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Short Summary International Business 22/23
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International Management SummaryBusiness Administration
Year 3 – semester 2
Content:
- Hill and Hult: chapters 16-20
- Short, J.L. & Toffel, M.W. (2021). Manage the Suppliers That Could Harm Your Brand.
Harvard Business Review, 99(2)
- Rust, R. T., Moorman, C., & Bhalla, G. (2010). Rethinking marketing. Harvard business
review, 88(1/2), 94-101
- Giles, S. (2016). The most important leadership competencies, according to leaders around the
world. Harvard Business Review, 15.
- Russwurm, S., Hernandez, L., Chambers, S., & Chung, K. (2011). Developing your global
know-how. Harvard Business Review, 89(3), 70-+
- Hankins, K.W. & Petersen, M. (2020) Why Are Companies Sitting on So Much Cash?
Harvard Business Review
- Bhattacharya, C.B., & Polman, P. (2017) Sustainability lessons from the front lines. MIT
Sloan Management Review, 58(2).
- Kaplan, S. (2020) Why social responsibility produces more resilient organizations. MIT Sloan
Management Review
Ch 16
Volume of export activities has increased as exporting from many countries has become easier due to
a decline in trade barriers under the WTO etc. Modern communication and transportation technologies
have reduced logistical problems. The great promise of exporting is large revenues and profit
opportunities, as the international market is larger than the domestic market. Economies of scale can
be achieved by expanding the size of the market.
The steps managers can take to improve their firm’s export performance are international
comparisons, information sources, service providers, export strategy, and the GlobalEdge Exporting
Tool. Freight forwarders combine smaller shipments into a single large shipment. Export management
company offer full menus of services to handle all aspects of exporting. Export trading companies
export products for companies that contract with them. Export packaging companies help make
packages to meet country-specific requirements. Custom brokers help companies avoid the pitfalls
involved in customs regulations. Confirming houses represent foreign companies that want to buy
your products. Export agents, merchants, and remarketers buy products directly from the manufacturer
and package and label according to their own wishes. Piggyback marketing is an arrangement whereby
one firm distributes another firm’s products (complementary products).
The readiness of a company to export is based on competitive capabilities in domestic market,
motivation for going international, commitment of owners and top management, experience and
training, skills, knowledge, and resources.
The bank’s promise to pay on behalf of the importer is letter of credit, the bill of lading is the title of
products given to the bank and the request of payment by the exporter is called the draft.
Countertrade denotes a range of barter-like agreements when conventional payment methods are
difficult. A barter is the direct exchange of goods/services without cash transaction. Counter purchase
occurs when a firm agrees to purchase a certain number of materials back from a country to which a
, sale is made. With an offset a firm also agrees to purchase goods and services with a specified
percentage of the original sale. This party can fulfil the obligation with any firm in the country to
which the sale has been made. Switch trading is when credits are purchased and sold to another party
that can better use them. A buyback occurs when a firm builds a plant in a country and agrees to take a
certain percentage of the plant’s output as a partial payment for the contract.
Ch 17
Supply chain management is the integration and coordination of logistics, purchasing, operations and
market channel activities from raw material to the end customer. One objective is to ensure that the
total cost of materials to finished goods is as low as possible. Another one is to eliminate defective
materials from the process. Upstream = inbound supply chain and downstream = outbound supply
chain. Total quality management eliminating mistakes and poor-quality materials. Six sigma aims
to reduce defects, boost productivity, eliminate waste and cut costs. Production and supply chain
functions must be able to accommodate demands for local responsiveness, which arise from national
differences in consumer tastes. This decentralizes production activities to regional markets which
enables the firm to customize the products. This way they are able to respond quickly to shifts in
customer demand.
Country factors: political/economic systems, culture and presence of location externalities, trade
barriers, transportation costs and movements in exchange rates.
Technological factors: fixed costs, minimum efficient scale of output, flexibility of technology
Production factors: value-to-weight ratio and products that serve universal needs
Offshore factory is developed for producing component parts or finished goods at a lower cost than
producing them at home or any other market. Source factory has a strategic role, where managers have
more of a say in certain decisions. A server factory supplies to specific countries or regional markets
around the globe. A contributor factory also serves a specific country or world region, but it has its
own responsibilities for product and process engineering. An outpost factory is an intelligence-
gathering unit to enhance the position of the global firm in strategic countries. A lead factory is
intended to create new processes, products and technologies that can be used throughout the global
firm.
Make-or-buy decisions on a strategic level focuses on the long term, while the operational level
focuses on the short term. The starting point is lower costs than we expect when we outsource the
production, but there needs to be excess production capacity to make it in house.
Logistics is the part of the supply chain that plans, implements, and controls the effective flows and
inventory of raw materials. A global distribution centre (warehouse) is a facility that positions and
allows customization of product delivery to worldwide wholesalers, retailers or customers. Global
inventory management includes decisions about how much inventory to hold, in what form to hold it,
and where to locate it. Reverse logistics is the process of planning, implementing and controlling the
efficient, cost-effective flow of raw materials from the point of consumption to the point of origin.
Just-in-time is an inventory system where the materials arrive just in time, so there is no inventory
which reduces holding costs. Information technology enables a firm to optimize its production
scheduling according to when components are expected to arrive. Global supply chain coordination is
decision-making involving joint consideration, namely responsiveness, variance reduction, inventory
reduction, shipment consolidation, quality and life-cycle support.
Short & Toffel (2021)
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