international business management

1. Unit- 4

2. Reasons why businesses might want to locate overseas.
1. To avoid import tariffs
(Bahamas, Monaco)
2. The Labour Force
3. Legislation & Bureaucracy

3. Political stability Market Opportunities
Transport cost Financial incentives
Globalization Corporate image

4. Production location
Production location is
concerned with the
establishment of
manufacturing facility
at a particular place or
location

5. Factors affecting the choice of location
Communication Suppliers
Labour
Customer market & Population
Government assistance

6. Choosing a location for your business
Cost
Competitor location
Convenience
Safety
Prestige

7. Source Of Competitive Advantage
• Choosing The Region
• Choosing The State
• Closeness To Markets
• Nearness" To Needed Raw Materials
• Wage Rates
• Labor Supply Needs
• Business Climate
• Tax Rates
• Internet Access
• Local Laws And Regulations
• Political Barriers

8. Marketing channel

9. Channels of international distribution
Firm (china)
Merchant
Agent (china) intermediary ( china)
1 5
2 6 4 3
Agent (India) Merchant
intermediary
(India)
7
End user (Indians)

10. Challenges in channel management:
• Handling relationships Report preparation
Set partner level
• Product management and order
approval
Training, support and marketing
materials
• Payment processing

11. 1) Stable, predictable (7) Reliable 'infrastructure
macroeconomic policy.
(2) An effective and honest (8) Availability of high-quality factors of
government. production.
(9) A strong local currency.
(3) A large and growing market.
(10) The ability to remit profits, dividends
(4) Freedom of activity in the market. and interest.
(5) Minimal government regulation.
(11) A favorable tax climate.
(6) Property rights at protection.
(12) Freedom to operate between markets

12. Make or Buy Decisions
Make or Buy Decisions It is the
act of making a strategic choice
between producing an item internally
(in-house) or buying it externally
(from an outside supplier)

13. Reasons for making

14. Reason for Buying

16. Process of make or Buy
Preparation
Data Collection
Data analysis
Feedback

17. New Product Development Strategy

18. Develop marketing strategy
Make marketing mix decisions
Estimate the demand curve
Calculate cost
Understand environmental factors
Set pricing objectives
Determine pricing

19. Methods of pricing
Mark up price Target return price
Selling Price = Fixed Cost per what level of demand there is for the
unit+ Variable Cost per unit product
+Desired Profit Margin
Going rate pricing
Value based pricing the business charges the average
price of what its competitors are
charging product

20. Sources of finance

21. Foreign exchange market
Where the currency of
one country is
exchanged for other
country

22. Functions of foreign market
• Transfer of purchasing power
• Provision for credit
• Minimizing foreign exchange rates

23. Structure of foreign exchange banks
Foreign exchange banks Retail clients
Local Bank
Foreign
Major Banks & Inter Foreign exchange
exchange broker
Banks Broker
Local Banks
Retail Clients

24. Challenges in product development
• Challenges in attracting capital
• Competing against big brands
• Customization for early customer
acquisitions
• Determining the right business model
• Domestic customers are slow to adopt
new stuff
• Entrepreneur’s lack of marketing skills
• Identifying the right customer
• Inability to scale
• Lack of global product marketing talent
• Lack of maturity in product development
skills
• No R&D at university level
• Open source
• Patience and sustainability
• Risk aversion and social influences for safe
jobs
• Unclear pricing strategy

25. Factors affecting Global Compensation and Benefits

26. expatriate managers
• Expatriates citizens of one
country who are working in
another country.

27. Selection of expatriate managers
Personality Attributes
Openness to experience: This personality variable has
recurring positive links with successful performance in an
international environment
Extroversion: is more important in some cultures than
others
Low anxiety/ neuroticism: As individuals move through
the process of relocation and culture shock they
experience high levels of stress

28. Competencies
Relational abilities:
Restricting social interaction has been shown
to reinforce feelings of alienation in a culture
Cultural sensitivity:
suggests that effective multi-cultural
performance abroad is achieved by being able
to switch effectively into which-ever host
culture one is in.

29. Linguistic ability:
it may be related to the ability to respond to
culture influences
Ability to handle stress:
A worrying amount of stress outcomes result
from working abroad, providing conclusive
evidence for the inclusion of an ability to
handle stress
Career Motivated :
People who believe strongly that successful
international experience is vital to their long-
term career success will be more inspired to
make it work.

30. Training for Expatriate Managers
• Cultural
– Seeks to foster an appreciation of the host-country’s
culture (include spouse and family)
• Language
– Improves expatriate’s effectiveness and rapport with
local employees
– Improves expatriate’s ability to relate to foreign
culture
– Fosters a better image of the firm
• Practical
– Helps expatriate and family adjust to the daily life of
the host country
– Uses expatriate community as and informative and
supportive network
•

31. Training and development
T& D Training: Giving an required
skills for success in foreign
assignment
Development: Long-term effort
to develop a manager’s skills
over their career with the firm
achieved with numerous
foreign postings

32. • Training and development cultural awareness
Pre-departure training
Preliminary visits
Language training
International English
Corporate language
International ‘cadre

33. International training and development

34. Compensation
something (such as
money) given or
received as payment

35. Compensation
• Monetary Factors:
Base Salary
• Base salary is the greatest point of
flexibility. Companies set a maximum
that’s not a maximum, to be hones
Assignment Premium
• Incentive: persuade acceptance of
international assignments
• Environmental or hardship premiums
• Mobility premium
Tax Considerations
– Tax burden depends on location of assignment

37. • Payroll
– Consider exchange rates and inflation
• Non-monetary Factors
• Family Considerations
• Medical Coverage
• Housing and utilities allowance
• Education
• Travel Expenses
• Repatriation
• Hardship bonus (often between 10% -
30% of base income)