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International Controlling

Summary by MMeier

Summary by MMeier

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Kartei Details

Karten 31
Sprache English
Kategorie BWL
Stufe Universität
Erstellt / Aktualisiert 16.10.2013 / 06.11.2013
Lizenzierung Kein Urheberrechtsschutz (CC0)    (Daniel Leutgeb, Technikum Wien, MSc International Business and Engineering)
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Reasons why international controlling is needed (6 Points)

  1. Globalisation
  2. Opening of the iron curtain
  3. International / multinational enterprises
  4. Foreign direct investments
  5. International thinking of the management
  6. Support of international activities through controlling

Types of companies / degree of globalization (5)

  1. National (e.g. MAnner, Völkl, FC Bayern AG)
  2. International (operating in two countries) (e.g. Marker, Fischer Sports GmbH)
  3. Multinational (operating in various countries on one continent) (e.g. Mayr-Melnhof, Öst. Volksbanken AG)
  4. Transnational (various countries, two continents) (e.g. KTM, REWE, Julius Meinl)
  5. Global (Doppelmayr, Kapsch, Palfinger, Rosenberger, Wienerberg....)

Forms of foreign direct investments (FDI) (4 Types)

  1. Subsidiaries
  2. Mergers (e.g. Daimler-Chrysler, Exon-Mobile)
  3. Acquisition (e.g. Lufthansa – AUA)
  4. Joint Venture (e.g. Sony Ericsson, Shanghai Volkswagen Automotive Company, Ltd.)

Interference factors in international controlling (6 types)

  • Volatilities (quick changes) of currencies
  • Different country risks
  • Differences in legal framework
  • Ecological differences
  • Deliveries and services within the group
  • Cultural distances

Volatilities of currencies (5 points)

  • Budgets are prepared in the group/company currency (e.g. €; $)
  • When sent out to departments in foreign markets, those budgets get transformed into foreign currencies (e.g. Yen, Yuan, Can$)
  • With the end of the budgeting period, the numbers of the branches are re-converted into the group currency
  • Changes of the national currency’s value can influence the numbers and therefore distort the evaluation of the subsidiary’s performance
  • Therefore, numbers have to be adjusted to the volatility of the currencies to enable a serious controlling process

Foreign exchange market (4 points)

  • The buying and selling rate on the spotmarket (notes and coins / liquid money)
  • The buying and selling rate on the forward market/derivatives market (assets)
  • The rates which have to be used to transform the value of assets are the selling rates (liquidation of asset through selling). In order to transform liabilities, use the buying rates

Formular to recalculate fictitious profits

v := value stated in the incomestatement

p:= percentage of "fictitious profit"

real value = v - v * (p/(1-p))

Different country risks - inflation (4 Points)

  • National currencies can get devaluated in relation to the group currency
  • In case that the currency gets devaluated in the period between investments (materials, production costs etc.) and the sale of goods, inflation influences the financial result of the product.
  • This is called fictitious profits
  • Those fictitious profits have to be eliminated from the results.