International Business Management

International Business ManagementUnit: VMKT-305-51International StrategyInternational Strategy is needed to make decisions regarding what products to produce, where to produce them and how to market them.MKT-305-52Strategy FormulationStrategy-formulation permits to step back from day to day activities and get a fresh perspective on the current and future direction of the company.MKT-305-53Strategy-Formulation Process

MKT-305-544International Organizational StructureOrganizational Structure is the way in which a company divides its objectives among separate units and coordinates activities among those units. MKT-305-55Alternative forms of OrganizationCentralizationDecentralizationMKT-305-56Types of Organizational StructuralInternational Division StructuralInternational Area StructuralGlobal Product StructuralGlobal Matrix StructuralMKT-305-57International Division Structure

MKT-305-588International Area Structure

MKT-305-599Global Product Structure

MKT-305-51010Global Matrix Structure

MKT-305-51111Analyzing International OpportunitiesScreening Potential Markets and Sites Identify basic appealAssess the national business environmentMeasure the market or site potentialSelect the market or siteMKT-305-512Conducting International ResearchDifficulties of Conducting International ResearchAvailability of DataComparability of dataCultural differences MKT-305-51313Sources of Secondary International Data International OrganizationsGovernment AgenciesIndustry and Trade AssociationsInternet

MKT-305-514Methods of Conducting Primary International Research Trade shows and Trade MissionsInterviews and Focus GroupsSurveys

MKT-305-515Selecting and Managing Entry Modes ExportingImportingCountertradeMKT-305-516ExportingSending goods or services to another country for saleWhy companies Export? Expand SalesDiversify SalesGain ExperienceMKT-305-517Exports to the United States

MKT-305-51818Developing an Export StrategyStep 1Identify a potential marketStep 2Match needs to abilitiesStep 3Initiate meetingsStep 4Commit resourcesMKT-305-51919Degree of Export InvolvementDirect exporting (sell to buyers)Sales representativeDistributorIndirect exporting (sell to intermediary)AgentExport management company (EMC)Export trading company (ETC)MKT-305-52020Avoiding Export BlundersConduct market researchObtain export adviceHire a freight forwarderMKT-305-52121Import An import is a good brought into a jurisdiction, especially across a national border, from an external source. An import in the receiving country is an export from the sending country. MKT-305-522Counter-tradePractice of selling goods or services that are paid for, in whole or in part, with other goods or services.Types: BarterCounter-purchaseOffsetSwitch TradingBuybackMKT-305-523Forms of CountertradeBarterDirect exchange without moneyCounterpurchaseSale to a nation in return for promise of future purchase from that nationOffset agreementOffset a hard-currency sale to a nation with future hard-currency purchaseSwitch tradingSale by a company of obligation to purchase from a countryBuybackExport of industrial equipment in return for products that the equipment producesMKT-305-52424Contractual Entry Modes LicensingFranchisingManagement ContractsTurnkey ProjectsMKT-305-525LicensingCompany owning intangible property (licensor) grants another firm (licensee) the right to use it for a specific timeAdvantagesFinance expansionReduce risksReduce counterfeitsUpgrade technologiesDisadvantagesRestrict licensors activitiesReduce global consistencyLend strategic propertyMKT-305-52626FranchisingCompany (franchiser) supplies another (franchisee) with intangible property over an extended periodAdvantagesLow cost and low riskRapid expansionLocal knowledgeDisadvantagesCumbersomeLost flexibilityMKT-305-52727Management ContractCompany supplies another with managerial expertise for a specific period of timeAdvantagesFew assets riskedNations finance projectsDevelops local workforceDisadvantagesPersonnel at riskCreate competitorMKT-305-52828Turnkey ProjectCompany designs, constructs and tests a production facility for a clientAdvantagesFirms specialize in competencyNations obtain infrastructureDisadvantagesPoliticized processCreate competitorMKT-305-52929Investment Entry Modes Wholly Owned subsidiaries Joint Ventures Strategic Alliances Selecting partners for cooperation

MKT-305-530Wholly Owned SubsidiaryFacility entirely owned and controlled by a single parent companyAdvantagesDay-to-day controlCoordinate subsidiariesDisadvantagesExpensiveHigh riskMKT-305-53131Joint VentureCompany created and jointly owned by two or more entities to achieve a common objectiveAdvantagesReduce risk levelPenetrate marketsAccess channelsDisadvantagesPartner conflictLose controlMKT-305-53232Joint Venture Configurations

MKT-305-53333Strategic AllianceEntities cooperate (but do not form a separate company) to achieve strategic goals of eachAdvantagesShare project costTap competitors strengthsGain channel accessDisadvantagesPartner conflictCreate competitorMKT-305-53434Selecting PartnersCommitmentTrustworthinessCultural knowledgeValuable contributionMKT-305-53535Strategic FactorsCultural environmentPolitical/Legal environmentsMarket sizeProduction and shipping costsInternational experienceMKT-305-53636Strategic Factors in Selecting an Entry Mode Cultural Environment Political and Legal Environment Market Size Production and Shipping costs International ExperienceMKT-305-537Developing and Marketing ProductsLearning objectives:Globalization and MarketingDeveloping Product StrategiesCreating Promotional StrategiesDesigning Distribution StrategiesDeveloping Pricing Strategies

MKT-305-538Globalization and MarketingStandardized product and promotionConsistent image / messageContain costsAdapted product and / or marketingRespond to local needsExploit unique imageMKT-305-53939Developing Product StrategiesCultural differencesLaws and regulationsNational imageCounterfeit goodsMKT-305-54040Creating Promotional StrategiesPush and Pull StrategiesInternational AdvertisingBlending Product and Promotional Strategies

MKT-305-541Designing Distribution StrategiesDesigning Distribution ChannelsInfluence of Product CharacteristicsSpecial Distribution Problems

MKT-305-542Developing Pricing StrategiesWorldwide PricingDual PricingFactors that Affect Pricing DecisionsMKT-305-543Managing International Operations

Learning Objectives:Product StrategyAcquiring Physical ResourcesKey Production ConcernsFinancing Business Operations

MKT-305-544Production StrategyCapacity PlanningFacilities Location PlanningProcess PlanningFacilities Layout PlanningMKT-305-545Acquiring Physical ResourcesMake or Buy DecisionRaw MaterialFixed Assets

MKT-305-546Key Production ConcernsQuality-improvement EffortsShipping and Inventory CostsReinvestment versus DivestmentMKT-305-547Financing Business OperationsBorrowingIssuing EquityInternal FundingCapital Structure

MKT-305-548Hiring and Managing EmployeesLearning Objectives:International Staffing PolicyRecruiting and Selecting Human ResourcesTraining and DevelopmentEmployee CompensationLabour Management Relations

MKT-305-549International Staffing PolicyEthnocentric StaffingPolycentric StaffingGeocentric Staffing

MKT-305-55050Ethnocentric StaffingIndividuals from home country manage operations abroadAdvantagesLocally qualified people not always availableTight control over subsidiariesRe-create local operations in home-office imageInterests of home office may be better protectedDisadvantagesRelocations are expensiveGive the business a foreign imageMKT-305-55151Polycentric StaffingIndividuals from host country manage operations abroadAdvantagesResponsibility on those knowing local businessAvoid expensive relocations from home nationDisadvantagesResemble a collection of national entitiesPotentially harm performanceMKT-305-55252Geocentric StaffingBest-qualified individuals, regardless of nationality, manage operations abroadAdvantagesManagers who can adjust anywhereBreak down nationalistic barriersDisadvantageThese individuals command high salariesMKT-305-55353Recruiting and Selecting Human ResourcesHuman Resource PlanningRecruiting Human ResourcesSelecting Human ResourcesCulture ShockReverse Culture Shock

MKT-305-55454Human Resource PlanningForecasting human resource needs and supplyPhase 1Take inventory of current human resourcesPhase 2Estimate firms future human resource needsPhase 3Develop plan to recruit and select people for vacant and anticipated new positionsMKT-305-55555Recruiting Human ResourcesProcess of identifying and attracting a qualified pool of applicants for vacant positionsCurrent employeesRecent college graduatesLocal managerial talentNonmanagerial workersMKT-305-55656Selecting Human ResourcesProcess of screening and hiring the best-qualified applicants with the greatest performance potentialAbility to bridge cultural differences is keyExpatriates must adapt to new ways of lifeCultural sensitivity raises odds for successMKT-305-55757Culture ShockPsychological process affecting people living abroad that is characterized by homesickness, irritability, confusion, aggravation, and depressionStage I: Thrilling experienceStage II: Downward slideStage III: Recovery beginsStage IV: Embrace local culture

MKT-305-55858Reverse Culture ShockReadapting to home cultureOnce-natural thoughts and feelings now strangeCan be more unsettling than culture shockSome companies reabsorb expatriates poorlyReducing its effectsHome-culture reorientation programsCareer-counseling sessionsCareer-development program before posting abroadMKT-305-55959MKT-305-5Training and DevelopmentMethods of Cultural TrainingCompiling a cultural profileNon-managerial Worker Training6060MKT-305-5Methods of Cultural Training

6161MKT-305-5Compiling a Cultural ProfileCultureGramsCountry Studies Area HandbooksBackground Notes6262MKT-305-5Non-Managerial Worker TrainingEmerging marketsBasic skills trainingApprenticeship training6363MKT-305-5Compensation of ManagersCost-of-living effectsBonus and tax incentivesCultural and social factors6464MKT-305-5Compensation of WorkersGreater cross-border investmentLabor mobility in some markets6565MKT-305-5Labor-Management RelationsPositive or negative relations between a companys management and its workersRooted in local cultureDirectly influences workers livesOften affected by political movements6666MKT-305-5Labor UnionsSelection of a locationPerformance in a marketEmerging marketsCodetermination in Germany6767MKT-305-5International Labor MovementsInternational activities of unions are making progress in improving treatment of workers and reducing child laborBut can be difficult:Events in distant lands difficult to comprehendWorkers in different nations often compete6868Home assignmentMKT-305-5What are the different sources of Financing Business Operations. Select any Multi-national company of your choice working in Saudi Arabia.69