International Business Management - Essay Example

International Business Management Question # 1 Cost refers to a measurement in monetary term of the amount of resources used in production of a particular good or in giving a certain service. The elements of cost comprise of material, expenses, and labour. Material costs include direct material cost and indirect material cost. Direct material relates to a specific job and process for instance, sugarcane for making sugar. Indirect material, on the other hand, cannot be related to a specific job or activity. Labour is the main element in product and service production. Direct labour takes specific part in production process. For example, cost of wages paid to casual employees in a company. Indirect labour refers to labour that is not directly related to converting raw material to finished products. An expense refers to all cost incurred in production of finished goods other than material and labour costs (Drury, 2008: p28). Revenue is an increase in the net worth resulting from a transaction. In business, revenue is the money-received from selling products or services. It is collected when it is earned. Revenue consists of three items; total revenue, average revenue and marginal revenue (Jain, 2011: p43). Total revenue (TR) is the total income of the firm. TR= Quantity * Price. If a firm sells 1000 blankets at a price of $200 each then the TR will be $200,000. Average revenue (AR) is the revenue per unit of sold output. AR= TR/Quantity. For example if the revenue for sell of 1000 blankets @ $200 is $200,000 then AR= 200,000/1000. AR= $200. Marginal revenue (MR) refers to additional revenue incurred from sale of additional output. For example if the TR realized in the sell of 1000 blankets id $200,000 and that from the sale of 1001 is $200,400 the MR of the 1001th blanket is MR= $200,400 – 200,000. MR= $400. Revenue Total Revenue Average Revenue Marginal Revenue (TR) (AR) (MR) Managers need to scan for factors that affect the viability of their organization in order to maximize their profits and remain competitive. These factors are both internal and external. They include politics and law, technological factors, culture and governance. The success of the organization is dependant on how managers strategize these factors in order to achieve prosperity. In the current global marketplace, culture is key influence on the success of the firm. Culture influences the entrance and sustainability of an organization in the international market (Hill, 2012: p 235). Managers have to learn and understand cultural differences with their international suppliers and consumers in order to create a direct contact. Attention to culture, norms, values and beliefs establish a successful relationship between business partners. The elements of culture that managers can manipulate to achieve organizational success include social and political philosophy, education, religious values, language used and the social structure of individuals (Whiteley and England, 2004: p 439-453). Managers have to narrow down to the fact that culture affects, brand image of a product, consumer behavior and buying decision and also a key determinant of the local demand (Hill, 2012: p 237). Business negotiations, managerial style, and decisions are influenced by culture. Some countries such as Russia, India, and USA are multicultural while countries like France, UK, and Germany are monocultural. Managers face cultural challenges and they need to understand cultures of the international market. For example, in Japan and China the number for is a symbol of death. Product with brand name “4” in these countries will generate fear and mixed reaction from the locals. In Korea and Taiwan, triangular shapes are considered negative and therefore managers have to implement cautious care in design and label of products in promoting sell in such countries. The political atmosphere, laws, and policies formulated by the government affect the way to conduct trade. Civil wars, corruption, rate of crime and system of rule influence the success and failure of a business. Managers seeking local and global success in the long run need to study the legal-political environment when venturing to business. Government decisions must protect the consumer, the citizen and encourage business. Tough government laws on foreign firms restrict foreign competition and tend to protect local firms. Government policies on incentives, tariffs and subsidies influence partnership formation in business (Mallor et. al, 2004: p 1-2). For instance, Government subsidies help domestic producers as they help them compete against low-cost foreign firms. These can be witnessed in countries such as Japan and the US. Some government also employ quota to restrict measures on goods that are imported. Managers can venture in countries that protect the rights to property such as trademarks, copyrights and patents as this discourages theft and piracy. Countries that encourage corruption affect the future income of business and discourage foreign investments. Technology has become an important tool in connecting businesses and the entire world, in production and innovation and in managing the operations of the business. Managers now rely on computers in decision making and market search. Managers need to keep up-to-date with the changing technology to ensure that they maintain a proper communication within the business and ensure that customers are well taken care of (Moeller, Egol, & Martin, 2004: p1). The standards, product quality, and system of control used by managers must be in-line with the technology in place. Managers ensure proper communication with suppliers and compliance in with firm’s policy and practice to build consumer confidence, conquer the market and protect the company branding (Hill, 2012: p 239). To maximize on profits managers can employ technology in strategic outsourcing. Strategic outsourcing establishes a direct and better relationship between managers and the external market. Managers can maximize long-run profits by good corporate governance. Decisions, policies and strategies of a company are influences by corporate governance. Managers have to reshape their design, the firm’s infrastructure, market strategies, and the practices of the business in order to match the conditions of the country they target. Therefore, managers have different operational models in their line to ensure success and efficiency. By implanting Open Standard and Benchmarking Framework, the organization has the capabilities to see activities across the industry, benchmarking of other firms around the world and influences best practice (Hill, 2012: p 236). A good example is the success of the Dell computer company. Managers can implement the Advantages Supply Network. This model enables directors and buyers to work conjunctionally communicate efficiently. This model is employed by the Toyota industry. Smart customization model can also be used by managers who aim to maximize on profits. This model focuses on strategy formulation and delivery (Hill, 2012: p 236). References Drury, C., 2008. Management and Cost Accounting. 7th Ed. UK: Pat Bond. Hill, CWL., 2012. International business: competing in the global marketplace. 9th Ed. New York: McGraw-Hill/Irwin. Jain, T. & Op, K. 2011. Business Economics. Delhi: V.K Publications. Moeller L., Egol M. & Martin K., 2004. Smart customization: Profitable growth through tailored business streams. Booz Allen Hamilton. Whiteley, W. & England G. W., 2004. International Business. Hoboken, NJ: John Wiley & Sons, Inc. Read More