Effects of Globalization on Financial Decisions

Posted: September 10th, 2013

Effects of Globalization on Financial Decisions

Name:

Course:

Date:

Effects of Globalization on Financial Decisions

            The effects of globalization on financial decisions may be good or bad depending on the different perspectives. The decision for Berry’s Bugs Blasters to move to an international location has implications on its financial state of affairs. It is therefore important for the company to make the right decision. First, a move to offer services internationally may be very expensive for the company. This is because they have to think about the startup cost and the cost of sustaining he business incase of failure. In this regard, they may hold off on making such a move until they are financially stable.

A move to an international location may mean an increase in financial commitment for the organization. The implication, therefore, is that budget allocations will have to increase to sustain the satellite. As a result, the organization is obliged to determine the proper amount of funds to be used in a firm. It will also mean ensuring that the working capital of the company is sufficient for its operations. Financial decisions may also include determining cost effective measure for operations. For example how top get the necessary equipment for work without having to come back to the mother country as a measure of cutting cost.

The statements of accounts such as balance sheets will have to be unified with that of the international branch of the company. The company will have to consider how to calculate profits especially with the fluctuations in foreign currency. This may be difficult to do; therefore, the company is obliged to employ cost accounting standards that will enable them to take stock of their assets effectively and efficiently. Financial decisions may also require the company to determine the cost of advertising to ensure that the company’s presence is known in the host country. Therefore, globalization requires that a company restructure its financial structures to meet the demand of expanding onto a global platform.