Notes on "The Finance Function in a Global Corporation" (Mihir A. Desai)

The Finance Function in a Global Corporation

Desai, Mihir A.

HBS Centennial Issue Harvard Business Review 86, nos. 7/8 (July–August 2008)

Capital budgeting decisions and valuation must reflect not only divisional differences but also the complications introduced by currency, tax, and country risks.

Saddling the managers of subsidiaries with debt can cloud their profit performance, affecting how they are perceived within the larger organization and thereby limiting their professional opportunities.

The existence of an internal capital market broadens a firm's risk-management options.

Many multinationals let local subsidiaries and regions manage their risks separately.

Companies often limit- in arbitrary and puzzling ways - their considerable expertise in managing currency exposures.

Creating a Global finance function:

• Establish the appropriate geographic locus of decision making
• Create a professional finance staff that rotates globally
• Codify priorities and practices that can be adapted to local conditions