Global Financial Management

GLOBAL FINANCIAL MANAGEMENT

INTRODUCTION

The management of the global finance of the business or organization in order to achieve global financial objectives

Key objectives of management create wealth for the business, generate cash and letting adequate return on investment

Elements of the process of global financial management

Global financial planning

It is the process of achieving your life set up goals through proper management of your finances. This life goal can include saving for your children's education their food, clothing or buying a home or planning for retirement. Thus it is the process of containing specific steps that help you take a ride and tells you where you stand financially, and taking this kind of ride you can actually work out and check yourself that where are you now, what you may need in the future, and what you must do to reach your goals.

http://www.pppnetwork.com/?view=Financial_Planning&mid=1563

Global Financial Control

Financial control or the internal control or management control is the organization, policies and procedures that help the government to ensure that their programme achieve their intended result that the resources which are chosen are used to deliver these programme are consistent with the stated aims and objectives of the organization concerned and are been protected from waste, mismanagement and fraud and truthful and exact information is obtained.

Global financial decision making

Global financial decision making can be defined as the decision that involved in doing some following steps

  • Knowing the correct amount of funds to put into the firm

  • Selection of projects and capital expenses analysis

  • Increasing funds on the most wanted terms possible

  • Managing the working capital like accounts and inventory receivable.

http://www.answers.com/topic/financial-decisions

EVALUATE THE CONTRIBUTION OF CHARLES H DOW, NIKOLAI KONDRATIEFF, AND JOSEPH SCHUMPETER TO GLOBAL MARKET THEORY

CHARLES H DOW

Even though Charles Dow was never the executive officer of the company nor he set up his own empire but he still he was been called the giant of global financial managements and his name is forever linked with the world of finance. His main aim was to bring in knowledge to the people the strength and the wonders of finance in day to day life.

Bringing Wall Street to Main Street

In 1882, Charles Dow and on of his fellow reporter Edward Jones decided that he should start their own company names as Dow and Jones Company. Their first publications were established in 1883 and that was Afternoon Letter. It had a two page summary on the financial news, which included movement of certain stock prices, and which was laid out in such a manner that it was very easy to understand. At that time when Charles had started his publications many reporters that time were taking bribes to pump a stock in their articles. But Dow established a reputation for unbiased analysis. But the most important thing was that, he wrote suck kind of analysis that majority if people were been able to understand what he had written.

The method that Dow Jones Industrial Average known as the (DJIA) was appeared in this small news letter as the few major average were in the shipping and rail industry. He also wanted to include a market average in his readership which gave a conclusion of whether the market was promoting, thus it gave some clarity and an overall view otherwise it could lose its total focus on the raise and the fall of a great number of stocks. In 1896, DJIA was the first to calculate by using the main 12 stocks in the market. The starting was a simple calculated sum and divides the given yielded 40.49 as the first published average.

Dow Theory

Dow believed that full revelation of the company can become the key in knowing, that in which company he could invest in, he began supervise or notice the patterns or the methods involving in his market averages. The market averages in which he evolved had undergone various types of measurable trends which gave Dow the hope of fundamental market rules which could be discriminating such kinds of trends. Dow studied carefully his trends as well as his averages carefully and then formulated a theory which was later on called as the Dow Theory. The theory normally states that the market goes into its upward trend if one of its averages advances above a previous important high, it is then similarly followed by similar advance in other, or you can it is regarded as an indicator of a download trend. But even though Dow never formally explained this theory and it then to it was very well known by others, some of them understood partially, after his death in 1902.

From all this contribution we can conclude about Charles Dow that he showed us the foundations of our modern financial marketplace, and even though DJIA may lose its empire as the most important index in an increasingly global future, the value of its creator contribution won't bemoved by time.

http://www.investopedia.com/articles/financial-theory/08/charles-dow.asp

Kondratieff cycle and Joseph Schumpeter

It was Kondratieff who suggested that the international economy is characterized by 50-year price cycles. The cycle was specially used and generally used to support the general understanding that there are 50-year cycles in economic activity.

http://www.encyclopedia.com/doc/1O18-Kondratieffcycle.html

Joseph Schumpeter

Joseph Schumpeter had popularized the term “creative destruction” in economics, Joseph had a vast theory in his arising History of Economic Analysis, Joseph judgments had got some of his peculiarity and sometimes he acted as a soldier. Joseph believed that the famous 18th century economist was Adam Smith and Turgot as like him many of them also consider the same thing but overall he thought that Leon walrus was the greatest of all economists, because he thought the theory of other economist were like inadequate attempts to catch some particular aspects of walrasian truth. With all other economist where Joseph had an argument or whether he had critized them but all them had a belief that one could easily trace policy conclusions straight away from a highly theoretical model. He described the introduction of innovation into economics activity as the destruction of existing arrangements. He perceived economics as a human science.

www.absoluteastronomy.com/topics/Joseph_Schumpeter

http://books.global-investor.com/books/98915/Joseph-A.-Schumpeter/History-of-Economic-Analysis/

http://www.palgrave.com/Products/title.aspx?pid=269716

ARE GLOBAL FINANCIAL MARKETS EFFICIENT EVALUATING THE EFFICENT MARKETS HYPOTHESIS (EMH) SHOULD THE EMH BE SCRAPPED?

GLOBAL FINANCIAL MARKET EFFICIENCY

Financial market is the market for the exchange of capital and credit, which includes money markets and capital markets. Money market is used for the short-term debt securities, which is normally safe and highly liquidable investment. While capital market is the market is the market used for long-term debt or traded securities.

Market efficiency refers to a term, in which the current prices reflect all the publicly available security information. The main idea is to underlying market efficiency that competition will always drive all the information into the price quickly.

In the financial market any of the investor who is willing to pay maximum price for the financial asset is actually the current value for the future cash payments that gives discount at a higher rate to compensate them for uncertainty in the cash flow projections. Therefore investors are actually giving out information as a commodity in the financial markets cash flows and information about the degree of certainty.

Efficient market oozes out whenever any new information is quickly incorporated into the price so that the price itself becomes the information. Therefore the current gives back all available information. This shows that the current market price in any of the financial market could be the best-unbiased value for the investment.

THE THEORY RELATING TO EFFICIENT MARKET HYPOTHESIS (EMH)

The efficient market hypothesis has been considered as one of the chief foundation on which the modern financial economics has been constructed. Fame was the first to define the term efficient market in the year 1965 in which all the securities policies were fully reflected on the given information. The market became more efficient on the given new information and the market prices to this new information should be instantaneous and unbiased. It is the idea that the information is efficiently and quickly incorporated into its asset price at any time or at any point, so that the old information cannot be used for the future price movements. Mainly, three versions of EMH are being differentiated and it depends on the level of information that is available.

The weak form of EMH shows us that the current asset price effect the past prices and volume information. The information contained in the past line of prices of a security is fully reflected in the current market price of that security. It has got the weak name because name because the security prices are easily operated and are easily accessible which are in pieces of information. This indicates that that no one will not be able to outperform the existing market something that everyone knows about it. Even though there are still some numbers of financial researches which are studying the series of past stock prices and trading volume data in getting profit. This is also called technical analysis that is brought by EMH as useless for guessing future price changes.

The semi strong form of EMH tells us that all information that is avaibiable publicly is similar and already incorporated into asset prices. The public information has not only given the information of past prices but also the data reported in company's financial statements, but the company's tell us about economic factors and some other related factors. This overall shows that the company's financial statements are of no use or help in forecasting the future price movements and securing investment returns.

The strong form of EMH tells us that private information or inside information is quickly incorporated by market prices and therefore it cannot be used to cut abnormal trading profits. Therefore all the information whether it is public or private is fully shown in current security market price. This shows that even the company's inside management are not been able to make profits from the information which they hold inside. They are not able to gain profits from information such as take over decision that was been made just few minutes ago. The reasons behind to support the market because it anticipates in an future development and unbiased manner and therefore the information has incorporated and evaluated into market price in an objective and informative way than it is inside.

ASSESSMENT FROM THE ABOVE STUDIES ABOUT FINANCIAL STUDIES, TO WHICH EXTENT THEY ARE EFFICIENT AND SHOULD EMH, BE SCRAPPED?

From the studies i.e. from weak, semi-strong, and strong we have seen that no initiative has been taken into account for the exceptional errors. No test is not been free from errors, nevertheless it has got some errors, while studying this studies or while making a research the researchers had to know the degree of error so that they can rely on the findings of the research. Therefore we have reached to the final conclusion that the study on semi-strong form tells us that the financial market under research is more efficient. Therefore from my point of view EMH should not be scraped.

COULD THE RECENT CRISIS GLOBAL FINANCIAL MARKETS HAVE BEEN PRIDICATED OR PREVENTED

GLOBAL FINANCIAL CRISIS

According to Douglas Alexander who is the secretary of state of the international development, checks at the impact that the global financial crisis is affected on world's poor and the necessity to maintain the commitment for increasing overseas aid.

He has told us about the financial crisis that it has been mostly effected the countries from where it began. But after all we can see the worst effect of the global crisis or it is being felt in world's poorest countries, as now what has happened that today's financial crisis has become human crisis

Emerging and developing countries were thought that they were insulated with the harassment in the financial markets but the factors that occurred in last September and the fall down of the trade and the investment around the world made a way and leveled the crisis of confidence from the west to the range of the globe.

The people who are poor in the least developed countries, it's like a curse to them because from first they were living in crisis and above they have crisis upon crisis. Overall people are getting poorer and poorer. Last year increased oil prices have put around 25 million people into more poverty; increased food prices have 130 million in poverty, whereas about 40 million children suffered from malnutrition.

Due to crisis the private capital which was been flowing to developing countries are likely to fall from $1 trillion two years ago to less than $200 billion this year. Similarly last year, some 450 infrastructure projects in the continent of Africa were cancelled due to which thousands of people were unemployed and had lost their jobs

The countries which were more depended on exports are being hit the hardest, with trade shrinking for the first time in more than 25 years. In china there is 17% reduction in exports from a year ago, plus 26 millions jobs lost. Whereas the clothing export in Cambodia have jumped from $250 million a month to $100 million last year, and in January with 50,000 people most of them were women who lost their jobs due to crisis.

The human crisis in this global recession is real, and it is very serious issue. It has been said that by the end of the next year we can see 90 million more people living in poverty. It has been estimated by the World Bank that nearly 400,000 more babies will die each year between now and 2015 due to global crisis. This is the truth because there are some reports that parents in Kinshasa, which is the capital of democratic republic of Congo, are already going through crisis and they are feeding only half of the family one day and the half the other day.

We should have the moral responsibilities to help our global neighbours from these sufferings. But on this ever-shrinking planet we cannot run from each other therefore we must find a better way and should always live together.

The main reasons for this crisis have been started from the attacks of 11 September 2001, from deforestation in Indonesia to the dangers of pandemic flu. Even the terrorist network Asia of south Asia to the drug dealers of West Africa. None of these problems are restricted to the countries from which they have originated, and povertiness in today's world is not only an injustice, but an imbalance in the global order but must be realized by for all four Futures.

Therefore some people debate that charity not only starts but finishes at home. And Mr. Alexander feels that this aid is not charity. It is our both moral obligation and it is in the British interest.

https://www.financialworld.co.uk/Archive/2009/2009_07jul/International/Alexander%20Douglas/16985.cfm

Conclusion

From the theory of Charles H Dow, Kondratieff and Joseph Schumpeter we can conclude that these people showed us the foundations of our modern financial marketplace, and even though these people were not any big entrepreneur they played an important index in an increasingly global future, the value of its creator contribution won't be removed by time.

Also from the studies of efficiency of EMH we conclude that the semi-strong study shows that the form of financial market under its research is more efficient

And finally from the study of financial Crisis we can conclude that today's world is not only facing financial crisis but there are actually facing HUMAN CRISIS

 

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