Unit IV

PRODUCTION,
MARKETING, FINANCIAL
& HUMAN RESOURCE
MANAGEMENT OF
GLOBAL BUSINESS
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
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
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
Global location decision

Country Factors
Technology Factors
Product Factors
Government Policies
Organizational Issues
Business Strategy Issues
Inventory Management Policies
 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
Scales of production

Continuous production
EX: FMCG products
Batch Production
EX: Furniture, Auto Ancillary
Single Item Production
EX: Designers, Bicycle mfg
Cost of Production
Labour Costs
Capital costs and depreciation
Cost of materials
Make or buy
 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
 Advantages of
Make or buy decision

Advantages Advantages
Lower cost Strategic flexibility
Facilitating Lower Costs
Specialized
Investments
Proprietary Product Offsets
Technology
Protection
Improved Scheduling Strategic Alliance
with Suppliers
Significance of Making
Lower Costs
Facilitating specialized
investments
Proprietary product technology
production
Improved scheduling
Significance of Buying
Strategicflexibility
Lower cost
offsets
 Global supply chain
management
Supply chain management deals
with the total flow of material
from supplier through the end
user.
Issues in global supply chain

Costs
Exchange Rate
Time
Weather Conditions
Customs
Sourcing Plan
Supplier Selections
Additional considerations
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
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
 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
Marketing strategy

The International Marketing

Strategies should depends on the
companys
Marketing Orientation
Production orientation
Sales orientation
Customer orientation
Strategic marketing orientation
Societal marketing orientation
Targeting and segmenting markets
 Marketing orientations

There are 5 common orientation

Production orientation
Sales orientation
Customer Orientation
Strategic Marketing orientation
Societal Marketing orientation
 Target Markets

3 Segmentations
By Country
By Global Segment
By Multiple Criteria
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.
Factors contributing to product
development
Changing customer preferences
Technological changes
International laws and Govt.
Policies
Product Life Cycle
 Challenges in
product development

Key Factors
Designing a Specific Platform Flexibility
Product

Design for the Market Complexity Management

Variant Design Customer Involvement

Build Anywhere Outsourcing

Design Everywhere Product Development

Development Speed
Pricing Strategies
Skimming Strategy
Penetration Pricing Strategy
Differential pricing Strategy
Geographic pricing Strategy
Product line pricing Strategy
 Pricing Strategies

Factors affecting International

pricing Strategies
Govt Interventions
Market Diversity
Export price Escalation
Fixed vs Variable Pricing
Relations with Suppliers
 Channel Management

It is one of 4Ps 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
International Financial
Management
It means many financing and investment
decisions involve economies and firms
outside a firms 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.
Scope of IFM
Foreign exchange market
Currency convertibility
International monetary system
Balance of Payments
International financial market
Investment decisions
CapitalBudgeting
Country Risk Analysis
Sources of funds
Foreign Exchange Risk
Country Risk Analysis
Political
Risks
Economic Risks
Competitive Risks
Operational Risks
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
 Exchange rate risk

Therisk that a business operations or an

investments 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.
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.
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.
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.
Selection of Expatriate
managers
Factors in selection of expatriate
managers
Technical competence / ability
Adaptiveness
Leadership ability
Cross cultural suitability
Family requirements
MNE requirements
Cultural requirements
language
Compensation
Thank u