Posts Selected From the Category "International Business"

Inventory in the form of raw materials, work in process or finished goods is held;

1. to facilitate the production process by both ensuring that supplies are at hand when needed and allowing a more even rate of production and
2. to make certain that goods are available for delivery at the time of sale.

Although, conceptually, the inventory management problems faced by multinational firms are not unique, they may be exaggerated in the case of foreign operations. For instance, MNCs typically find it more difficult to control their overseas inventory and realize inventory turnover objectives. There are a variety of reasons: long and variable transit times if ocean transportation is used, lengthy customs proceedings, dock strikes, import controls, higher duties, supply disruption, and anticipated changes in currency values.

Advanced Inventory Purchases

In many developing countries, forward contracts for foreign currency are limited in availability or the nonexistent. In addition, restrictions often preclude free remittances, making it difficult, if not impossible, to convert excess funds into a hard currency. One means of hedging is to engage in anticipatory purchases of goods, especially imported items. The trade-off involves owning goods for which local currency prices may be increased, thereby maintaining the dollar value of the asset even devaluation occurs, versus forgoing the return on local money market investments.…

Credit is an essential requirement for any kind of business. So is the case with exporting also. The various sources available have to be explored by the exporter in order to fulfill the financial requirements of export business.

We can define export credit as “the credits required by the exporters for financing their export transactions from the time of getting an export order to the time of the full realization of the payment from the importers.”

From the time of an export order is received and confirmed, the exporter needs finance at pre-shipment stage and also at post-shipment stage.

Finance is required at pre-shipment stage for the following purposes:

1. To purchase raw materials and other inputs to manufacture goods.
2. To assemble the goods in the case of merchant exporters.
3. To store the goods in suitable warehouses till the goods are shipped.
4. To pay for packing, marking and labeling of goods.
5. To pay for pre-shipment inspection charges.
6. To pay for consultancy services.
7. To import or purchase from the domestic market heavy machinery and other capital goods to produce export goods.
8. To pay for export documentation expenses.

Finance is needed at the post-shipment stage for the following purposes:

1. To pay to agents / distributors and others for their services.
2. To pay for publicity and advertising in the overseas markets.

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