The Multinational Finance Function
THE MULTINATIONAL FINANCE FUNCTION X»J arlo De Benedetti took over as CEO of Olivetti in 1978, and turned the company, known primarily as a typewriter company, into the leading European-based office-automation company and one of the largest manufacturers of IBM-compatible computers. De Benedetti’s aggressive strategy thrust Olivetti into the international marketplace and forced management...
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OLIVETTI’S FOREIGN-EXCHANGE RISK-MANAGEMENT The Company When De Benedetti was offered the CEO spot at Olivetti in 1978, the company was losing $8 million a month, had a debt position in excess of liquid assets by more than $600 million, and also had a management team that was very discouraged. “We had only a few...
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ORGANIZATION OF THE FINANCE FUNCTION To optimize the flow of funds worldwide, the MNE must determine the proper parent-subsidiary relationship with respect to the finance function. There are three distinct patterns of parent-subsidiary relationships: (1) complete decentralization at the subsidiary level, (2) complete centralization at the parent level, and (3) varying degrees of centralization.4...
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INTERNAL SOURCES OF FUNDS If a firm wants to expand operations or needs additional working capital, it can look to outside sources or to sources within the firm. In the case of the MNE, the complexity of internal sources is magnified because of the number of related affiliates and the diversity of environments in...
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GLOBAL CASH MANAGEMENT The problems of managing cash globally are complex. International cash management is complicated by governmental restrictions on the flow of funds, differing rates of inflation, and changes in exchange rates. General Principles We can discuss some general principles of international cash management without reference to the risks of inflation and exchange-rate...
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