Page 275 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes the cost of transporting the finished product is significantly higher than for the components,
export in the CKD form would be preferred and the assembling of the product would be
done in the foreign market. This will be particularly attractive if the labour is cheap in the
foreign market. Sometimes the import duty and transport cost will favour the complete or
most of the manufacturing activity in the foreign market.

exchange rate variation

Exchange rate fluctuations may also influence the import vs. manufacturing decision.
A depreciation of the foreign currency vis-à-vis the home currency will make imports into the
foreign country costly and this may encourage production within the foreign market.

availability and cost of inputs

Availability and cost of inputs (including land and infrastructure), obviously, are critical factors
influencing the location decision. The infrastructure and other facilities and incentives are the
attraction of export processing/special economic zones.

factors

Certain locations are preferred because of logistical reasons the cost and ease of moving products
to various markets. Some locations (Singapore, for example) are indeed regarded as the hub of
international operations.
Government Policies and regulations

Government regulations like foreign investment policy, environmental regulations, local content
stipulations, labour laws, taxation, assistances and incentives, dividend policies, etc., influence
the location.

social and Political factors

Social and political factors such as attitude towards foreign business, domestic harmony and
peace, etc. also influence the location decision.

14.4 international logistics management

According to John Daniels and lee H. radebaugh an important dimension of the supply chain
is logistics, also sometimes called materials management. It is the design and management of a
system that controls the forward and reverse flow of materials, services, and information into,
through, and out of the international corporation.
According to the council of logistics management, usa, “logistics management is the “process
of planning, implementing and controlling the efficient, cost effective flow and storage of raw
materials, in-process inventory, finished goods, and related information from point of origin to
point of consumption for the purpose of conforming to the customer requirements.”
The difference between supply chain management and materials management is only of
degree. Materials management, or logistics, focuses much more on the transport and storage of
materials and final goods, whereas supply chain management extends beyond that to include
the management of supplier and customer relations. It is an important component of operations

management.

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