Question

In: Operations Management

international business What are some of the most important considerations we should evaluate to best configure...

international business

What are some of the most important considerations we should evaluate to best configure our production and supply chain operations.

Provide specific details for each consideration

Solutions

Expert Solution

Legal, economic and political environmental factors are important considerations & should be evaluated for best configuration of production and supply chain in international economies.  

They play an important role to influence the marketing and strategic decisions for the various organisation that are competing globally.

Legal Factors & related criteria

  • The legal factors mean adhering to all rules and regulations so it helps to define the means of production and also gives direction to distribution strategy in the country.
  • The per capita aspect helps to define a nation's overall wealth and helps to determine marketing strategies to target a potential market. The class structure helps to define the distribution of wealth in a country and shapes the marketing effort depending on what percentage is upper, middle and low-income families in the economy.
  • The supply and demand analysis helps to position the marketing mix in the best manner and gives proper results.
  • The rules and regulations offer a lot of advantages to the MNC. The tariffs and duties on important defined the operations within the country.
  • Currency conversion, risk and safety regulations also define the marketing mix of a business in a country.

All these legal factors become important for selecting a particular economy, country, supply chain management in the market for international business.

Role of Political Factors

  • The political and legal factors influence the marketing efforts globally as the interest of the government, ideologies, interest of pressure groups and legal laws governing the system has to be analysed.
  • These factors are important as they impact the production capacity, cost, design & marketing of the product.
  • Licensing and various permits and approvals required for operating in a country define the importance of such political factors.
  • Various taxes, fees and tariffs have to be assessed to plan & implement the business model and marketing efforts. Various governments have different policies and all have to be taken into account while operating & marketing internationally.
  • The currency risk as a political factor plays an important role to plan marketing efforts as a wrong decision can lead to massive losses.

The production & supply chain can be hugely impacted by such political factors and should be taken into consideration.

Role of Economic Factors

  • The economic factors have a macro-level impact on company operations. It helps to define the means of production and also gives direction to distribution strategy across the globe.
  • The per capita aspect helps to define a nation's overall wealth and helps to determine marketing strategies to target a potential market.
  • The class structure helps to define the distribution of wealth in a country and shapes the marketing effort depending on what percentage is upper, middle and low-income families in the economy.
  • The supply and demand analysis helps to position the marketing strategy in the best manner and gives proper results.

Other Economic Factors:

  • One of the important factors is the stability of the political situation and related policies as it directly impacts the development of the economy.
  • The economic and legal factors help to bring reforms and transformation in the International Business. Various rights and privileges related to contractual system and properties help to differentiate the growth between various economies.
  • The culture of innovation and entrepreneurship is also a major factor that contributes to the economic growth of any business. The investment and support for research and development, building a culture of innovation and providing a healthy environment for entrepreneurs helps to contribute towards long-term growth.
  • The planning of the entire economy helps to define goals and makes them measurable. It helps to focus on a certain key aspect of policies leading to efficient resource utilisation.
  • The domestic and local market having an external orientation to operations helps to bring economic development. It helps to compare with competition and makes it export friendly.
  • All the factors involved in the production process like land, raw material & resources, labour, technology and quality of management helps to create a great environment for economic growth and sustainability.
  • Support and focused growth of the industrial sector is another important factor. Economies having specialised focus and resources for industrial sector creates opportunities and leads to optimal resource utilisation.
  • Privatisation and globalisation confidence for state/government owner enterprises helps to bring innovation and modernisation in the economies. Privatisation brings new technologies and better results in terms of productivity. It helps to make production & supply chain operations efficient & modern.

Here are some of the future opportunities that must be checked as it will will help to make the advantage of the same:

  • The Supply chain digitisation offers a great future and helps the firm to plan better in a fast, highly competitive & complex business environment. It will help to improve the speed, dynamics and comntinituiy of the supply chain.
  • Artificial intelligence is the future opportunity area for logistics management - with numerous application it can help to improve & automate warehouse management. Robotics and automation can make the supply chain run without challenges and also help in repetitive tasks making the overall process efficiency.
  • Another opportunity area involves strong and better collaborations to improve overall logistics management. It will lead to stronger relationships & help avoid risks. It will also reduce the overutilisation of resources & time.
  • Risk management techniques and companies adopting the same is the future of logistics management. Outsourcing practices, offshoring, diversity & versatility of the product, security and interdependency can be managed better with these risk planning tools & techniques.
  • Knowledge and data work will be more important and will go up in future - as the business will become,e fully global the knowledge work will go global as well. It will allow global companies to work from headquarters and manage all the operations.
  • The wearable devices will be the future and be used by the warehouse teams to work in a fast manner and get an accurate collection of inventory data, keeping track of items and distribution channels.

Software as service models and also much-developed logistics & supply chain visibility are future opportunities which will help to increase the efficiency of the entire process. The mobile point of sale sensors will make drastic changes to the entire logistics management.

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