The Bangladesh Growth Story
Historically, Bangladesh has been one of the most impoverished regions in Asia. The 1971 war of independence left Bangladesh with a huge financial deficit. The end result was that the country was facing extreme poverty and famine for many years after their independence. Even before the independence, West Pakistani politicians would often call Bangladesh (then […]
Production Module – Subcontracting and Materials Issue
Production Order Subcontracting – In the age of production outsourcing and the organizational focus on their core competency, subcontracting of production orders is assuming greater importance. In addition to the business functionality necessary for producing goods in house, sub contraction operations necessitates some additional business process such as generation of sub contracting purchase order. Sub […]
Open Systems Approach to Project Management in Organizations
When organizations have “flat” structures and consist of coalitions of people coming together with multiple loyalties, intersection of the organization with its environment being characterized by shifting boundaries; the informal nature of the work processes makes use of “open” systems approach towards organizations. The point to note here is that external environments both shape and […]
Historic Greek Debt Relief Deal and the Lessons for Other Nations from this Crisis
Historic Debt Deal The Greek Debt Crisis is over, so proclaimed Finance Ministers from the Eurozone Countries who gathered in Brussels, on June 21st in talks that went into the early hours of the day. By saying so, they paved the way for Greece to emerge from a nearly decade long bailout process wherein it […]
What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
The Rise of Populism and Protectionism The election of President Trump represents the cusp of the current wave of protectionism and populism that emerged in the aftermath of the Global Financial Crisis of 2008. As the Brexit vote and the emergence of populist leaders such as Vladimir Putin in Russia showed, the disaffection and dissatisfaction […]
Today every individual entrepreneur owned businesses as well as Corporates have changed the way they look at their vision and business planning. Companies how ever big or small are no longer operating in domestic markets alone, for they have at their disposal the entire global market which is just waiting to be captured. The globalization has increased the international trade which has been enabled and propelled due to the electronic and internet revolution. Every company draws up ambitious business plans for its domestic markets as well as targeting the most attractive foreign markets for its products with a long term view makes up for most of the business plans.
Today most of the Organizations are thinking global, setting up networks globally and this is leading to an increase in international trade.
Multi National Product Company’s view of global markets and trade is totally different from the other smaller organizations. They generally tend to identify their markets first. To be able to cater to the growing markets they identify suitable manufacturing locations that give them the best cost advantage in terms of labor as well as other resources.
Using various Supply chain network models, as well as commissioning various Market Research reports, they choose to setup manufacturing or assembly plants based on analysis and detailed network designs. Accordingly we see manufacturing plants being set up or transferred from one region to another region. Many US and European companies have setup manufacturing locations in Malaysia, India, Hong Kong, Singapore, Indonesia, Philippines for these are known to offer skilled labor at cheaper costs and are ideally located to the growing markets too etc.
Then there are other companies in the US as well as Europe and other parts of the world who believe in outsourcing or contract manufacturing. There are several Large scale ECM/EMS companies like Sanmina, Solectron, Foxcon, Flextronics etc who have setup manufacturing facilities for electronics field and cater to leading brands all over the world. In the field of Electronics and Computers, contract manufacturing seems to be very much in vogue since 1980s.
Even in the field of pharmaceuticals, last two to three decades have seen several changes in terms of manufacturing. Multi national Companies have increasingly outsourced manufacturing of bulk drugs to countries that are cheaper especially to countries like China, India and Philippines etc.
The increased international trade and sales and marketing efforts in new markets have given impetus to international trade. While planning to capture a new market different Organizations have different approaches. While very big Multi National Companies like Procter & Gamble, Unilever, IBM, Microsoft etc, have approached new markets directly by establishing their own networks and offices in foreign countries, there are other companies that have sought to go in for a Joint venture with local business partners and bring in Foreign Direct Investments into the country. This approach varies from country to country and is especially dependent upon the foreign countries policy towards foreign direct investment and their support for global players to set shop in the country.
However there are host of medium and small size organizations those that explore new markets with a very clear approach of manufacturing locally, products for export markets and exporting to the new markets. Such organizations focus more on setting up marketing network in the new markets. There are different options that are followed by different organizations depending upon their business plans.
There are several different options available to exporters to market their products and manage the exports to the foreign country. Many companies appoint Sales Representatives or Agents that market the products, book orders and work on commission basis. The second type of model followed by many organizations is to appoint Country Distributor who will buy the stocks and sell in the local market. Yet another type of export marketing involves consignment sale to agents in which the consignment is exported to the agent who does not own the stock but holds it in inventory and sells in the market and repatriates the earning directly back to the company.
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