In today’s age, nothing is restricted to a particular country or nation. Whether you are a small business owner or a brand name, you can advertise and deliver your products or services not only within your country but also in almost any part of the globe. Before we come to know effects of globalization on corporate finance, we need to understand the terms.
What is corporate finance: Corporate finance basically refers to the techniques, financial processes and strategies used by a business for acquiring, managing and utilizing capital assets. Some of the activities involved in the field of corporate finance include:
- Securing the investors
- Fundraising for beginning the ventures
- Merging with another company
- Orchestrating acquisitions
- Selling stocks of the company
Apart from all these, there are several other business activities that are carried out under corporate finance. For performing all these activities, several different financial professionals are required to take part including private investors, banks, venture capitalists, corporate attorneys, brokers and corporate finance experts.
What is globalization ?
Basically, globalization refers to merging together of all the worldwide markets on a single platform. Earlier, most of the businesses used to be localized to their isolated markets only. But, with advancements in the technological field, advent of Internet and improvements in the travel market all over the world, the businesses have now begun to cater to markets other than their own country’s local area. Now, a company in a particular country can fulfill order for customers in any part of the world, and deliver their products within a few days, instead of months that used to be the case only a few years back.
Effects of globalization on corporate finance
Because of globalization, isolated markets have almost been eliminated. As a result of this, there has been an increase in the competition, not only between companies within a country but between international companies. Undoubtedly, there has been an increase in corporate finance options also. Now, a particular company can utilize financial resources from international investors, and thus increase their scope manifolds. If a company wants to take best advantage of the international investment opportunities, then it would need to gain more knowledge about international finance options.
Therefore, it would not be wrong to say that increasing globalization of the market is affecting corporate finance sector to a great extent, not only for the benefit of the corporate entities but also for the customers and clients.