Describe the period of Globalization in international economic Essay

Describe the period of Globalization in international economic management - Essay Example International Monetary System was formed to overcome the imbalances in economies arising from globalization. The new system took into account the international trade imbalances, investment, finance, and exchange markets. The international monetary system also took into account the imbalances in international payments which as a result of globalization were settled through financing, changing domestic economic policies, rationing exchange controls, and changes in currency exchange rate. The management of International Monetary System was difficult because it needed full international cooperation which was politically impossible. For the management of the system, the economies agreed on using a set of policies. For instance, mix of adjustment mechanisms were developed such as floating exchange rates or linking currencies to dollar under fixed exchange rate. Many political and economic crises arose in the midst of globalization. Reformation of International Monetary System was required. Many countries relaxed controls, opened domestic markets and removed regulatory barriers. As a result, financial markets became integrated into one global market influencing floating exchange rate system making it the central part of the new monetary system. Such an exchange rate could provide effective account adjustments by increasing exports and lowering imports and thus creating a trade balance. Many new treaties and pacts were made within countries as well as amongst others. For instance, the United States-Japan Enhanced Initiative on Deregulation and Competition Policy for Framework was signed to reduce trade deficits between US and Japan. The European Union introduced a single currency known as Euro under the Economic and Monetary Union had significant impact on the currency exchange transactions. In addition, almost all countries set up private banks, made the more central banks more independent, liberalized their financial systems and also joined the IMF

Financial Decision Making Essay Example | Topics and Well Written Essays - 1500 words

Financial Decision Making - Essay Example Therefore, it won't be an exaggeration to say that finance is the lifeblood of all enterprises. This is particularly so when economics are undergoing structural changes and economic reforms are in the making to introduce greater elements of competitive forces. In a competitive environment managers are faced with a challenge to compete for resources and to find a better utilization of such resources. Finance is a specialized subject in itself but it draws heavily on other related functions like marketing, production, personnel, purchase etc. Drury (2004, p.5) states "Management accounting is concerned with the provision of information to people within the organization to help them make better decisions and improve the efficiency and effectiveness of existing operations" (Lev, 2001) stated that existing financial accounting standards sharply distinguish between physical and intangible assets. While physical assets (e.g., property, plant, and equipment) are valued on the balance sheet at the price paid to obtain them, less accumulated depreciation, intangible "assets" are expensed as incurred. Accounting is therefore considered an integral part of the knowledge management within an organization. ... What mix of equity and debt to use How much financial risk to take Making a calculated financial decision makes a big difference between a prosperous and growing business and a liability. The prime function of a management executive in a business organization is decision-making and forward planning. Decision making means the process of selecting one action from two or more alternative courses of action whereas forward planning involves means establishing plans for the future. The question of choice arises because resources such as capital, land, labor and management are limited and can be employed in alternative uses. The manager is thus supposed to analyze the past data, current information and the estimates about future predicted as best as possible. This application of economic theory to business management is known as managerial economics. This is micro-economic in character as the unit of study is the company. The following aspects are said to be generally under the ambit of managerial economics; Demand analysis and forecasting Cost and production analysis Pricing decisions, policies and practices Profit management Capital management. Often a distinction is made between management accounting and financial accounting. Management accounting measures and reports financial and non-financial information that helps managers make decisions to fulfill the goals of the organization. Its focus is on internal reporting. On the other hand financial accounting is considered to have a focus on reporting to external parties. It measures and records business transactions and provides financial statements that are based on the 'Generally Accepted Accounting Principles (GAAP)'. Therefore managers are responsible for the financial statements