Porsche, with over 12,000 employees in 2008, is the smallest German automobile builder, but the largest sports car specialist in the world. The company was founded in December 1930, when Dr. Ferdinand Porsche, with 12 close associates, established an office in Stuttgart for “design and consultation on engines and vehicles.” By 1932, Porsche’s design office had developed the torsion bar suspension element that is still in use in automobiles around the world. In 1934, the Porsche Company was commissioned by the manufacturers association to design “a utilitarian car of normal dimensions but relatively low weight, to be achieved by new basic measures.” Prototypes of this car were on the road by the end of 1935 but World War II postponed mass production of the vehicle. After the war, Volkswagen started production of the car, which came to be known as the VW Beetle. In 1972, when the 15,007,034th unit left Continue reading
International Business Basics
Business Organizations in a Global Context
In the recent past, businesses have seen a change in the economic setting. The domestic market is no longer able to meet the demands of the globalized people. Businesses have developed to ensure it thrives in the age of globalization. This development has made many domestic businesses become a household name worldwide. Besides globalization, an improved communication technology has also been a key factor in the success of these globally operating organizations. This allows efficient communication and swift access to global markets. However, in order to operate globally, an organization faces many challenges which include HR issues, financial problems, cultural differences and legal issues. In order to succeed, a multinational firm is expected to comply with the host country’s laws, regulations, policies, customer preferences and business practices. Management of operations globally across different cultures and varying market requirements is both challenging and full of opportunities. In the wake of increasing Continue reading
Different Challenges Faced by the Multinational Companies (MNC’s)
A multinational company (MNC) is an enterprise that manages production or delivers services in more than one country. There are some challenges faced by MNC’s that transact business in international markets which can hinder its competitiveness hence its controversies and these are as follows; Market Imperfections It may seem strange that a corporation has decided to do business in a different country, where it doesn’t know the laws, local customs or business practices of such a country is likely to face some challenges that can reduce the manager’s ability to forecast business conditions. The additional costs caused by the entrance in foreign markets are of less interest for the local enterprise. Firms can also in their own market be isolated from competition by transportation costs and other tariff and non-tariff barriers which can force them to competition and will reduce their profits. The firms can maximize their joint income by Continue reading
Transfer Pricing – Definition, Objectives and Principles
Meaning and Definition of Transfer Pricing Large organizations are divided into a number of divisions to facilitate managerial control. The problem of transfer pricing arises when one division of the organization transfers its output to another division as an input. A transfer price is the price one segment (sub unit, department, division etc.) of an organization charges for a product or service supplied to another segment of the same organization. The transfer from one segment to another is only an internal transfer and not a sale. Transfer pricing is needed to monitor the flow of goods and services among the divisions of a company and to facilitate divisional performance measurement. The main use of transfer pricing is to measure the notional sales of one division to another division. Thus the transfer prices used in the organization will have a significant effect on the performance evaluation of the various divisions. This Continue reading
Family Businesses: Growth Stages and Challenges Faced
Family business can be describe when business own by one or more families members directly or indirectly and have significant ownership and commitment toward the business well being. Family business can be consist of numerous combination of family members such as husband and wife, parents and child, extended family and also multiple generations such as grandfather, father and son. These family members also play roles as stakeholder, board members, working partners, adviser and employees for the company. Generally there are three different stages of family business had gone through in order for the business to growth from inception to maturity. Different skills are required in each stage and family issues might happen when the business moving from one stage to another stage. The first stage is called as start up stage where the business is still new and varies from 1st to 5th year after the company started to venture Continue reading
Importance of Understanding Culture in International Business
As described by the famous author Edgar Schein, the culture in reference to the corporate world is the different corporation’s learning that is developed by different discoveries, invention and the development for handling the internal and the external issue effectively. These learning and development should be successful enough to be passed and taught to the coming and joining employees for handling such affairs in the future. He also remarked the famous quote, “the culture has a same meaning to the group what personality has to with individual”. Also it is well understood in the current era of global market that a successful multinational company has to have an in-depth knowledge of the environment and the different cultural background of the different countries and regions in which it is operating to have a considerable amount of success. For any of the successful MNC, it is very essential to understand the different Continue reading