International Finance and Risk Management

Research Paper (undergraduate) from the year 2009 in the subject Business economics - Investment and Finance grade: 10 University of applied sciences Munich language: English abstract: The globalization enables companies a rapid expansion of their international businesses. In particular the former export champion Germany gets higher profits from increased worldwide business activities and sales opportunities. However while the international expansion reaches daily new records the risks for international business remain and should be considered seriously. The risks of international business are from different types and include economic political manufacturing currency and transport risks. For export transactions risk analysis of buyer and buyer's country plays an important role. Based on a thorough risk analysis terms of payment and terms of delivery in the contract of sale could be developed. Moreover hedging instruments like advance payment letter of credit payment guarantee from a bank government Euler Hermes coverage transport insurance and others arrangements could be used for international financing. The object of this study is to learn and understand about international finance and risk management through evaluation of risks and opportunities for international expansion of a medium sized company. Thereby country risks of Lebanon Russia and Turkey are appraised using SWOT analysis. Furthermore differences between political and commercial risks are studied. Various terms e.g. INCOTERMS Payment terms Collection and Letter of credit are explained and compared. In addition pros and cons of repaying of company's loan in Euro or Swiss Francs are assessed. Finally the possibilities of money transfer inside Europe and to the US are illustrated. Besides the theoretical reflection concrete recommendations are given for the company.