Foreign Licensing


The method of going global through the use of contractual agreements is foreign licensing. Such an agreement grants foreign marketers the right to distribute a firm’s merchandise or use its trademark, patent, or process in a specified geographic area. These arrangements usually set certain time limits, after which agreements are revised or renewed.

Licensing offers several advantages over exporting, including access to local partners’ marketing information and distribution channels and protection from various legal barriers. Because licensing does not require capital outlays, many firms, both small and large, regard it as attractive entry strategy. Like franchising, licensing allows a firm to quickly enter a foreign market with a known product or concept. The arrangement also may provide entry into a market, which government restrictions close to imports or international direct investment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Forces in the Environments


Environment is the sum of all the forces surrounding and influencing the life and development of the firm. The forces themselves can be classified as external or internal. Management has no direct control over them, though it can exert influences. The external forces are commonly called uncontrollable forces and consist of the following:

  1. Competitive: kinds and numbers of competitors, their locations, and their activities.
  2. Distributive: national and international agencies available for distributing goods and services.
  3. Economic: variables (such as GNP, unit labor cost, and personal consumption expenditure) that influence a firm’s ability to do business.
  4. Socio-economic: characteristics and distribution of the human population.
  5. Financial: variables such as interest rates, inflation rates, and taxation.
  6. Legal: the many kinds of foreign and domestic laws by which international firms must operate.
  7. Physical: elements of nature such as topography, climate, and natural resources.
  8. Political: elements of nations’ political climates such as nationalism, forms of government, and international organizations.
  9. Socio-cultural: elements of culture (such as attitudes, beliefs, and opinions) important to international businesspeople.
  10. Labor: consumption, skills, and attitudes of labor.
  11. Technological: the technical skills and equipment that affects how resources are converted to products.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Foreign Exchange


An international marketer needs to transact financial transfers across nation lines in order to close deals. The financial transfers from one country to another are made through the medium of foreign exchange.

Foreign exchange is the monetary mechanism by which transactions involving two or more currencies take place. Transacting foreign exchange deals presents two problems. First, each country has its own methods and procedures for effecting foreign exchanges—usually developed by its central bank. The transactions themselves take place through the banking system. Thus, both the methods and procedures of the central bank and commercial banking constraints must be thoroughly understood and followed to compete a foreign exchange transaction.

The second problem involves the fluctuation of  the rates of exchange. Fluctuations in exchange rates are based on the supply and demand of different currencies. The rate of exchange between two countries can fluctuate from day to day. This produces a great deal of uncertainty since a business person cannot know the exact value of foreign obligations and claims.

To appreciate fully the complexities of foreign exchange, a few terms must be understood. Their understanding also will provide a historical perspective on the making of payments across national boundaries. The terms are gold standard, gold exchange standard, gold bullion standard, inconvertible currencies, and hard and soft currencies.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Going Global


Besides generating additional revenue, firms are expanding their operations outside their home country to gain other benefits, including new insights into consumer behavior, alternative distribution strategies, and advance notice of new products. By setting up foreign offices and production facilities, marketers may learn new marketing techniques and gain invaluable experience. Global marketers are typically well-positioned to compete effectively with foreign competitors.

A method used by international marketers before entering foreign markets is to conduct transcontinental product testing. Since firms must perform the marketing functions of buying, selling, transporting, storing, standardizing and grading, financing, risk taking, and obtaining market information in both domestic and global markets, some may question the wisdom of treating international marketing as a distinct subject. After all, international marketing is marketing; a firm performs the same functions and works toward the same objectives in domestic or international marketing.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Corporate Giving


One of the most visible ways in which businesses help communities is through gifts of money, property, and employee service. The corporate philanthropy or corporate giving demonstrates the commitment of businesses to assist the communities by supporting nonprofit organizations.

Some argue that corporate managers have no right to give away company money that does not belong to them. According to the line of reasoning, any income earned by the company should be either reinvested in the firm or distributed to the stockholders who are legal owners. The charitable contributions are one additional way in which companies link themselves to the broader interests of the community, thereby advancing and strengthening the company rather than weakening it.

Companies also help local communities through the substantial number of business donations that are not recorded as philanthropy because they are not pure giving. Routine gifts of products and services for local use often are recorded as advertising expenses; gifts of employee time for charity drives and similar purposes usually are not recorded; and the costs of soliciting and processing employee gifts, deductions usually are not recorded as corporate giving. Still, they add value to the local community of which the company is part.

Many large US companies have established nonprofit corporate foundations to handle their charitable programs. This permits them to administer contribution programs more uniformly and provides a central group of professionals that handles all grant requests. Foreign-owned corporations use foundations less frequently, although firms use highly sophisticated corporate foundations to conduct their charitable activities. As corporations expand to more foreign locations, pressures will grow to expand international corporate giving. Foundations, with their defined mission to benefit the community, can be a useful mechanism to help companies implement philanthropic programs that meet corporate social responsibility.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Corporate Disclosures


Giving stockholders more and better company information is one of the best ways to safeguard their interests. The theory behind the move for greater disclosure of company information is that a stockholder, as an investor, should be as fully informed as possible to make sound investments. By law, stockholders have a right to know about the affairs of the corporation in which they hold ownership shares. Those who attend annual meetings learn about past performance and future goals through speeches made by corporate officers and documents such as the company’s annual report. Those who do not attend meetings must depend primarily on annual reports issued by the company and the opinions of independent financial analysts.

Historically, management has tended to provide stockholders with minimum information. But companies now disclose more about their affairs, in spite of the complicated nature of some information. Stockholders therefore can learn about sales and earnings, assets, capital expenditures and depreciation by line of business, and details of foreign operations.

Corporations also are required to disclose detailed information about directors, how they are chosen, their compensation, conflicts of interest, and their reasons for resigning in policy disputes with management.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

The Challenges of Global Business


Many past political barriers to trade have fallen or been minimized, expanding and operating new market opportunities. Managers who can meet the challenges of creating and implementing effective and sensitive business strategies for the global marketplace can help lead their companies to success. Multinational corporations, such as, General Electric and Ford, which derive a substantial portion of their revenues from international business, depend on savvy managers who can adapt to different cultures. Lucent Technologies has invested more than $24 million in a design center in China in an effort to aid in China’s modernization of its infrastructure and telecommunications technology. The income potential from Lucent, which manufactures, designs, and delivers products for networking, communications systems, software, data networking systems, business telephone systems, and microelectronics components, is enormous. Small businesses, too, can succeed in foreign markets when their managers have carefully studied those markets and prepared and implemented appropriate strategies. Being globally aware is therefore an important quality for today’s managers and will become a critical attribute for managers of the 21st century.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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