Topic 7 Management of Foreign Operations and International Trade.ppt

Topic 7 Management of Foreign Operations and International Trade.ppt

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Topic 7: MANAGEMENT OF FOREIGN OPERATIONS AND INTERNATIONAL TRADE Lecture Notes Prepared by: Dr. Martine Oleche University of Nairobi School of Economics 09/11/18 1 Dr. Martine Oleche, School of Economics, University of Nairobi
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7.1 Management Of Foreign Operations and International Trade Many companies that have significant foreign operations derive a high percentage of their sales overseas. Financial manager of the company require an understanding of the complexities of international finance to make sound financial and investment decisions. International operations in the finance aspect or perspective involve consideration of managing working capital, financing the business, control of foreign exchange and political risks, foreign direct investments. The efficient and cost effective production and delivery of goods and services to customers is essential for business to flourish. Achieving this in the global marketplace poses unique and exciting challenges, and international companies require skilled operations manages to deliver these goals. 09/11/18 Dr. Martine Oleche, School of Economics, University of Nairobi 2
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7.2 Types of Foreign Operations Companies, nations involved in foreign operations business may structure their activities in the following three ways. 7.2.1 Wholly Owned Subsidiaries A large, well established company with much international experience may eventually have wholly owned subsidiaries. 7.2.2 IMPORTS/EXPORTS ACTIVITIES A small company with limited foreign experience operating in “risky areas” may be restricted to export and import activity. If the company’s sales force has minimal experience in export sales, it is advisable to use foreign brokers when specialized knowledge of foreign markets is needed. When sufficient volume exists, the company may establish a foreign branch sales offices, including sale people and technical services staff.
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