A Sample Paper on McDonalds- Strategic Financial Management
In today’s world businesses are becoming increasingly global with their operations in a number of countries which requires global management. The global management is necessary in order to integrate the operations of all the countries to make business highly successful throughout the world. An important role played in the global management of business is that of financial manager. There are global financial managers for companies who have established their operations worldwide so that these managers can integrate the financial environments of all the countries in which a business is operating and then make financing decisions (Shapiro, 2008).
Similarly, there is also an international financial manager at McDonalds who is responsible for the global financial operations of the company so that he can make sound decisions after examining the financial opportunities and threats of different countries. Financial management holds an important place in the strategic planning of McDonalds since the organization is continually expanding in different parts of the world which makes budget analysis and cost management important. The company keeps on introducing new products into new markets after ensuring that the investment is financially feasible. Previously, McDonalds was only a production oriented company which didn’t give much importance to financial management but the international expansion drive has made the company realize the importance of global financial management. The job of a financial manager is to basically make financing decisions relating to how to finance the firm. He is not only responsible for making financial statements but also for determining the combination of debt and equity, how much to retain as investments and how much to pay out as dividends, analyzing the interest rates and risks in the economy and ensuring that the stockholders receive their required rate of return on the investment.
The international financial manager at McDonalds is responsible for examining the capital markets of different countries and then preparing feasibility reports for possible investment in a particular country with an estimate of the return on the investment. He is the person responsible for analyzing the financial environment of different countries and then making decisions regarding the establishment of operations in a particular country. He is also responsible for coming up with alternate financing strategies to finance growth even if a country has virtually no capital markets which is a complex job. Therefore, the international financial manager at McDonalds needs to have expertise and skills in making sound decisions which set up the path of growth and prosperity for the organization. Fiscal management at McDonalds doesn’t encompasses budget management and cost analysis only but also includes cash management, risk and insurance management, mergers and consolidations management, treasury management etc. An international financial manager at McDonalds needs to have leadership qualities and a vision through which he could always take a pro-active stance at times of risk. He needs to evaluate the risk foreseeable in the future with an alternative and then make decision regarding that financing alternative (Madura, 2006).
Financial managers need to have quality education and management skills so that they contribute their expertise to the progress of the organization. Financial managers need to have a bachelor’s degree or a master’s degree from a reputed institution but for a global financial manager it is preferred that they also have some experience so that they contribute that experience to the efficient financial management at McDonalds. The degree should be in accounting, business administration, economics, finance or risk management. He must be aware of capital budgeting methods, financial analysis methods and technology, strategic and tactical financing decisions. He also needs to have analytical skills, interpersonal skills, creative skills and problem-solving skills. Moreover, a global financial manager for McDonalds needs to have global knowledge about the capital markets in different countries so that he can make sound financing decisions (O’Brien, 1995).
The global financial manager at McDonalds is also responsible for managing the foreign risks that the firm faces. These risks include foreign debt risk, liquidity risk, foreign exchange rate risk etc. These risks can be efficiently management by taking a pro-active approach which requires the financial manager to have a breadth of vision so that he can predict the future with reasonable forecasting and estimations. For example, the country’s monetary and fiscal policy will provide information about the future interest rates in the economy which can be used as a tool for making capital budgeting decisions. The government and financial institutions of a country can also be studied to make assumptions about their attitude towards the foreign companies. The structure of short-term and long-term debt should be studied before tying up funds in any investment based on debt. Thus, the financial manager should use his analytical and pro-active skills to take sound decisions regarding the different foreign risks faced by the company (Choi & Powers, 2002).
Conclusively, global financial management acquires a strategic position in the company’s operations and its importance has been increased since the 1990’s when McDonalds started expanding its operations and introduced new products which increased the risk for the company. An efficient global financial manager has the ability to minimize the risk and make efficient budgeting and cost decisions.
Choi, J.J., & Powers, M.R. (2002). Global Risk Management: Financial, Operational, and Insurance Strategies. JAI Press.
Madura, J. (2006). International financial management, 8th ed. Cengage Learning.
O'Brien, T.J. (1995). Global Financial Management. Wiley.
Shapiro, A.C. (2008). Multinational Financial Management, Study Guide, 6th ed. Wiley.
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