International Finance and Financial Management - Essay Example

Word Count 004 The on International Finance and Financial Management has allowed me to look at factors affecting macroeconomic dynamics ina more critical and analytical level. I have come to appreciate that there are many factors that have to be considered for any single corporation and this is without considering external factors that similarly influence their growth. What I have to appreciate more is the reality of the interconnectivity of businesses, the government, and of the people that make up the entire economic system. The blogs that I wrote taught me to look at various issues and scrutinize the different sides that concern compelling issues in international finance and in the government’s policies that dictate the flow of the country’s sustained fiscal soundness. On the first web blog entry dated October 8th (see Appendix A), I discussed four challenges that Alibaba is going to face. First, the mobile industry is changing swiftly, second, the shareholder issues, third, China’s unpredictable economic growth, and finally, withstanding growth in spite of its relatively advanced existence in the market. Further, a great problem that the Chinese company is facing is the massive product counterfeiting that can be bought on other web stores. This is an interesting topic where a Chinese company has announced its initial public offering (IPO) in the New York Stock Exchange at such a vast amount. This shows the substantial move towards capitalist activities in the region. Alibaba is a company worth taking note of as it continues to show a strong presence in a niche market of online mobile accessory shops. The Alibaba IPO in terms of its confidence in publicly listing the corporation provides a new trend in Chinese business enterprise. Similarly, the market interaction in the United Kingdom is a main concern that determines the domestic financial system. Oil is an important product that determines the course of the economy since practically all industries utilize it. The recent decline in oil prices, as macroeconomic predictors indicate is due to the decrease in the demand in the world market. Other than the supply and demand interaction, there are other factors considered as discussed in the November 16 web log titled Oil Prices Likely to Fall Further (see Appendix D). While the fall in oil prices is seen as a positive event for most consumers, it shows a downward trend on production which affects the country’s macroeconomic perspective. This most probably translates to a decrease in demand which affects many businesses that also redounds to labor. But on an earlier blog post where I wrote about the October fall in retail sales (see Appendix B), I surmised that the weather is a major factor in why shoppers are not going out and that even the projected move to purchase winter clothes does not compel them to brave the weather. But economists are hopeful that the next few months will post retail sales growth to recover from the slight losses suffered in the retail industry. This is important in anticipation of improved economic sustainability since retail is a major industry of the country. Overall, the UK’s economy is determined largely by the policies that the government will be able to accurately apply in contemplation of aspects that determine its progress. A major problem for the Britain is the large deficit that it continues to struggle with. The data provided by the Office for National Statistics (ONS) contained in the December 7 blog entry (see Appendix E) contains the trend of borrowing that the country is facing. A compelling statistic revealed that the Gross Domestic Product continues to plummet between the years 2010 to 2014. Another major problem is on the tax revenues that are also falling. This means that with slow government revenue in the form of taxation, the country will not be able to adequately meet the demands required for effective governance as well as eliminate its budget deficits. This will translate to borrowing more money from other resources in able to finance the entire fiscal year. Evidently, this will only worsen the budget deficit of the country. Tax losses will have to be addressed but with the current low inflation, the government will not be able to sustain high tax rates to the detriment of individual economic growth, especially for corporations. Without the ability to increase tax rates, debt is sure to rise. This ballooning deficit problem was discussed in the November 4 blog titled Does the UK have a £70bn deficit problem? (see Appendix C). Released by the ONS, UK’s budget deficit for the previous year was a staggering £72.4bn, the highest for any major industrialised economy. While imports continue to rise especially for oil, trade deficits rise. Even the financial services see slow returns. In order to reduce the deficit, drastic moves should be enforced to cut back on spending in areas such as government expenditures and social welfare aids. Core projects of the government that aims to somehow alleviate the upper class and lower class gap in society. To date, health, education and social welfare continue to take the biggest pieces in the government’s budget. International economic factors greatly affect domestic growth and it is not the government alone that plays a vital role for a viable financing system. The relationship of businesses, whether big or small, sound government economic policies, and the people’s productivity contribute to the macro and microeconomic details that compose the whole of UK’s’ economy. The relationship among many factors determines the fiscal adequacy of companies and the direction that they should take while the perceptive decision-making of the government, considering the interrelations of economies, add up to a better grasp of International Finance. A dynamic international development must start locally for persistent advancement together with corporate governance. The budget deficit, inflation problems and taxation losses are aspects that analysts must take into account for a proper projection of where the country is heading. These are just some of the things that I have learned in the module that I could apply in analysing the financial market. Appendix A Appendix B Appendix C Appendix D Appendix E Read More