What are at least four international financial management issues the combined company doing business internationally must address that would not be a concern of a company just doing business domestically? What are some ways in which an international company can protect itself from any adverse effects of or risks from the issues chosen in h

Some of the most important international financial management issues that is associated with conducting business internationally are:

Some of the risks which you can mention in your summary are:

Exchange Rate Risks: This is the most important element of international trade and finance as even small fluctuations in exchange rate risks can result in significant gains or loss for companies involved in foreign trade.

Some of the tools to mitigate these risks are the various financial instruments available in the market such as Derivatives instruments including futures, options (Calls/Puts), forward contracts and interest rate swaps.

For example, If Dell exports products to India and is expected to receive payments after six months, it can hedge against adverse fluctuations between the US dollar and Indian Rupee by entering into a forward contract for six month period, which would lock in the exchange rate price for the amount to be received by Dell.

Credit Risks: Another important risk which you can mention is the credit risk arising in international finance and trade due to lack of knowledge and credit knowledge about the other party in foreign country. Since it is difficult to obtain information about firms located in foreign countries due to lack of knowledge about credit bureaus in those countries, significant credit risks arise.

In order to mitigate this risk, Companies involved in international transactions should try to obtain as much information as possible via various independent agencies available to secure their money in international transactions.

Risks arising due to political instability or change in government: Such changes could adversely affect the laws with respect to foreign investment, import-export and repatriation, leading to delayed payments or even non payment. Further, lack of knowledge about complex international trade laws, paperwork, etc. can also cause significant delays in payments.

Such issues can be reduced by keeping a close track on the economic and political developments in the country and region. Further, one should also be careful during changes in governments which might adversely affect the prevalent laws. Further, one should also keep a close track of the introductions of new bills. laws or amendments related to the international trade in the other countries in which business is being conducted.

Another financial management issue in conducting business internationally is existence of a well established banking infrastructure in the country of operation. One must ensure that the primary bank of the company should have an extensive branch network in all the countries in which the company conducts operation and should have efficient and cost effective international cash management facilities for smooth movement of funds between different nations. It is advisable to conduct business with large international banks such as Citibank, HSBC, etc. which have branch network in almost all countries around the world.