What is meant by project management? Please indicate some of the benefits of learning / practicing project management.
20 marks]
Set of jobs usually directed towards some significant outcomes & requiring a significant period of time is termed as a project. The management of such large number of activities poses complex problems in planning, scheduling, directing & controlling resources. Project management is nothing but synchronization between all these above mentioned activities, especially when the project activities have to be performed in a specified technological sequence. The two methods critical path method & program evaluation & review technique are aids to efficient project management. However, they differ in their approach to the problem & solution technique.
After getting a tutorial of project management, any manager gets the ability to organize & schedule the activities in a proper way. The time management is often considered as a mandatory factor; hence, identifying the deadlines is the most critical issue for a project manager. To be formal, learning aids of project management are:-
• Planning the project ahead of time & foresee possible sources of trouble & delays in completion.
• Schedule the project activities at the appropriate times to confirm with proper job sequence so as to complete the project ASAP.
• Coordinate & control the project activities so as to stay on schedule in completing the project.
Write short notes on the following topics:
a) Opportunity studies
Before starting with any new projects parties involved in it make studies regarding the chance of success in the project. So for this purpose opportunity study is done which includes feasibility study, detailed study & technical study.
Opportunity Study:
In the preliminary stage parties involved in the project evaluates whether the concept is viable or not. The purpose is to understand whether the users request matches with the objective of the organization. In opportunity phase the needs of the client should be identified & plans should be made according to that. Opportunity study leads to the making of the scoping note & it shows the intent of the project.
Feasibility Study:
It evaluates the economic, organizational & technical feasibility of the project.
Detailed Study:
This is done to understand all the phases of the project & to see that the process is maintained as per the requirement.
Technical Study:
In this study design of the technology that needs to be used is made to understand the technological requirement of the project.
b) Feasibility studies
When a person wants to start a new business or to expand, consideration of strengths and weakness of the business to be started is known as feasibility study. By doing this study a business person can find the answers to an important question: whether business is viable, idea will work and how to proceed to attain objective.
Various components of feasibility study are description of business, market feasibility, technical feasibility, financial feasibility, organizational feasibility.
By doing feasibility study people arrive on decision of go or no-go with the idea of business. It is one of the critical steps while starting a business and if this step proves to be right then investment made in the particular business will be best ever.
c) Project Planning and Management Cycle – various phases and their inter-connections
Phases of Project planning:
1. Project Initiation:
At this stage management decides that a project is needed & establishes their objective & also estimates resource required for it.
2. Project definition:
Project plan & schedule is done foe operational purpose here.
3. Project Implementation:
Here main works of the project is done.
4. Project Completion:
Project is terminated at this stage.
Phases of Management Cycle:
1. Identify Needs:
Business needs & objective is identified at this stage.
2. Plan:
Makes plan about how to go with the process & what sort of technology to use.
3. Adopt:
Here the technology is adopted before going for another one.
4. Maintain:
Here the whole process is maintained as decided before.
3. Evaluate:
Evaluation is done so that to know if everything has gone as per plan. & if any changes is required that is done.
[20 marks]
Saturday, October 1, 2011
PROJECT MANAGEMENT ASSIGNMENT 2
Write short notes on the TWO (2) of the following:
i) Project Manager – main responsibilities and desired traits
Project manager is a person in an organization who has a sole responsibility of handling the project and achieving the objectives stated. The main responsibilities are planning, organizing and controlling. He also has to make decisions on the constraints of time, cost and quality to achieve the desired results. He should also make sure that team members under him complete the task in desired time.
A manager should have expertise knowledge about the work to perform, should be a good communicator, should have empathy, team building skills, problem solving skills, Focus on motivation and not intimidation i.e. treat people as human beings but not just resources etc.
ii) Project Organization – types and their suitability for implementing various types of organization
Project organization makes an alignment between the project and the parent company to deliver or complete the project effectively and efficiently. There are three types of project organization:
1. Functional organization: In this part of project is assigned to various functions of company such as marketing, product development, sales etc so that specialist would do their part of work. It is mainly used when one functions plays dominant role in completion of project.
2. Pure project organization: this is referred as creation of separate project teams to complete task. This is unit which is self independent and has own staff to do work that is own team of people. The organization is developed in such a way that functional department helps the project teams in their work.
3. Matrix organization: this organization structure is a combination of functional and pure project organization both. This type of structure optimizes the use of resources available with the company. The boundaries between the project team and functional units is not very strict hence make it flexible which makes it more popular among the firms to use this structure but decision making process is very slow in this type of structure as various functional departments and project group should agree for the work to make it inot action.
iii) Evaluation of Public Sector Projects – Benefit – Cost Ratio and the Cost Effectiveness Criteria
Benefit-Cost Ratio
Benefit-cost analysis, is the economic decision making approach, which is used particularly in the government & business. Benefit-cost analysis is used in assessment of either the proposed project, programme or the policy is worth doing or for choosing between so many alternative ones. This involves comparing total expected costs of every option against total expected benefits, for seeing whether benefits outweigh the costs and by how much. In Benefit-cost analysis, the benefits & costs are expressed in the money terms and are adjusted for time value of money so that all flows of the benefits & flows of the project costs over time are expressed on the common basis in the terms of their present value.
Benefit-Cost Ratio = Equivalent Users’ Net Benefits / Equivalent Sponsors’ Net Cost
When the Benefit-Cost Ratio exceeds 1 then the project may be justified
Cost-Effectiveness Criteria
The Cost-effectiveness analysis is the form of economic analysis which compares relative costs & outcomes of two or more courses of the action. Cost-effectiveness analysis is distinct from the cost-benefit analysis that assigns the monetary value to measure of effect. Cost-effectiveness analysis is mostly used in field of the health services, where this can be inappropriate for monetizing health effect.
Cost Effectiveness Criteria
• The cost-effectiveness method allows us for comparing the projects on basis of the cost & nonmonetary effectiveness measures.
• We can either maximize effectiveness for the given cost criterion or minimize cost for the given effectiveness criterion.
[20 marks]
What is meant by the Work-Breakdown-Structure? Give some example.
It is a simple way to express the full project in graphical way. This makes the project easier to understand and communicate. The whole project is broken down into tasks, each of which has a manager, an institution, costs and schedule & technical scope. The Work-Breakdown-Structure begins with a single box at the top which signifies the whole project. The project is then broken down into its components with lower level boxes. The major role of the WBS is first to divide the whole project deliverables into smaller parts to improve the accuracy of cost forecasts or estimates, secondly to provide a procedure for collecting, organizing and managing actual costs and thirdly to provide a means for control & performance measurement. But it shouldn’t be mistaken as the system that deals with schedules and thus has time dimension, instead it is used as entry criteria for schedule enlargement and improvement. Thus we can say WBS charts a project in a simple map of what is to be produced.
What are the various Project Control mechanisms / techniques. Briefly discuss.
Project controlling has been established as an independent function of Project Management and provides a detailed plan of activities and deliverables that need to be controlled and measured to assure the achievement of proposed solution while maintaining the set quality standards and time limits. It begins with project planning and ends with post-implementation review, being thoroughly involved at each step in the process.
Project control mechanism includes formal infrastructure, transparency among project processes and a proper communication system to maintain smooth flow of right information and to avoid disparity in project parameters. The various techniques of project controlling are:
• Investment analysis: this helps in analyzing whether an investment is suitable for a particular project and how it shall perform. It is a look back on the past investment and a thought process of mainly future investments.
• Cost-benefit analysis: it is an economic decision making approach for the purpose of assessing whether a proposed project is worth undertaking. It involves the comparison of total expected cost against the total expected benefits of the alternatives.
• Value benefit Analysis: A useful tool for preparing systematic decisions. It measures the effectiveness rather than the efficiency of a solution while working on a project.
• Expert surveys: a reliable way of quality of work of a project.
• Simulation calculations: it studies the random failure times and combines it with the reliability of the solution while working on a project and then the overall results are analyzed to determine the behavior of the whole project.
• Trend analysis: In project management, trend analysis is a quality control tool and a technique that uses historical or past results to measure or forecast the future results.
[20 marks]
Write brief notes on:
a. Role of leadership in project management
A project manager must also be a strong and confident leader. Leadership is a great quality, trait or characteristic that a person can have. Project managers and decision makers are required to display leadership in various aspects in their work and jobs. This is so because when we work with people or in a team, someone has to take the initiative to coordinate and synchronize in such a way that it is possible for the team to move forward as a whole. Leadership is a quality possessed by a person that enables him to motivate and influence people. It is not about dominating, but about winning consensus. Leadership is thus a trait that helps obtain support for accomplishment of a common goal. Effective leadership is concerned not just a science, but an art and also a philosophy. Leadership can be considered to be effective in case of the leader being able to take the team ahead and create a common vision which stimulates and synergizes the channelizing of the efforts of all of the employees and managers towards the common vision or common goals of the organization. Leadership is an extremely essential and important trait required for efficient and effective management. It cannot be refuted that good governance requires effective leadership in order to be able to manage people and direct or channelize their efforts in the required direction. This makes leadership eccentric to the core of management as well as the tools that helps influence and motivates people to give in their best.
b. Team building – strategic elements
Team building, from the strategic perspective requires cultural convergence and this can be achieved through cross cultural training. Cross cultural training has an important role in case of the strategic function mainly because in order to communicate the information, especially obtained from management accounting to the top management and other workers and employees. It becomes important to have a common language as well as a common understanding about how each of the employees would perceive information about different aspects. Moreover it also becomes important to assess and understand the work methods and styles of the top management in order to provide them with relevant information and also to be able to understand their point of views and judgments as well as decisions. In this way cross cultural training and an understanding about other cultures has an important role to play even in case of accounting and several other strategic functions. It is extremely important that the firm considers human resource aspects while designing and using information systems and prioritizes it over the compliance element as human resources are a very important function in every business. Acquisition and retention of human resources is a very big challenge for every firm or business. Improving the talent pools' skills and enhancing their value is essential in order to remain dynamic and ever-improving. This helps every firm achieve its strategies and long term goals. The talent pool can be improved through the usage of a number of human resource development techniques including training and development. Cross functional teams and seminars as well as techniques of improvement on the job as well as off the job can be used.
c. Project termination – essential steps
Project termination means that closing the project which occur when the project is successfully completed or either shut down before completion due to early warning signs to the company.
Various steps that are needed to take to terminate the project are:
First of all the required payments to any of the concerned person is to be done whether supplier, vendors etc. after making payments responsibilities are transferred to other if required and the duties are reassigned to those people who were involved in doing the project so that they can be involved in order to perform other duties.
The resources if left over should be released while terminating the project such as raw materials or any other. Books related to bills, costs should be completed or closed when the project is terminated. After this the results of the project should be compiled and the recommendation to make better in future time period should be made so the opportunity can be taken and risk can be avoided. In the last step the presentation should be made and should be communicated whether the project is accepted or rejected.
If the project is accepted then it should be installed and if it is rejected then the reasons should be determined so as to keep in mind for any future reference or to know the changes required.
[20 marks]
i) Project Manager – main responsibilities and desired traits
Project manager is a person in an organization who has a sole responsibility of handling the project and achieving the objectives stated. The main responsibilities are planning, organizing and controlling. He also has to make decisions on the constraints of time, cost and quality to achieve the desired results. He should also make sure that team members under him complete the task in desired time.
A manager should have expertise knowledge about the work to perform, should be a good communicator, should have empathy, team building skills, problem solving skills, Focus on motivation and not intimidation i.e. treat people as human beings but not just resources etc.
ii) Project Organization – types and their suitability for implementing various types of organization
Project organization makes an alignment between the project and the parent company to deliver or complete the project effectively and efficiently. There are three types of project organization:
1. Functional organization: In this part of project is assigned to various functions of company such as marketing, product development, sales etc so that specialist would do their part of work. It is mainly used when one functions plays dominant role in completion of project.
2. Pure project organization: this is referred as creation of separate project teams to complete task. This is unit which is self independent and has own staff to do work that is own team of people. The organization is developed in such a way that functional department helps the project teams in their work.
3. Matrix organization: this organization structure is a combination of functional and pure project organization both. This type of structure optimizes the use of resources available with the company. The boundaries between the project team and functional units is not very strict hence make it flexible which makes it more popular among the firms to use this structure but decision making process is very slow in this type of structure as various functional departments and project group should agree for the work to make it inot action.
iii) Evaluation of Public Sector Projects – Benefit – Cost Ratio and the Cost Effectiveness Criteria
Benefit-Cost Ratio
Benefit-cost analysis, is the economic decision making approach, which is used particularly in the government & business. Benefit-cost analysis is used in assessment of either the proposed project, programme or the policy is worth doing or for choosing between so many alternative ones. This involves comparing total expected costs of every option against total expected benefits, for seeing whether benefits outweigh the costs and by how much. In Benefit-cost analysis, the benefits & costs are expressed in the money terms and are adjusted for time value of money so that all flows of the benefits & flows of the project costs over time are expressed on the common basis in the terms of their present value.
Benefit-Cost Ratio = Equivalent Users’ Net Benefits / Equivalent Sponsors’ Net Cost
When the Benefit-Cost Ratio exceeds 1 then the project may be justified
Cost-Effectiveness Criteria
The Cost-effectiveness analysis is the form of economic analysis which compares relative costs & outcomes of two or more courses of the action. Cost-effectiveness analysis is distinct from the cost-benefit analysis that assigns the monetary value to measure of effect. Cost-effectiveness analysis is mostly used in field of the health services, where this can be inappropriate for monetizing health effect.
Cost Effectiveness Criteria
• The cost-effectiveness method allows us for comparing the projects on basis of the cost & nonmonetary effectiveness measures.
• We can either maximize effectiveness for the given cost criterion or minimize cost for the given effectiveness criterion.
[20 marks]
What is meant by the Work-Breakdown-Structure? Give some example.
It is a simple way to express the full project in graphical way. This makes the project easier to understand and communicate. The whole project is broken down into tasks, each of which has a manager, an institution, costs and schedule & technical scope. The Work-Breakdown-Structure begins with a single box at the top which signifies the whole project. The project is then broken down into its components with lower level boxes. The major role of the WBS is first to divide the whole project deliverables into smaller parts to improve the accuracy of cost forecasts or estimates, secondly to provide a procedure for collecting, organizing and managing actual costs and thirdly to provide a means for control & performance measurement. But it shouldn’t be mistaken as the system that deals with schedules and thus has time dimension, instead it is used as entry criteria for schedule enlargement and improvement. Thus we can say WBS charts a project in a simple map of what is to be produced.
What are the various Project Control mechanisms / techniques. Briefly discuss.
Project controlling has been established as an independent function of Project Management and provides a detailed plan of activities and deliverables that need to be controlled and measured to assure the achievement of proposed solution while maintaining the set quality standards and time limits. It begins with project planning and ends with post-implementation review, being thoroughly involved at each step in the process.
Project control mechanism includes formal infrastructure, transparency among project processes and a proper communication system to maintain smooth flow of right information and to avoid disparity in project parameters. The various techniques of project controlling are:
• Investment analysis: this helps in analyzing whether an investment is suitable for a particular project and how it shall perform. It is a look back on the past investment and a thought process of mainly future investments.
• Cost-benefit analysis: it is an economic decision making approach for the purpose of assessing whether a proposed project is worth undertaking. It involves the comparison of total expected cost against the total expected benefits of the alternatives.
• Value benefit Analysis: A useful tool for preparing systematic decisions. It measures the effectiveness rather than the efficiency of a solution while working on a project.
• Expert surveys: a reliable way of quality of work of a project.
• Simulation calculations: it studies the random failure times and combines it with the reliability of the solution while working on a project and then the overall results are analyzed to determine the behavior of the whole project.
• Trend analysis: In project management, trend analysis is a quality control tool and a technique that uses historical or past results to measure or forecast the future results.
[20 marks]
Write brief notes on:
a. Role of leadership in project management
A project manager must also be a strong and confident leader. Leadership is a great quality, trait or characteristic that a person can have. Project managers and decision makers are required to display leadership in various aspects in their work and jobs. This is so because when we work with people or in a team, someone has to take the initiative to coordinate and synchronize in such a way that it is possible for the team to move forward as a whole. Leadership is a quality possessed by a person that enables him to motivate and influence people. It is not about dominating, but about winning consensus. Leadership is thus a trait that helps obtain support for accomplishment of a common goal. Effective leadership is concerned not just a science, but an art and also a philosophy. Leadership can be considered to be effective in case of the leader being able to take the team ahead and create a common vision which stimulates and synergizes the channelizing of the efforts of all of the employees and managers towards the common vision or common goals of the organization. Leadership is an extremely essential and important trait required for efficient and effective management. It cannot be refuted that good governance requires effective leadership in order to be able to manage people and direct or channelize their efforts in the required direction. This makes leadership eccentric to the core of management as well as the tools that helps influence and motivates people to give in their best.
b. Team building – strategic elements
Team building, from the strategic perspective requires cultural convergence and this can be achieved through cross cultural training. Cross cultural training has an important role in case of the strategic function mainly because in order to communicate the information, especially obtained from management accounting to the top management and other workers and employees. It becomes important to have a common language as well as a common understanding about how each of the employees would perceive information about different aspects. Moreover it also becomes important to assess and understand the work methods and styles of the top management in order to provide them with relevant information and also to be able to understand their point of views and judgments as well as decisions. In this way cross cultural training and an understanding about other cultures has an important role to play even in case of accounting and several other strategic functions. It is extremely important that the firm considers human resource aspects while designing and using information systems and prioritizes it over the compliance element as human resources are a very important function in every business. Acquisition and retention of human resources is a very big challenge for every firm or business. Improving the talent pools' skills and enhancing their value is essential in order to remain dynamic and ever-improving. This helps every firm achieve its strategies and long term goals. The talent pool can be improved through the usage of a number of human resource development techniques including training and development. Cross functional teams and seminars as well as techniques of improvement on the job as well as off the job can be used.
c. Project termination – essential steps
Project termination means that closing the project which occur when the project is successfully completed or either shut down before completion due to early warning signs to the company.
Various steps that are needed to take to terminate the project are:
First of all the required payments to any of the concerned person is to be done whether supplier, vendors etc. after making payments responsibilities are transferred to other if required and the duties are reassigned to those people who were involved in doing the project so that they can be involved in order to perform other duties.
The resources if left over should be released while terminating the project such as raw materials or any other. Books related to bills, costs should be completed or closed when the project is terminated. After this the results of the project should be compiled and the recommendation to make better in future time period should be made so the opportunity can be taken and risk can be avoided. In the last step the presentation should be made and should be communicated whether the project is accepted or rejected.
If the project is accepted then it should be installed and if it is rejected then the reasons should be determined so as to keep in mind for any future reference or to know the changes required.
[20 marks]
INTERNATIONAL BUSINESS ASSIGNMENT 2
Discuss the similarities and differences between global, international and regional business.
International business is the business which works in different countries but does not exists across the globe. International business is generally prevalentwith small firms and organization. Global business is the business which operates across the world. Regional business is the business which operates in a particular region.
Example: McDonalds has expanded its reach not only to the local US market but also to different countries. It has expanded its reach by following transnational strategy.
It has expanded its reach particularly by following franchising. The concept of franchising is the key for McDonald’s world wide success. Through this they have ensured consistency of quality and uniformity of product from location to location and country to country. McDonalds key objective was global standardization with an statement ‘Expand our mindset by sharing best practices and leveraging our best people resources around the world’. The strategy of McDonalds relies on achieving low costs and prices with reliable quality and value for money. The company’s strategy is based on knowledge of modern lifestyles, young people tastes, food production processes and service levels coupled with a strong brand image, its constant product innovation and effective marketing tools.
McDonalds follows transnational strategy to reach its customers globally. To facilitate global reach McDonalds follows Local preferences of products by customers. The overall strategic mission and vision of the company is based on the resources and competence of the organization and the extent of industry and market globalization. McDonalds took into consideration the expanding market and increasing needs of the consumers and the changing preferences and tastes of consumers of different countries of its operations.
McDonalds focuses on the needs of every nation so as to cater to the specific needs of the customers of every nation and thus follows transnational strategy.
[7.5 marks]
Discuss the role of culture in international business.
Understanding culture is crucial when a company does across borders. For international companies to be successful, in a global society they must adapt to, relate to, and understand the culture of the countries where they conduct business.
Culture is an essential part that defines the individual, a human community and different social organization. Culture is basically the values, beliefs, perception and traditions which shape the behaviour of an individual. “Culture is defined as the collective mental programming of the people in the environment. Culture is not characteristics of the individuals; it encompasses a number of people who are conditioned by same education and life experience” (Hofstede) . Thus, it can be said that the culture is affected by the place we live, time, language we use, traditions followed. So each country has different culture.
With the increase in global trade and globalization the need to know the culture of different nations as important as it will facilitate the better working. Each individual has different attitudes, perception and value towards certain things, these are the main things which helps in shaping the culture of an individual. Belief is a thought which an individual hold about a particular thing, this is highly influenced by the place the individual live in. Culture is an unconscious thing which comes in an individual while the development of his personality.
Communication is based on culture. One perceives and draws conclusion of the communication on the basis of what he has learned. The main problems faced in the cross cultural communication are body position and movements, each country or culture interprets the movement or non verbal communication differently. For example if an individual moves his hand to and fro, it can be interpreted as a good bye in America and No in Europe.
[7.5 marks]
Outsourcing is the key strategy in global supply chain. Discuss.
Outsourcing refers to giving out a portion of the work to another nation in order to have it done in a better and more efficient way. It may be within the country or may be given to a firm in another nation. U.S. manufacturers become vulnerable to offshore outsourcing as they have to compete with them.In cases of not being able to perform a task efficiently and effectively, outsourcing becomes a blessing and helps the firm achieve a lot of savings of effort, time and capital. A firm might not be able to handle an order completely, but would be extremely competent at delivering some of the tasks. In such cases, it is essential that the firm opts for outsourcing and delivers the completed product or service to the final customer. Outsourcing can be based on technological outsourcing or outsourcing of a particular business function. In any of these cases there is a requirement of consideration of certain factors which includes the cost benefit analysis as one of the most important considerations. It really matters as the cost of the final product is greatly influenced by this strategic decision of outsourcing.The outsourcing market has experienced strong growth over the last several years because of businesses' need to focus on core competencies, Web implementation initiatives, consolidation across industries, and a tight labor pool. The outsourcing of noncore, transaction-based processes has gained significant momentum over the last few years as organizations have become more comfortable with the concept of outsourcing and its advantages.
Organizations elect to outsource for a variety of reasons. Some of these reasons are tactical, while others are strategic. No one would seriously expect an oil company to outsource its exploration and refining functions; pharmaceutical companies probably would not outsource their research and development; and few, if any, major automakers would consider out-sourcing their production planning or marketing campaigns. These activities are core to their businesses and often the means for differentiation in the marketplace and a source of competitive advantage. Businesses outsource their noncore functions, such as payroll and IT.
In the urge to downsize, “right size,” and eliminate headquarters staff, and to focus on value-added activities and core competencies in order to survive and prosper, public and private organizations have outsourced an extremely broad range of functions and activities formerly performed in-house. Some activities, such as janitorial, food, and security services, have been outsourced for many years. Information systems (IS) is one activity that has received much attention recently as a target for outsourcing.
Other popular outsourcing targets are mail rooms, copy centers, and corporate travel departments. Almost no function is immune to outsourcing. Accounts payable, human resources, marketing/sales, finance, administration, logistics, engineering, and even purchasing are examples of functions now outsourced but previously done in-house. The company may outsource the entire function or outsource a part of it and keep the remaining part as in-house. Like an IT firm can outsource the technical part but may retain the basic things so as to focus on lower purchases. The function needs to be identified and then segregating the same in potential components which can be kept in house and outsourced.
[7.5 marks]
Discuss the theories of competitive advantage.
Competitive advantage is the most important and crucial strategy for the organization to achieve and to get benefited with this strategy for the long run of business. Since, it is a kind of integrated strategy of cost minimization and profit or wealth maximization. It makes the thing effect by making the optimal use of the resources to get the maximum benefit from this. So, the organization could make the most perfect and effective move at this age of competitive scenario.
According to Michael Porter, there are basically two types of competitive advantage:
Cost advantage and differentiation advantage strategy. These two aspects are very important for the competitive advantage as the cost is one of the most important and crucial factor for any business to make it effective and efficient and on the other hand differentiation strategy also plays a vital role to make an effective and efficient move to gain the core competency and finally helps in achieving the competitive advantage for the long run of business.
Differentiation can be achieved by innovation of new and value added products, through an integrated and enhanced customer service. Cost leadership can be achieved through economies of scale in production and distribution and optimal utilization of resources.
Competitive advantage is the most crucial and important strategy now a days that makes an organization effective and efficient for the long run of business and also helps to cut the competition in the market.
[7.5 marks]
International business is the business which works in different countries but does not exists across the globe. International business is generally prevalentwith small firms and organization. Global business is the business which operates across the world. Regional business is the business which operates in a particular region.
Example: McDonalds has expanded its reach not only to the local US market but also to different countries. It has expanded its reach by following transnational strategy.
It has expanded its reach particularly by following franchising. The concept of franchising is the key for McDonald’s world wide success. Through this they have ensured consistency of quality and uniformity of product from location to location and country to country. McDonalds key objective was global standardization with an statement ‘Expand our mindset by sharing best practices and leveraging our best people resources around the world’. The strategy of McDonalds relies on achieving low costs and prices with reliable quality and value for money. The company’s strategy is based on knowledge of modern lifestyles, young people tastes, food production processes and service levels coupled with a strong brand image, its constant product innovation and effective marketing tools.
McDonalds follows transnational strategy to reach its customers globally. To facilitate global reach McDonalds follows Local preferences of products by customers. The overall strategic mission and vision of the company is based on the resources and competence of the organization and the extent of industry and market globalization. McDonalds took into consideration the expanding market and increasing needs of the consumers and the changing preferences and tastes of consumers of different countries of its operations.
McDonalds focuses on the needs of every nation so as to cater to the specific needs of the customers of every nation and thus follows transnational strategy.
[7.5 marks]
Discuss the role of culture in international business.
Understanding culture is crucial when a company does across borders. For international companies to be successful, in a global society they must adapt to, relate to, and understand the culture of the countries where they conduct business.
Culture is an essential part that defines the individual, a human community and different social organization. Culture is basically the values, beliefs, perception and traditions which shape the behaviour of an individual. “Culture is defined as the collective mental programming of the people in the environment. Culture is not characteristics of the individuals; it encompasses a number of people who are conditioned by same education and life experience” (Hofstede) . Thus, it can be said that the culture is affected by the place we live, time, language we use, traditions followed. So each country has different culture.
With the increase in global trade and globalization the need to know the culture of different nations as important as it will facilitate the better working. Each individual has different attitudes, perception and value towards certain things, these are the main things which helps in shaping the culture of an individual. Belief is a thought which an individual hold about a particular thing, this is highly influenced by the place the individual live in. Culture is an unconscious thing which comes in an individual while the development of his personality.
Communication is based on culture. One perceives and draws conclusion of the communication on the basis of what he has learned. The main problems faced in the cross cultural communication are body position and movements, each country or culture interprets the movement or non verbal communication differently. For example if an individual moves his hand to and fro, it can be interpreted as a good bye in America and No in Europe.
[7.5 marks]
Outsourcing is the key strategy in global supply chain. Discuss.
Outsourcing refers to giving out a portion of the work to another nation in order to have it done in a better and more efficient way. It may be within the country or may be given to a firm in another nation. U.S. manufacturers become vulnerable to offshore outsourcing as they have to compete with them.In cases of not being able to perform a task efficiently and effectively, outsourcing becomes a blessing and helps the firm achieve a lot of savings of effort, time and capital. A firm might not be able to handle an order completely, but would be extremely competent at delivering some of the tasks. In such cases, it is essential that the firm opts for outsourcing and delivers the completed product or service to the final customer. Outsourcing can be based on technological outsourcing or outsourcing of a particular business function. In any of these cases there is a requirement of consideration of certain factors which includes the cost benefit analysis as one of the most important considerations. It really matters as the cost of the final product is greatly influenced by this strategic decision of outsourcing.The outsourcing market has experienced strong growth over the last several years because of businesses' need to focus on core competencies, Web implementation initiatives, consolidation across industries, and a tight labor pool. The outsourcing of noncore, transaction-based processes has gained significant momentum over the last few years as organizations have become more comfortable with the concept of outsourcing and its advantages.
Organizations elect to outsource for a variety of reasons. Some of these reasons are tactical, while others are strategic. No one would seriously expect an oil company to outsource its exploration and refining functions; pharmaceutical companies probably would not outsource their research and development; and few, if any, major automakers would consider out-sourcing their production planning or marketing campaigns. These activities are core to their businesses and often the means for differentiation in the marketplace and a source of competitive advantage. Businesses outsource their noncore functions, such as payroll and IT.
In the urge to downsize, “right size,” and eliminate headquarters staff, and to focus on value-added activities and core competencies in order to survive and prosper, public and private organizations have outsourced an extremely broad range of functions and activities formerly performed in-house. Some activities, such as janitorial, food, and security services, have been outsourced for many years. Information systems (IS) is one activity that has received much attention recently as a target for outsourcing.
Other popular outsourcing targets are mail rooms, copy centers, and corporate travel departments. Almost no function is immune to outsourcing. Accounts payable, human resources, marketing/sales, finance, administration, logistics, engineering, and even purchasing are examples of functions now outsourced but previously done in-house. The company may outsource the entire function or outsource a part of it and keep the remaining part as in-house. Like an IT firm can outsource the technical part but may retain the basic things so as to focus on lower purchases. The function needs to be identified and then segregating the same in potential components which can be kept in house and outsourced.
[7.5 marks]
Discuss the theories of competitive advantage.
Competitive advantage is the most important and crucial strategy for the organization to achieve and to get benefited with this strategy for the long run of business. Since, it is a kind of integrated strategy of cost minimization and profit or wealth maximization. It makes the thing effect by making the optimal use of the resources to get the maximum benefit from this. So, the organization could make the most perfect and effective move at this age of competitive scenario.
According to Michael Porter, there are basically two types of competitive advantage:
Cost advantage and differentiation advantage strategy. These two aspects are very important for the competitive advantage as the cost is one of the most important and crucial factor for any business to make it effective and efficient and on the other hand differentiation strategy also plays a vital role to make an effective and efficient move to gain the core competency and finally helps in achieving the competitive advantage for the long run of business.
Differentiation can be achieved by innovation of new and value added products, through an integrated and enhanced customer service. Cost leadership can be achieved through economies of scale in production and distribution and optimal utilization of resources.
Competitive advantage is the most crucial and important strategy now a days that makes an organization effective and efficient for the long run of business and also helps to cut the competition in the market.
[7.5 marks]
INTERNATIONAL BUSINESS Asssigment 1
What is the impact of Japan’s Tsunami crisis on the world economy?
[10 marks]
Japan the third largest economy in the world behind china and US has been suffering from world’s largest and costliest natural disaster of a deadly earthquake and huge tsunami. This not only affected Japanese economy but the impact is being felt on the world economy. Before this disaster Japan was contributing 18% to the world’s economy which fell to only 9% after this problem.
Process of exports and imports the major dependence business is affected by this disaster and raised fear of high interest rates. Various numbers of manufacturing companies are in Japan which is not able to produce and trade hence not able to fulfill the needs of various economies. The various sector in which Japan faced a trouble are car industry, electronics etc. this disaster halted the orders because of no production which may increase the prices also for the products in near future.
Panic on trading can also be felt on Tokyo’s stock exchange which is hammering markets worldwide.
The industry of smart phones and computers are also harmed because Japan supplies chips for making these products and in turn affected tech companies all over.
Global oil markets are also hampered as Japan was the biggest importer of oil because of presence of more industries but after the disaster many of the companies are shut down hence consumption of oil is near to nil due to which prices of barrel decreased.
Reconstruction of Japan economy and the northeastern coast of Japan could even strike heavily on the growth of economy
In order to combat with the problem and to raise money Japan will be selling some of holdings of US government debts which would push the prices of US treasury bonds down which may raise interest rates of US.
Even steel mills are also expected to suffer as demand is likely to reduce as industries are shut down which affects iron ore industry. There may be also problem arise of fuel in Asian countries as Japan is main exporter of fuel.
Toyota decided to manufacture its products in ASEAN countries. What factors do you think Toyota considered in selecting ASEAN countries as the site for the factories? Who benefits and who losses from the new plant in ASEAN? Is the firm’s decision consistent with OLMA model?
[10 marks]
ASEAN is the name given to the Association of Southeast Asian Countries. It was formed on 8th August, 1967 and till date the total number of countries in this association has gone up to 19. Some of the major countries in this association are Singapore, Indonesia, Thailand, and Malaysia. The business philosophy of Toyota Company is stable and a long term growth by developing those activities which focus on the importance of close relationships between society, individuals, the global environment and also the world economy. As Toyota is planning to consider an ASEAN country for its new manufacturing plant, it will go in favor of the company strategy. The people or the customers in these countries also have the same vision as the company has. Not only this , the vehicles produced by Toyota is within the buying level of the citizens in these countries than any other European company. One can observe considerable increase in the sale of Toyota automobile in ASEAN countries. Moreover the culture of these countries is somewhat similar to Japan and hence there is no distance problem for the company even. Moreover, the trade integration between Asian nations also makes the business of Toyota move smoothly. After going through all the above points, it seems that this new business strategy will go in the positive direction for the profit of Toyota. The major loss from this step will be to the competitors of the company, basically European cars. The European countries are expensive than the cars produced by Toyota and the major population living in ASEAN countries comprises of middle level income. So, more people will prefer to buy cheaper product having good quality. This is what Toyota is providing to the masses. Though it will be a bit difficult for the company to replace the competitor completely but if with some new technologies and ways, it gets replaced then ASEAN countries will be the major contributor in the company’s profits
How are the components of international strategy (scope of operation, resource deployment, distinct competency) likely to vary across different types of corporate strategy (single business, related diversification and unrelated diversification)
[10 marks]
In today’s turbulent business environment, corporate should be flexible and responsive. Corporate parent in a multi firm organization can facilitate creating strategically organization, which have cascading effect on divisions under its control, which can become a true value driver. From the last fifty years, there has been a rapid change in the global economy. There has been a tremendous development in the world economic integration and some of the standardized products. The prime components of international strategy of any business organization are the scope of its business operation, resource deployment of the product and most important its competitors across the international boundaries. International business strategy can be defined as all those set of activities which can help in managing organizational business at both national and international level. It helps in the achievement of competitive advantage over its competitors at both the levels. As the corporate culture, basic culture varies across the world; it becomes entirely necessary for the organization to make its strategy as per the demand of the country in which the operation is going on. Customers today expect these things, making it necessary for firms to adopt strategic responses that emphasize speed, innovation, cooperation, quality, and cost effectiveness. The foreign policy of any country is one of the important policies of a country. There are number of terms and decisions regarding the foreign trade, foreign investments and relationship between the countries. Today is the time of globalization. If the economy of a country is good the only the country will be capable to establish profitable trade relations with the foreign countries. Otherwise due to any reason, if the country is facing slum in economy or if its economic growth rate is low, then the foreign countries will think whether they should trade with that country or not. In this way the economy affects a lot in foreign policy making decisions.
[10 marks]
Japan the third largest economy in the world behind china and US has been suffering from world’s largest and costliest natural disaster of a deadly earthquake and huge tsunami. This not only affected Japanese economy but the impact is being felt on the world economy. Before this disaster Japan was contributing 18% to the world’s economy which fell to only 9% after this problem.
Process of exports and imports the major dependence business is affected by this disaster and raised fear of high interest rates. Various numbers of manufacturing companies are in Japan which is not able to produce and trade hence not able to fulfill the needs of various economies. The various sector in which Japan faced a trouble are car industry, electronics etc. this disaster halted the orders because of no production which may increase the prices also for the products in near future.
Panic on trading can also be felt on Tokyo’s stock exchange which is hammering markets worldwide.
The industry of smart phones and computers are also harmed because Japan supplies chips for making these products and in turn affected tech companies all over.
Global oil markets are also hampered as Japan was the biggest importer of oil because of presence of more industries but after the disaster many of the companies are shut down hence consumption of oil is near to nil due to which prices of barrel decreased.
Reconstruction of Japan economy and the northeastern coast of Japan could even strike heavily on the growth of economy
In order to combat with the problem and to raise money Japan will be selling some of holdings of US government debts which would push the prices of US treasury bonds down which may raise interest rates of US.
Even steel mills are also expected to suffer as demand is likely to reduce as industries are shut down which affects iron ore industry. There may be also problem arise of fuel in Asian countries as Japan is main exporter of fuel.
Toyota decided to manufacture its products in ASEAN countries. What factors do you think Toyota considered in selecting ASEAN countries as the site for the factories? Who benefits and who losses from the new plant in ASEAN? Is the firm’s decision consistent with OLMA model?
[10 marks]
ASEAN is the name given to the Association of Southeast Asian Countries. It was formed on 8th August, 1967 and till date the total number of countries in this association has gone up to 19. Some of the major countries in this association are Singapore, Indonesia, Thailand, and Malaysia. The business philosophy of Toyota Company is stable and a long term growth by developing those activities which focus on the importance of close relationships between society, individuals, the global environment and also the world economy. As Toyota is planning to consider an ASEAN country for its new manufacturing plant, it will go in favor of the company strategy. The people or the customers in these countries also have the same vision as the company has. Not only this , the vehicles produced by Toyota is within the buying level of the citizens in these countries than any other European company. One can observe considerable increase in the sale of Toyota automobile in ASEAN countries. Moreover the culture of these countries is somewhat similar to Japan and hence there is no distance problem for the company even. Moreover, the trade integration between Asian nations also makes the business of Toyota move smoothly. After going through all the above points, it seems that this new business strategy will go in the positive direction for the profit of Toyota. The major loss from this step will be to the competitors of the company, basically European cars. The European countries are expensive than the cars produced by Toyota and the major population living in ASEAN countries comprises of middle level income. So, more people will prefer to buy cheaper product having good quality. This is what Toyota is providing to the masses. Though it will be a bit difficult for the company to replace the competitor completely but if with some new technologies and ways, it gets replaced then ASEAN countries will be the major contributor in the company’s profits
How are the components of international strategy (scope of operation, resource deployment, distinct competency) likely to vary across different types of corporate strategy (single business, related diversification and unrelated diversification)
[10 marks]
In today’s turbulent business environment, corporate should be flexible and responsive. Corporate parent in a multi firm organization can facilitate creating strategically organization, which have cascading effect on divisions under its control, which can become a true value driver. From the last fifty years, there has been a rapid change in the global economy. There has been a tremendous development in the world economic integration and some of the standardized products. The prime components of international strategy of any business organization are the scope of its business operation, resource deployment of the product and most important its competitors across the international boundaries. International business strategy can be defined as all those set of activities which can help in managing organizational business at both national and international level. It helps in the achievement of competitive advantage over its competitors at both the levels. As the corporate culture, basic culture varies across the world; it becomes entirely necessary for the organization to make its strategy as per the demand of the country in which the operation is going on. Customers today expect these things, making it necessary for firms to adopt strategic responses that emphasize speed, innovation, cooperation, quality, and cost effectiveness. The foreign policy of any country is one of the important policies of a country. There are number of terms and decisions regarding the foreign trade, foreign investments and relationship between the countries. Today is the time of globalization. If the economy of a country is good the only the country will be capable to establish profitable trade relations with the foreign countries. Otherwise due to any reason, if the country is facing slum in economy or if its economic growth rate is low, then the foreign countries will think whether they should trade with that country or not. In this way the economy affects a lot in foreign policy making decisions.
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