The Politically Incorrect Films That Cannot Be Shot Today

As a movie fan I watch as many old films as new ones. Every week I watch at least 3 or 4 movies that were shot back in the 40s, 50s or the 60s. And it's amazing how politically incorrect quite a few of them are.

For example, I have watched both the EXODUS (1960) and MUNICH (2005) within the same week and it's amazing to see the ways in which international politics does influence both screenwriting and the directorial choices.

EXODUS is a flat out pro-Israeli story of the creation of the state of Israel. This almost 3.5 hours long epic film by Otto Preminger is certainly very educational, a fantastic entertainment and does not hide the fact that at least one Jewish underground group, the Irgun, employed terrorism as a technique. However, it is still largely a very sympathetic take on the formation of Israel. There is no question about that.

MUNICH (2005), on the other hand, is full of complicated moral judgments, self questioning and paranoia that is foreign to EXODUS. Although a strong supporter of Israel himself, director Steven Spielberg's approach definitely reflects the changes that our world went through since 1960.

The world of MUNICH is not the clean black-and-white world of the EXODUS. In MUNICH both sides kill for the causes they ardently believe in but what all that struggle does to a man's soul is not clear. The moral judgment is still out there left hanging in the balance of many hard questions.

Or take the SCARFACE (1983), the De Palma cult classic that launched Al Pacino's stellar movie career and still continues to influence the hip-hop culture and videos today.

Even back in 1983 this film was so controversial that it could not be shot in Miami. All the "Miami" scenes were actually shot in Los Angeles. The screenwriter Oliver Stone, knowing the kind of controversy it would create, did not first want to touch the subject but the $300,000 writing fee proved to be too much for a mortal to resist.

Tony Montana is not the only Cuban profile highlighted in SCARFACE. Montana's mother, for example, who totally disapproves his violent drug-dealer career, gives us the "other Cubans" also living in Miami. But due to its incredible violence (remember the chainsaw scene?) and the over-the-top portrayal of The-World-Is-Yours Montana by Al Pacino, most Cubans at the time felt that this movie disparaged the Cuban culture and community and did not want to have anything to do with it. Probably they still feel that way and I can easily understand why.

23 years later not only there would be even more outrage for a film like SCARFACE but probably there would not be even any financing to underwrite such a project, given the prominence and political clout of the American Hispanic community. I think SCARFACE is another politically incorrect film that cannot be produced today.

How about the GODFATHER series? I think the tremendous success of HBO's SOPRANOS has proven that the "Italian-American mafia stories" are still acceptable to a certain degree, especially if they have a modern touch to them (the mafia boss who visits a psychiatrist regularly and worries about his son's performance at school). What's next? A "green mafia boss" who drives a Toyota Prius and leads the crusade against corporations that dump their toxic waste into the ocean? (Hey, there's a million dollar plot for you!)

Another movie that cannot be shot today is THE GETAWAY (1972) starring Steve McQuinn and Ali MacGraw. If you've seen this one you'll remember the scene in which McQuinn actually whacks MacGraw right across the mouth and... she does not hit back! If this was a contemporary film shot in 2006, we would definitely see the female lead character getting back even with the impulsive macho lead. Our modern definition of love does not include an unanswered slap across the face anymore - unless perhaps it is a study in masochism.

Which reminds me of another controversial scene from an otherwise great movie - THE PHILADELPHIA STORY (1940). Remember the scene in which Cary Grant pushes Katherine Hepburn's face rudely and sends her reeling back to the floor (although we don't actually see it)? Try doing that in a modern rom-com and watch the howl of protest from all movie lovers and critics. It would be a sure-fire way to box office disaster.

Ugur Akinci, Ph.D. is a Creative Copywriter, Editor, an experienced and award-winning Technical Communicator specializing in fundraising packages, direct sales copy, web content, press releases, movie reviews and hi-tech documentation. He has worked as a Technical Writer for Fortune 100 companies for the last 7 years.

In addition to being an Ezine Articles Expert Author, he is also a Senior Member of the Society for Technical Communication (STC), and a Member of American Writers and Artists Institute (AWAI).

Good International Corporate Governance

IOD in London consulting on good corporate governance

It was announced recently that the Institute of Directors is to train Russian and Chinese businesses in good corporate governance. London is considered the centre of the trading world in financial terms and investors can invest in emerging and growing economies as well as the traditional markets.

China is establishing its corporate governance structures by following the Anglo-American model. However, the country does not yet have the necessary formal and informal institutions, or the financial infrastructure to make these structures work effectively. A culture of secrecy and sheer exploitation, that has existed for many years, has to turn into the openness and disclosure of everything to all comers who wish to invest, that is largely the trademark of US and the UK. It took the UK a few hundred years from the adventurers like Sir Walter Raleigh to John Castaing in 1698 in his Coffee House to 1801, when the first regulated exchange came into existence. The US managed it relatively quickly, simply because they had to, if they did not want their baby economy disintegrating into mush, as it did - almost-in the 1920's Depression.

With globalisation comes a whole new set of issues and problems apart from finding multilingual employees to fill all the new language jobs that will arise. We cannot change cultures and ways of working overnight- the Chinese civilisation is far older than ours. However many of these emerging markets want to 'join in' and benefit from the wealth of the global economy, so undoubtedly they will have some sort of baptism of fire and will quickly adopt many of the standards and ethics of those institutions like the London Stock Exchange and Wall Street. They have worked pretty well over the years and can limit any damage that can potentially arise with new markets.

Rather than employ a big stick to get everyone in line, a carrot in the form of education and persuasion will work better - hence the involvement of the IOD in the process. The IOD is an old and revered institution, a non party political organisation and no doubt will be able to provide an smooth passage to worldwide trading.