With large foreign operations that are not dominated by a single country or area including the headquarters, but well spread out geographically Multinational Enterprises use geographic divisions. Global Geographic (Region/Nation/Area) Division Structure is more common to European MNEs, such as Nestle. Nestle uses this structure because no one region dominates its operations. Merits of Global Geographic Division Structure The structure is useful when maximum economies in production can be gained on a regional rather than a global basis because of market size or the production technologies for the industry. A global geographic structure puts managers closer to the scene of operations than are managers at central headquarters. Regional managers are well positioned to be responsive to local situations such as the needs of regional customers and to fluctuations in resources. Thus regional divisions are often able to find solutions to region-specific problems and to use available resources more effectively than Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Fixed Exchange Rates, 1945-1973
Fixed Exchange Rates, 1945-1973 The currency arrangement negotiated at Bretton Woods and monitored by the IMF worked fairly well during the post-World War II period of reconstruction and rapid growth in world trade. However, widely diverging national monetary and fiscal policies, differential rates of inflation, and various unexpected external shocks eventually resulted in the system‘s demise. The U.S. dollar was the main reserve currency held by central banks and was the key to the web of exchange rate values. Unfortunately, the United States ran persistent and growing deficits on its balance of payments. A heavy capital outflow of dollars was required to finance these deficits and to meet the growing demand for dollars from investors and businesses. Eventually, the heavy overhang of dollars held abroad resulted in a lack of confidence in the ability of the United States to meet its commitment to convert dollars to gold. On August 15, Continue reading
Regulatory Documents used in Export/Import Documentation
Regulatory documents are otherwise called as Official documents, because most of these documents are required for compliance of regulations of either the exporter’s country or the importer’s country. 1. Export Declaration Forms As per Indian Exchange Control Regulations, details of all goods (except certain exempted categories) by whatever means exported from India, are required to be declared on certain specified forms. These forms are known as Export Declaration Forms. These forms are evolved by the Reserve Bank of India to ensure that the value of all the goods exported from India is declared and the foreign exchange due there is repatriated to India. In export trade, the goods leave under the supervision of one agency (Customs/Post Office) and proceeds thereof are received through another agency (banks, etc.) These export declaration forms are so designed that they can have an effective check over the cycle of movement of goods out of Continue reading
Global Strategic Rivalry Theory of International Trade
The Global Strategic Rivalry Theory of international trade was developed in the 1980s by such economists as Paul Krugman and Kevin Lancaster as a means to ‘examine the impact on trade flows arising from global strategic rivalry between Multi-National Corporations.’ It explores the notion that in order to stay viable, firms should exploit their competitive advantage globally and try to keep it sustainable. According to this view, firms struggle to develop some sustainable competitive advantage, which they can then exploit to dominate the global marketplace. Like Linder’s approach, global strategic rivalry theory predicts that intraindustry trade will be commonplace. It focuses, however, on strategic decisions that firms adopt as they compete internationally. These decisions affect both international trade and international investment. Companies such as Caterpillar and Komatsu, Unilever and Protect & Gamble, and Toyota and Ford continually play cat-mouse games with one another on a global basis as they Continue reading
Advantages and Disadvantages of Franchising Business
Franchising is a style of business which has a lot of different but same branches throughout the world. Franchising business is an arrangement for a continuing relationship in which one party – a franchisor provides an accredited opportunity to another party – the franchisee to do business using its trade name and offers assistance in organizing, training, producing, marketing and managing a good or service in adherence to certain specifications, in return for monetary exchange. The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and in turn gains instant name and recognition, tried and tested products, standard infrastructural design and interior decor, detailed techniques in running and promoting the business, training of employees and on-going help in promoting and improving the product The advantages of franchising from the franchisee’s point of view are myriad. First, the franchisee can benefit from the widely recognized Continue reading
Inventory Management Practices in Multinational Corporations
Inventory in the form of raw materials, work in process or finished goods is held; to facilitate the production process by both ensuring that supplies are at hand when needed and allowing a more even rate of production and to make certain that goods are available for delivery at the time of sale. Although, conceptually, the inventory management problems faced by multinational firms are not unique, they may be exaggerated in the case of foreign operations. For instance, MNCs typically find it more difficult to control their overseas inventory and realize inventory turnover objectives. There are a variety of reasons: long and variable transit times if ocean transportation is used, lengthy customs proceedings, dock strikes, import controls, higher duties, supply disruption, and anticipated changes in currency values. Advanced Inventory Purchases In many developing countries, forward contracts for foreign currency are limited in availability or the nonexistent. In addition, restrictions often Continue reading