BA7401 - International Business management - Unit 4 - Anna university syllabus

1. Unit – IV
PRODUCTION, MARKETING,
FINANCIAL & HUMAN
RESOURCE MANAGEMENT
OF GLOBAL BUSINESS

2. INTRODUCTION – GLOBAL
PRODUCTION
 Global production provides an unparalleled
opportunity for companies to grow into new
markets while at the same time boosting their
competitiveness.
 Reasons
◦ Import restrictions
◦ Raw materials
◦ Inputs
◦ Human resource
◦ Labor laws
◦ Logistics management
◦ Export
◦ Different consumers

3. Location of production
Meaning – location of production
 It determines the cost of marketing and
availability of the products to the
international customers.
Meaning – production location
 Production location is concerned with the
establishment of manufacturing facility at
a particular place or location

4. Factors behind the selection of a
location
1.Size 8. Logistics
2. Raw Material 9. Economies of scale
3. Currency 10. Low – cost site
4. Political 11. Quality
5. Cultural 12. Subsidiaries
6. Market 13.Customers
7.labour

5. Global location decision
 Country Factors
 Technology Factors
 Product Factors
 Government Policies
 Organizational Issues
 Business Strategy Issues
 Inventory Management Policies

6. Scale of operations
The term scale of production refers to the quantity
or numbers of a product made.
Its decisions will be influenced by the:
 Volume or quantities of products required
 Types of materials used to make the products
 Type of product being manufactured
Input factors:
 Land , labour, capital, resources, and
technology…

7. Scales of production
Continuous production
 EX: FMCG products
Batch Production
 EX: Furniture, Auto Ancillary
Single Item Production
 EX: Designers, Bicycle mfg

8. Cost of Production
 Labour Costs
 Capital costs and depreciation
 Cost of materials

9. Make or buy

10. Make or buy decisions
 The make or buy decisions is the act of
making a strategic choice between
producing an item internally (in house) or
buying it externally (from an outside
supplier).
 The buy side of the decision also is referred
to as outsourcing
 Outsourcing

11. Advantages of
Make or buy decision
Advantages Advantages
Lower cost Strategic flexibility
Facilitating Specialized
Investments
Lower Costs
Proprietary Product
Technology Protection
Offsets
Improved Scheduling Strategic Alliance with
Suppliers

12. Significance of Making
 Lower Costs
 Facilitating specialized investments
 Proprietary product technology
production
 Improved scheduling

13. Significance of Buying
 Strategic flexibility
 Lower cost
 offsets

14. Global supply chain
management
 Supply chain management deals with
the total flow of material from supplier
through the end user.

15. Issues in global supply chain
 Costs
 Exchange Rate
 Time
 Weather Conditions
 Customs
 Sourcing Plan
 Supplier Selections
 Additional considerations

16. Global supply chain business
process
Customer relationship management
Customer Service Management
Demand Management
Order fulfillment
Manufacturing Flow Management
procurement
Product Development and Commercialization
Returns Management

17. Quality considerations
 Quality defined as meeting or exceeding
the expectations of the customer.
 It is the conformance to specifications,
value, fitness for use, support and
psychological impressions

18. Globalization of markets -
Reasons
 Mass Production
 Risk reduction
 Increase Profits
 Adverse Conditions of home country
 To cater the demand of the foreign
market
 Unfulfilled needs of the customers by
the domestic companies

19. Marketing strategy
The International Marketing Strategies
should depends on the company’s
 Marketing Orientation
◦ Production orientation
◦ Sales orientation
◦ Customer orientation
◦ Strategic marketing orientation
◦ Societal marketing orientation
 Targeting and segmenting markets

20. Marketing orientations
There are 5 common orientation
 Production orientation
 Sales orientation
 Customer Orientation
 Strategic Marketing orientation
 Societal Marketing orientation

21. Target Markets
3 Segmentations
 By Country
 By Global Segment
 By Multiple Criteria

22. Product Development
 Product development is the process of
finding out the possibility of producing
a product.
 It involves the adding, dropping, and
modification of item specifications in
the product line for a given period of
time.

23. Factors contributing to product
development
 Changing customer preferences
 Technological changes
 International laws and Govt. Policies
 Product Life Cycle

24. Challenges in
product development
Key Factors
Designing a Specific Product Platform Flexibility
Design for the Market Complexity Management
Variant Design Customer Involvement
Build Anywhere Outsourcing
Design Everywhere Product Development
Development Speed

25. Pricing Strategies
 Skimming Strategy
 Penetration Pricing Strategy
 Differential pricing Strategy
 Geographic pricing Strategy
 Product line pricing Strategy

26. Pricing Strategies
Factors affecting International pricing
Strategies
 Govt Interventions
 Market Diversity
 Export price Escalation
 Fixed vs Variable Pricing
 Relations with Suppliers

27. Channel Management
It is one of 4P’s ‘Place’
The term channel management has two
meanings
 1. The Physical movement of goods from
the place of manufacture to a location in or
close to points of purchase
 2. A marketing channel can be seen as a
concatenation of individuals and
organizations involved in the process of
making goods or services available for use
or consumption

28. International Financial
Management
 It means many financing and investment
decisions involve economies and firms
outside a firm’s own domestic borders either
directly, through international transactions or
indirectly, through the effects of international
issues on the domestic economy.
 International finance is a section of financial
economics that deals with the monetary
interactions that occur between two or more
countries.

29. Scope of IFM
 Foreign exchange market
 Currency convertibility
 International monetary system
 Balance of Payments
 International financial market

30. Investment decisions
 Capital Budgeting
 Country Risk Analysis
 Sources of funds
 Foreign Exchange Risk

31. Country Risk Analysis
 Political Risks
 Economic Risks
 Competitive Risks
 Operational Risks

32. Sources of Funds
 Internal Sources
◦ Funds from the parent (Equity / Loans)
◦ Funds provided by operations
◦ Loans from sister subsidiaries
◦ Global cash management
◦ Multilateral netting
 External Sources
◦ Debt financing
◦ Venture capital
◦ Equity financing
◦ Factoring
◦ Forfeiting
◦ Equipment leasing

33. Exchange rate risk
 The risk that a business operations or an
investment’s value will be affected by
changes in exchange rates.
 Foreign exchange risk is the level of
uncertainty that a company must manage
for changes in foreign exchange rates that
will adversely affect the money the
company receives for goods and services
over a period of time.

34. International HRM
 HRM is concerned with the most
effective use of people to achieve
organizational and individual goals.
 International Human resource
management is the process of
procuring allocating and effectively
utilizing the human resources in a
multinational corporation.

35. Objectives of IHRM
 To reduce the risk of international human
resource
 To avoid cultural risks
 To avoid regional differences
 To manage diversified human capital
 To remain competitive throughout the
world
 Maintaining local responsiveness
 To be capable of transferring learning
across globally dispersed units.

36. Expatriate
 A person who has citizenship in at least
one country, but who is living in another
country for his/her career.
 An employee who is sent to live abroad
for a defined time period. An expatriate is
expected to relocate abroad, with or
without family, for as short a period as
six months to a year; typical expat
assignments, however, are from two to
five years long.

37. Selection of Expatriate managers
Identification of expatriate pool
Assessment of I.Q.
Determination of Learning styles
Determination of thinking styles
Determination of assignment task
Assessment of family characteristics
Development of Repatriation program
Selection of expatriate candidates

38. Factors in selection of expatriate
managers
 Technical competence / ability
 Adaptiveness
 Leadership ability
 Cross – cultural suitability
 Family requirements
 MNE requirements
 Cultural requirements
 language

39. Compensation
Types
Home Based
Method
Head
Quarters
Based Method
Host – Based
Method

40. Thank u