2011

Types of International Business

There are number of ways for internationalization / globalization of business. these are referred as foreign market entry strategies. Each of these ways has certain advantages and disadvantages. One strategy for a particular business may not be very suitable for another business with different environment. Therefore it is quite common that a company employs different strategies for different markets.

The different strategies are :

  1. Imports : Imports is defined as goods and services produced by host country and purchased by parent country. it is reverse process of Exports.
  2. Exports : Exports is defined as goods and services produced in one country then get marketed to other country.
  3. Foreign Direct Investment  (FDI) : Here funds are invested in equity from parent country to a host country. Rich countries invest funds in growth industries and geographic areas of economic development.
  4. Licensing  : Licensing which involve minimal commitment of resources and effort on the part of the international marketer, are easy ways of entering the foreign markets. Under international licensing, a firm in one country (the licensor) permits a firm in one country permits the firm in another country to use the intellectual property (such as patents, trademarks, copyrights, technology, technical know – how, marketing skill or some other specific skill). The monetary benefits to the licensor is the royalty fees, which the licensee pays.
  5. Franchising : Franchising is giving right at a parent company (Franchiser) to another company (Franchisee) using his name selling his products, do business in a prescribed manner and get advantage of brands of parent company.
  6. Joint Venture : It is a mutual agreement of two or more partners across globe to collectively own the company to produce goods and services. This will be pooling the resources to mutual advantages.
  7. Manufacturing in Foreign Country : When a company finds better economy in manufacturing in host country due to lower costs of materials labour or duties the manufacturing is undertaken in host country. The local conditions in host country should support manufacturing and marketing activities.
  8. Management Contracts : The foreign country needs management expertise in managing existing or a sick company this method is used. Under management contract the service provided gets fees or shares in the company. The contracts is for a specific period.
  9. Consultancy Services
  10. Strategic Partnerships : The positive aspect of two companies in different countries are joined together. The resources are pooled together to produce new marketable products. This will put both companies in win-win situations .
  11. Mergers : A Corporate Merger is a combining of corporations in which one of two or more corporations survives and works for common objectives. These are several types of mergers with a variety of filing requirements based on number of corporations merging and the type of merger.
  12.  Counter Trades : Counter trade is a form of international trade in which certain exports and import transactions are directly linked with each other and in which imports of goods are paid for by exports of goods, instead of money payments.

 

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Problems in International Business

There are many Problems in International Business. The restraining forces slow down the progress of companies that take up International Business. The restraining forces are :

  1. First Main Problem in International Business is Culture: The culture of the nation and the companies should have an international vision. The long term perspective of companies should be to move wherever market opportunities are good. Inward-looking culture makes companies remain local.
  2. Another main problem in International Business is Market Competition in Host Country: If the best global companies enter the markets, the competition goes intense, and accordingly, inefficient companies have to close their shops.
  3. Another main problem in International Business is Costs: The competition calls for marketing quality products at competitive prices. If prices are high the market rejects the products.
  4. One of the main problems in International Business is National Controls: The nation-build barriers for outside country manufacturers by increasing trade barriers. Trade barriers will be direct by way of high customs duties. Indirect barriers will be licensing procedures, quota system, inspection, certification, and tedious paperwork.
  5. Another main problem in International Business is Nationalization: Due to Ideological differences, some nations do not trade with nations of their dislike.
  6. Another main problem in International Business is War and Terrorism: The political uncertainties and war-like situation are blockages to the growth of trade.
  7. One of the main problems in International Business is Shortsightedness of Management: Some management ignores vast business opportunities across national borders. The companies do not wish to go beyond national borders. If a company does not adapt to local conditions it does not survive.
  8. One of the main problems in International Business is Organization History: The companies who are contended and like to remain within a nation.
  9. Another main problem in International Business is Domestic Forces: The government or social restrictions imposed on commerce and industry become a hurdle in a company going global.
  10. One of the main problems in International Business is Conflict within companies and within the international organization: Difference of opinion in strategies to be adopted between different management levels in international business. If support is inadequate the international business proposal fails.

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Main Difference Between Domestic and International Business

Main Difference Between Domestic and international Business are as follows :



 

S.No International Business Domestic Business
1. It is extension of Domestic Business and Marketing Principles remain same. The Domestic Business Follow the marketing Principles
2. Difference is customs, cultural factors No such difference. In a large countries languages likeIndia, we have many languages.
3. Conduct and selling procedure changes Selling Procedures remain unaltered
4. Working environment and management practices change to suit local conditions. No such changes are necessary
5. Will have to face restrictions in trade practices, licenses and government rules. These have little or no impact on Domestic trade.
6. Long Distances and hence more transaction time. Short Distances, quick business is possible.
7. Currency, interest rates, taxation, inflation and economy have impact on trade. Currency, interest rates, taxation, inflation and economy have little or no impact on Domestic Trade.
8. MNC’s have perfected principles, procedures and practices at international level No such experience or exposure.
9. MNCs take advantage of location economies wherever cheaper resources available. No such advantage once plant is built it cannot be easily shifted.
10. Large companies enjoy benefits of experience curve It is possible to get this benefit through collaborators.
11. High Volume cost advantage. Cost Advantage by automation, new methods etc.
12. Global Standardization No such advantage
13. Global business seeks to create new values and global brand image. No such advantage
14. Can Shift production bases to different countries whenever there are problems in taxes or markets No such advantage and get competition from some spurious or SSI Unit who get patronage of Government.

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International Business

The Technology era since the last two decades is bringing a fundamental shift in business around the globe. The national economies are opening up and allowing cross border trade and investments. Technologies are helping to reduce distances and improve business.

Business is a medium of growth for any country. When a business grows internationally country’s economy also grows.

International Business is a combination of two words :
INTERNATIONAL + BUSINESS = INTERNATIONAL BUSINESS

“International Business is doing business across national political boundaries”. The business transactions may be importing, exporting, and in the form of goods in any areas of transactions like transfer of process knowledge, managerial inputs, capital investments, and consultancy.

In other words – when the business of a country that type of business is called international business. It is concerned with the movement of goods and services, capital technology, raw material, manpower, etc.

International business also includes :

  • Cross border transaction in Intellectual property rights for e.g. patents, trademarks copyrighting.
  • Investment in physical and financial assets in a foreign country.
  • Contract manufacturing or assembly of goods.
  • Buying and selling in foreign countries through imports and exports.
  • Establishment of warehousing and distribution system.

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Scope of Employee Welfare

The scope of employee Welfare cannot be limited, since it differs according to social customs and the degree of industrialization indifferent countries and at different times. They have to be elastic and flexible enough to suit the conditions of the workers, and to include all the essential prerequisites of life and the minimum basic amenities. The laws of every country highlight directions to specific application to the working class, the necessity of securing just and humane conditions of work, for them. However, what these conditions actually imply cannot be specified in rigid terms for all times and situations.

Thus, the subject of Labour Welfare is fairly wide and is not limited to anyone country, region or industry. Writers and institutions have described its scope in different ways and from different angles. The line of demarcation cannot be very precise. But what should be common is that a welfare measure should enhance the working and living conditions of the workers and their families and make their lives better worth living. In other words, Labour Welfare policies should “Enable workers to live a richer and more satisfactory life”.

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Objectives of Employee Welfare

Labour Welfare aims at the whole development of the person of the working class. The Labour Welfare Policies of any organization should keep in mind the following objectives:

  1. To increase the standard of living of the. Working class: The labourer is more prone to exploitation from the capitalists if there is no standardized way of looking after their welfare.
  2.  To make the management feel the employees are satisfied about the work and working conditions.
  3. To reduce the labour problems in the orgnisaton: There are various problems affecting the workers, problems like absenteeism, turnover ratio, indebtedness, alcoholism, etc., which make the labourer further weak both physically and psychologically. Labour Welfare looks forward to helping the labourer to overcome these problems.
  4.  To recognize human values Every person has his own personality and needs to be recognized and developed. It is in the hands of the management to shape them and help them grow. The management employs various methods to recognize each one’s worth as an individual and as an asset to the organization.
  5.  Labour Welfare helps to foster a sense of responsibiJjty in the industry: A person works both in a group and as an individual. If the person is given responsibility he will act better or else he will be only a slave to the direction of the superiors and will not show any initiative to prove his worth,
  6. Labour Welfare improves industrial relations and reduces industrial disputes: Industrial dispute in any industry is a sign of unsatisfied employees. Labour Welfare measures act as a preventive tool to most of these disputes.
  7. To retain the employees There should be fixed policies: This calls in to prepare the policies, to conduct different training programmes, to have various motivational schemes, to create interest in the job. The employees who feel secure in an organisation, backed by fixed welfare policies have less chance of looking for a job elsewhere.
  8. To show up their positive mind in the work: Positive mind refers to the development of one’s attitudes. This is to change the negative attitude into positive.
  9. To influence over other employees: This means Labour Welfare helps to change one’s personality – presentation skills, communication skills, inter-personal relationships, etc. This is best achieved when their morale is kept high by the different welfare schemes.
  10. To increase the bargaining power of the employees: Bargaining means to systematically extract something from the opponent. The better bargaining power, the better influence on the opponent. Labour welfare measures like formation of works committee, worker’s participation, Trade Union, etc., will surely help them to have better bargaining power.

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Non Statutory Welfare Schemes

Many Non statutory welfare schemes may include the following schemes:

  1. Personal Health Care (Regular medical check-ups): Many businesses have facilities for comprehensive safety inspections
  2. Flexi-time: The primary purpose of the flextime program is to provide workers with the ability to work with flexible work schedules. Flexible work schedules are developed by employees and accepted by management to meet business obligations while meeting personal life needs of employees.
  3. Employee support programs: Different assistant programs are structured such as external counseling facilities so that employees or members of their immediate families can get help on various issues.
  4. Harassment Policy: To protect an employee from harassment of any sort, instructions are given for disciplinary action and also for the protection of the employee who has been grieved.
  5. Maternity & Adoption Leave: Workers can take maternity leaves or leaves for adoption. Various businesses have adopted parental leave programs.
  6. Medi-claim insurance plan: This insurance program offers sufficient medical coverage to workers for hospitalization costs due to sickness, illness or accident or pregnancy.
  7. Employee referral scheme: Worker referral scheme is introduced in many organizations to allow workers to refer friends and relatives to the company for jobs.

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Statutory Welfare Schemes

The statutory welfare schemes include the following provisions:

  1. Drinking Water: At all the working places safe hygienic drinking water should be provided.
  2. Facilities for sitting: In every organization, especially factories, suitable seating arrangements are to be provided.
  3. First aid appliances: First aid appliances are to be provided and should be readily assessable so that in case of any minor accident initial medication can be provided to the needed employee.
  4. Latrines and Urinals: A sufficient number of latrines and urinals are to be provided in the office and factory premises and are also to be maintained in a neat and clean condition.
  5. Canteen facilities: Cafeteria or canteens are to be provided by the employer so as to provide hygienic and nutritious food to the employees.
  6. Spittoons: In every work place, such as ware houses, store places, in the dock area and office premises spittoons are to be provided in convenient places and same are to be maintained in a hygienic condition.
  7. Lighting: Proper and sufficient lights are to be provided for employees so that they can work safely during the night shifts.
  8. Washing places: Adequate washing places such as bathrooms, wash basins with tap and tap on the stand pipe are provided in the port area in the vicinity of the work places.
  9. Changing rooms: Adequate changing rooms are to be provided for workers to change their cloth in the factory area and office premises. Adequate lockers are also provided to the workers to keep their clothes and belongings.
  10. Rest rooms: Adequate numbers of restrooms are provided to the workers with provisions of water supply, wash basins, toilets, bathrooms, etc.

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Employee Welfare – Its Benefits and Principles

The Employee Welfare describes “efforts to provide good work-life at the workplace” “Employee welfare is a descriptive concept that encompasses different programs, incentives, and facilities that workers & employers are provided. The employer makes life worth living for workers through such generous fringe benefits.

Welfare includes all that is done to ensure employee comfort and improvement and that goes beyond wages. Social welfare contributes to maintaining employee morality and motivation so that employees can stay longer. The social welfare acts should not only have to be political but in every way. Employee welfare includes monitoring work conditions, building industrial harmony for workers and their families via health infrastructure, industrial relations, disease insurance, and accidents and unemployment.

Employee benefits encompass all of the employer’s acts aimed at delivering such facilities and services to workers, aside from compensation or wages.

Performance, safety, commitment, and happy labor force for the company are the underlying reasoning behind delivering welfare schemes. The goal of providing these facilities is to improve their working lives and to increase their living standards.

This activity comes either through a law formed by the State or through a local tradition or through a collective agreement or at the initiative of the employer:

  • To make philanthropic and paternalistic sensations known.
  • To win the loyalty of the employee and to increase his moral standards.
  • Fight against socialist ideas and unionism.
  • Strengthening secure jobs, reducing labor income and absenteeism.
  • Developing workplace performance and productivity.
  • Save yourself from high surplus taxes.
  • Goodwill and public relations enhancement.
  • Reducing the possibility of further government interference.
  • To increasing the efficacy of recruitment (because these incentives contribute to the work appeal).

Benefits of Employee Welfare

The major benefits of welfare can be summarized as follows:

  • Provide staff with improved physical and mental health and foster a safe working atmosphere.
  • Facilities such as accommodation, medical care, and schooling and leisure facilities for the families of staff help raise their living conditions. It allows staff to concentrate more on work and thereby increase productivity.
  • By having healthcare services, workers provide a stable workforce. Workers are deeply involved in their roles and work with a sense of engagement.
  • The welfare measures of employees increase organizational productivity and promote sound industrial relations, maintaining industrial peace.
  • The welfare policies are raising the social evils prevalent among work such as drug abuse, etc.

Principles of Employee Welfare Schemes:

In general, the principles to be followed in establishing a welfare service for employees are:

  • The service should meet the workers’ real needs. This means that the manager must first determine with active involvement by the employees what the true needs of the employee are.
  • A cafeteria will be used to manage the operation. Benefits are significantly different due to their variations in sex, age, marital status, the number of children, the nature of the job, and the amount of wages for workers. This is known as the cafeteria Approach. The value method is individualized under such an approach, though procedures and administration can be challenging.
  • The employer should not take a caring position.
  • The cost and funding of the operation should be measured in a reasonable manner.
  • A periodic review of the service should be carried out, and input should be received in a timely manner.

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Human Resource Management

This article is on HRM or Human Resource Management in an Organization. Employees are the organization’s main assets. HRM or Human Resource Management focuses on hiring, training, managing, analyzing performance appraisal, dispute settlement or grievance handling, and giving direction to the employees of the organization. Human Resource Management role is to tackle grievances related to the employees such as compensation, recruiting, performance appraisal, growth of organizations, welfare, benefits, engagement of staff, communication, administration, training, and retention. HRM also helps to shape the community and climate of individuals and of the workplace.

Good or Efficient HRM

Good HRM or Human Resource Management allows employees to perform efficiently and productively for the success of the organization and to achieving the goals and objectives of the organization. It is expected that HRM will bring value to employee strategic efficiency and that employee services will affect the company in tangible ways. HRM’s new role involves strategic direction and measurements for proving value. HRM contributes to organizational development by attaining optimum efficiency.

Duties of HRM

The duties of human resources administration shall be as follows:

Human Resource Planning

Human Resource Planning is known as the method of predicting the potential demand and supply of an enterprise in the right number for the right category of people.

Job Analysis

Job Analysis is the method of researching and collecting knowledge about the activities and obligations of a specific work. Job analysis includes job specifications and job description.

Recruitment

Recruitment is the method of identifying and recruiting qualified job applicants. The cycle starts as new hires are found and finish as they submit their applications. The outcome is a pool of applicants who selects new employees from.

Selection

Selection is the method of distinguishing between candidates in order to classify (and hire) those who are more likely to succeed in a job.

Placement

Placement is known as allocating people to jobs. This is an employee’s promotion or reassignment to a new position or another position.

Training and development

Training is provided to enhance the current or potential performance of employees through improving the capacity of an employee to succeed by training, usually through modifying the attitude of the employee or improving knowledge, working attitude, and skills. Need for Training and Development (T&D) defined by the performance deficiency of the employee, measured as follows:

Training Need = Standard performance-Actual performance

Remuneration

Compensation that an employee receives for his or her work and targets achieved for the growth of the organization.

Motivation

Motivation begins by appreciating employees to perform well. It can be in the form of monetary and nonmonetary benefits.

Participative management

Employees’ participation can be taken widely to include all terms of the interaction of employees and their superiors in the decision-making process, ranging from knowledge exchange, meetings, decisions, and agreements to more institutionalized ways such as the involvement of staff on management boards or supervisory boards.

Communication

Communication is the Information flow in the organization. This can be a transfer of information through HR and various departments. Communication is necessary for the effective working of the organization.

Safety and health

The company has to take measures for the safety of its employees. The company has to provide safety equipment and materials for the employees working in a risk condition.  The HRM is focused on healthier jobs and health care to ensure better health employees.

Welfare

The Employee Welfare describes “efforts to provide good work-life at the workplace” “Employee welfare is a descriptive concept that encompasses different programs, incentives, and facilities that workers & employers are provided. The employer makes life worth living for workers through such generous fringe benefits.

Transfer

Transfer entails a shift in an employee’s job (accompanied by a shift in the place of work) without adjusting the duties or compensation.

Separations

Employers are separated by lay-offs, resignations, and dismissals.

Employee Relations

Employee relations is concerned with the processes, rules, and procedures that trade unions and employers use to establish the compensation for contribution and other employment conditions, to safeguard the right of workers and their employers and to control how employers handle their workers.

Disputes and their settlement

Labor disputes are any disputes or discrepancies between employers and employees.

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