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
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 Specialized
Investments
Lower Costs
Proprietary Product
Technology Protection
Offsets
Improved Scheduling
Strategic Alliance with
Suppliers
Global Supply Chain

It is the management of a network of
interconnected businesses involved in the
ultimate provision of product and service
packages required by end users.
Issues in global supply chain
Costs
 Exchange Rate
 Time
 Weather Conditions
 Customs
 Sourcing Plan
 Supplier Selections
 Additional considerations

Significance of Making
Lower Costs
 Facilitating specialized investments
 Proprietary product technology
production
 Improved scheduling

Significance of Buying
Strategic flexibility
 Lower cost
 offsets

Global supply chain management

Supply chain management deals with the
total flow of material from supplier
through the end user.
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 company’s
 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 Product
Platform Flexibility
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 4P’s ‘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
Investment decisions
Capital Budgeting
 Country Risk Analysis
 Sources of funds
 Foreign Exchange Risk

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
The risk that a business operations or an
investment’s 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.

Selection of
expatriate managers
There are four dimensions that seem to
success in a foreign posting:
 1. Self Orientation
 2. Others Orientation
 3. perceptual Ability
 4. Cultural Toughness
Selection of Expatriate managers
Identification of expatriate pool
Assessment of I.Q.
Determination of Learning styles
Determination of thinking styles
Determination of assignment task
Assessment of family characteristics
Development of Repatriation program
Selection of expatriate candidtes
Thank u