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Managing International Operations

Managing International Operations. Identify the types of planning involved in production strategy List the reasons for making or buying inputs Explain several issues that are of special concern in production strategy Discuss problems of international debt financing

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Managing International Operations

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  1. Managing International Operations

  2. Identify the types of planning involved in production strategy List the reasons for making or buying inputs Explain several issues that are of special concern in production strategy Discuss problems of international debt financing Identify each source of equity financing available to international companies Chapter Preview International Business 3e

  3. Essential to achieving objectives Reflects overall firm strategy Low-cost leadership Differentiation Focus Production Strategy International Business 3e

  4. Assessing a company’s ability to produce enough output to satisfy market demand Number of work shifts Number of employees Size of facilities Subcontracting Capacity Planning International Business 3e

  5. Selecting the location for production facilities Location economies Economic benefits derived from locating production activities in optimal locations Centralized Centralized production tends to be well-suited to global strategy Decentralized Decentralized production tends to be well-suited to multinational strategy Facilities Location Planning International Business 3e

  6. Deciding the process that a company will use to create its product Standardization Suits low-cost leadership Adaptation Suits differentiation and focus Process Planning International Business 3e

  7. Deciding the spatial arrangement of production processes within facilities Reflects business-level strategy Location’s geography also a factor Facilities Layout Planning International Business 3e

  8. Raw materials Intermediate components Availability Needed modifications Cost considerations Make-or-Buy Decision International Business 3e

  9. Vertical integration Extend control over inputs (backward integration) or output (forward integration) Reasons to make Lower cost Greater control Decision to Make International Business 3e

  10. Outsourcing Buying from another company a good or service that is not central to a company’s competitive advantage Reasons to buy Lower risk Greater flexibility Market power Barriers to buying Decision to Buy International Business 3e

  11. Total Quality Management (TQM) Continuous quality improvement to meet or exceed customer expectations through quality-enhancing processes ISO 9000 International Standards Organization 9000 is certification a firm gets when it meets the highest quality standards in industry Quality Improvement International Business 3e

  12. Shipping costs Inventory costs Just-in-time (JIT) manufacturing Other Production Issues International Business 3e

  13. Reinvest Promising outlook Growing market Highest return Divest Unprofitable outlook Social unrest Decision to Reinvest or Divest International Business 3e

  14. Financial resources needed to: Pay operating expenses Expand production capacity Enter new geographic markets Develop and reward employees Invest in new projects and much more… Financing Business Operations International Business 3e

  15. Difficulties: Exchange-rate risk Currency inconvertibility Restricted capital flows Borrowing International Business 3e

  16. Certificates traded in the US that represent a specific number of shares in a non–US company No currency-conversion fees No minimum purchase amounts Attractive to US mutual funds American Depository Receipts International Business 3e

  17. Extreme volatility Hot money: Liquid investments that can be quickly withdrawn Patient money: Holdings of factories, equipment and land that cannot be quickly withdrawn Poor regulation Emerging Stock Markets International Business 3e

  18. Equity, debt and fees Subsidiaries financed by parents, who are later rewarded financially Revenue from operations Money earned from sales is the lifeblood of every company Internal Funding International Business 3e

  19. Mix of equity, debt and internal funds used to finance activities Infusion of capital from the sale of equity Capital generated by dividends, royalties, and licensing fees Infusion of capital from the issuance of debt Transfer prices from the sale of goods and services Capital Structure International Business 3e

  20. Tips for entrepreneurs to find funds: Contact business schools with strong international programs Consult your country’s commerce department Leverage your contacts Attend industry events in other countries Consider hiring an intermediary Small Business Financing International Business 3e

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