Lecture on international logistics - role of the IMF, UN, World Bank and other associated non-profit organizations in facilitating international business; the forces and factors impacting int'l
Lecture on international logistics - role of the IMF, UN, World Bank and other associated non-profit organizations in facilitating international business; the forces and factors impacting int'l business and the staffing challenges.
IBRD – focuses on middle income and creditworthy poor countriesIDA – focuses on the poorest countries of the worldHeadquarters in Washington DC with 100+ country offices and >10,000 employeesEstablished during WWII at Bretton Woods, New Hampshire – initially helped rebuild Europe after the war. Loaned $250 million to France in 1947 for post-war reconstruction.
Started out as the League of Nations after WWI – 42 countries wanted to preserve peace/defend other members from aggression – promotion international cooperation in economic and social affairsUN - started on October 24th1945 (after WWII) recognizing that the League of Nations failed because they had no military power and members were not willing to use sanctions– originally 51 member statesHeadquartered in New York City but the land and buildings are international territory (own flag, own post office, own postage stamps)6 official languages (Arabic, Chinese, English, French, Russian and Spanish)
ethnicomm inc. is a provider of a wide array of sales, marketing and web strategy consulting services that enable successful market entry or growth for Canadian, American, European and Asian-based small-medium sized businesses.
International Logistics Facilitating International Business
International Monetary System Impossible Triangle how exchange rates, balance of payments and macroeconomic management are managed and adjusted globally system is necessary to define a common standard of value for the world's currencies exchange-rate stability free movement of capital independentmonetary policies only two can be chosen
International Monetary Fund (IMF) promoting international monetary cooperation facilitating the expansion and balanced growth of international trade promoting exchange stability assisting in the establishment of a multilateral system of payments making its resources available (under adequate safeguards) to members experiencing balance of payments difficulties 185 member countries
IMF criticism – East Asian nations IMF accused of turning the 1997 Asian financial situation into a crisis – in Indonesia, they closed the bank owned by the president’s brother Can’t trust the president’s brother? Who can you trust? Collapsed the banking system US gov’t bailing out AIG and Citigroup is contrary to the IMF approach If country wants to borrow >20% of it’s quota, it has to follow IMF conditions
The World Bank makes loans to developing countries for development programs with the stated goal of reducing poverty made up of two unique development institutions owned by member countries—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) must be member of the IMF Source: web.worldbank.org
United Nations 192 members “…keep peace throughout the world …develop friendly relations between nations …work together to help people live better lives, eliminate poverty, disease and illiteracy in the world, environmental destruction and encourage respect for each other's rights and freedoms …be a centre for helping nations achieve these aims” Source: un.org
NGOs Nongovernmental, nonprofit voluntary organizations private institutions independent of the government international or regional Doctors without Borders Red Cross
International Logistics When introducing the X-Box gaming console, Microsoft had to decide if it should manufacture the console or outsource manufacturing to a 3rd party Microsoft primarily creates software and lacked the manufacturing capabilities to make the X-Box Microsoft decided to outsource production to Flextronics… Flextronics had been pursuing an industrial park strategy so that it could control its supply chain Flextronics had a global presence Flextronics could use Web-based information systems to share information with Microsoft Microsoft trusted Flextronics Source: The McGraw-Hill Companies, Inc
The Impact of International Logistics Total Landed Cost Logistical Costs In North America, logistical costs are 10% to 30% of the total landed cost of an international order. Would you expect this to be the same in Asia? Europe? Explain.
A reduction is supply cost directly increases gross profit Profit $0.10 Profit $0.13 Overhead Overhead $0.15 $0.15 Labour Labour $0.15 $0.15 Inputsupplies Inputsupplies $0.30 $0.30 Logistics Logistics $0.30 $0.27 $0.30 Make more money without increasing sales!
Factors Necessary for the Use of Logistics as a Competitive Tool Close collaboration with suppliers and customers to develop a JIT system - maintain manufacturing cost at globally competitive rates. Technologically advanced information processing and communication exchange capabilities. An integrated business infrastructure.
New Dimensions of International Logistics Basic differences between domestic and international distance variation entry regulations different transportation modes
New Dimensions of International Logistics Country-specific differences Transportation systems and intermediaries vary. Reliability of carriers may be different. Computation of freight rates may be different.
Competing Forces that can Impact International Business Global Market Forces Integrated, Synchronized Supply Chain. TechnologicalForces Economic Forces Global Cost Forces
Factors Impacting International Business Sociocultural Physical / Environmental International Staffing Political Labour
Physical/Environmental Will the current world political environment force changes to how business is conducted? How will consumers, suppliers, manufacturers/producers be linked in future?
Sociocultural Do you understand the cultural make-up of the country in which you seek to operate in? How are business relationships formed in different countries? Is it the same everywhere? http://www.youtube.com/watch?v=m4TvwE_CSHI
Sociocultural – other factors to consider business protocols social & business customs language factors
Political Are you aware of the politics and their implications in any of the nations in which you intend to have a presence? Iranian traders in Dubai are affected by Bush urging Gulf allies to “confront” Iran (see notes) Source: wikinews.org
Political To be successful, one must have appropriate knowledge and involvement in the political, media, and industry leadership of the country or regions of operations. How can political issues impact global logistics? Source: moonbattery.com
Discussion – Implications on International Logistics
Labour Need to understand local labour laws or policies and ensure they are followed.
International Staffing - Discussion What obstacles can you expect when staffing an international business? Europe Asia Australia Africa