International Business - BA4302 - Notes - Unit 3 - Global Entry
International Business - BA4302 - Notes - Unit 3 - Global Entry
3rd Semester
Human Resources
2nd Semester
Syllabus:Strategic compulsions – Strategic options – Global portfolio management- Global entry strategy,
different forms of international business, advantages - Organizational issues of international business –
Organizational structures – Controlling of international business, approaches to control – Performance of
global business, performance evaluation system.
International Strategic Planning
International strategic planning is a process of evaluating the internal and external environment by
multinational organizations, through which they set their long-term and short-term goals and then they
implement a specific plan of action in order to achieve those objectives.
Strategic management is the process of systematically analyzing various opportunities and threats vis-à-vis
organizational strengths and weaknesses, formulating and arriving at strategic choices through critical
evaluation of alternatives and implementing them to meet the set objectives of the organization.
Strategic Compulsions
It means that the companies face the compulsion to be global if they want to gain the global market and
more values. But in the modern context strategic management faces many compulsions. The present and
future development of the field of strategic management is likely to be driven by compulsions like
contemporary developments in social and economic theory and recent changes in the nature of the business
and economic context.
To survive in the world of cut-throat competition, companies must sell their products in the global market. It
is necessary to come up with new strategies to win more customers. Effective strategic management requires
strategic estimation, planning, application and review/control.
The path for strategic management is activated by compulsions like modern developments in the societal
and economic theory and the recent changes in the form of business, apart from the economic context.
Areas of Strategic Compulsions
Here is a list of some compulsions that a global business might have to face −
E-commerce and Internet Culture − Expansion of internet and information technology made the
business move towards e-commerce. Online shopping /Selling and Advertising are important issues.
These factors compel the businesses to go modern.
Hyperactive Competition − Businesses now are hyper-competitive which compel them to draw a
competitive strategy that includes general competitive intelligence to win the market share.
Diversification − Uncertainty and operational risks have increased in the current global markets.
Companies now need to protect themselves by diversifying their products and operations. Businesses
now are compelled to focus on more than one business, or get specialized in one business.
Active Pressure Groups − Contemporary pressure groups direct businesses to be more ethical in
their operations. Most of the multinationals are now spending a good deal to address their Corporate
Social Responsibility (CSR).
Strategic Options
Strategic Options include a set of strategies that helps a company in achieving its organizational goals. It is
important to do a SWOT analysis of the internal environment and also the external environment to get the
list of possible strategic alternatives.
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A business can’t run on gut feeling and hence, strategic options are indispensable tools for every
international business manager. The following diagram shows the very basic options to choose – whether to
go global or act local while improving the business in a holistic manner.
Strategic options/choice involves the selection of a strategy or set of strategies that helps in achieving
organizational objectives.
Global strategy
International strategy
Transactional strategy
Multi-domestic strategy
Global strategy: It views the world as a single market. Tightly controls global operations from headquarters
to preserve focus on standardization.
International strategy: In this strategy company extends marketing, manufacturing and other activities
outside the home country.
Multi-domestic strategy: the international company discovers that differences in markets around the world
demand an adaptation of its marketing mix in order to succeed.
Transactional strategy: this is company that thinks globally and acts locally. The transactional corporation
is much more than a company with sales, investments and operations in many countries.
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External Constraints − The survival and prosperity of a business firm is fully dependent on
interaction and communication with the elements that are intrinsic to the business. It includes the
owners, customers, suppliers, competitors, government, and the stakeholders of the community.
Intra-organizational Forces − The big decisions of a company are often influenced by the power-
play among various interest groups. The strategic decision-making processes are no exception. It
depends on the strategic choices made by the lower Management and top notch strategic
management people.
Values and Preferences towards Risk − Values play a very important role, It has been observed
that the successful managers have a more pragmatic, interactive and dynamic progressive and
achievement seeking values. The risk takers in the high-growth less-stable markets prefer to be the
pioneers or innovators. They seek an early entry into new, untapped markets.
Impact of Past Strategies − A strategy made earlier may affect the current strategy too. Past
strategies are the starting point of building up a new strategies
Time Constraints − There may be deadlines to be met. There may be a period of commitment,
which would require a company to take immediate action.
Information Constraints − The choice of a strategy depends heavily on the availability of
information. A company can deal with uncertainty and risks depending on the availability of
information at its disposal. Lesser the amount of information, greater the probability of risks.
Competitor’s Risk − It is important to weigh the strategic choices the competitors may have. A
competitor who adopts a counter-strategy must be taken into account by the management. The
likelihood of a competitor’s strength to react and its probable impact will influence the strategic
choices.
Global Portfolio Management
Global Portfolio Management, also known as International Portfolio Management or Foreign Portfolio
Management,refers to grouping of investment assets from international or foreign markets rather than from
the domestic ones. The asset grouping in GPM mainly focuses on securities. The most common examples of
Global Portfolio Management are −
Share purchase of a foreign company
Buying bonds that are issued by a foreign government
Acquiring assets in a foreign firm
Factors Affecting Global Portfolio Investment
Global Portfolio Management (GPM) requires an acute understanding of the market in which investment is
to be made. The major financial factors of the foreign country are the factors affecting GPM. The following
are the most important factors that influence GPM decisions.
Tax Rates
Tax rates on dividends and interest earned is a major influencer of GPM. Investors usually choose to invest
in a country where the applied taxes on the interest earned or dividend acquired is low. Investors normally
calculate the potential after-tax earnings they will secure from an investment made in foreign securities.
Interest Rates
High interest rates are always a big attraction for investors. Money usually flows to countries that have high
interest rates. However, the local currencies must not weaken for long-term as well.
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Exchange Rates
When investors invest in securities in an international country, their return is mostly affected by −
The apparent change in the value of the security.
The fluctuations in the value of currency in which security is managed.
Investors usually shift their investment when the value of currency in a nation they invest weakens more
than anticipated.
Modes of Global Portfolio Management
Foreign securities or depository receipts can be bought directly from a particular country’s stock exchange.
Two concepts are important here which can be categorized as Portfolio Equity andPortfolio Bonds. These
are supposed to be the best modes of GPM. A brief explanation is provided hereunder.
Portfolio Equity
Portfolio equity includes net inflows from equity securities other than those recorded as direct investment
and including shares, stocks, depository receipts (American or global), and direct purchases of shares in
local stock markets by foreign investors.
Portfolio Bonds
Bonds are normally medium to long-term investments. Investment in Portfolio Bond might be appropriate
for you if −
You have additional funds to invest.
You seek income, growth potential, or a combination of the two.
You don’t mind locking your investment for five years, ideally longer.
You are ready to take some risk with your money.
You are a taxpayer of basic, higher, or additional-rate category.
Global Mutual Funds
Global mutual funds can be a preferred mode if the Investor wants to buy the shares of an internationally
diversified mutual fund. In fact, it is helpful if there are open-ended mutual funds available for investment.
Closed-end Country Funds
Closed-end funds invest in internationals securities against the portfolio. This is helpful because the interest
rates may be higher, making it more profitable to earn money in that particular country. It is an indirect way
of investing in a global economy. However, in such investments, the investor does not have ample scope for
reaping the benefits of diversification, because the systematic risks are not reducible to that extent.
Drawbacks of Global Portfolio Management
Global Portfolio Management has its share of drawbacks too. The most important ones are listed below.
Unfavorable Exchange Rate Movement − Investors are unable to ignore the probability of
exchange rate changes in a foreign country. This is beyond the control of the investors. These
changes greatly influence the total value of foreign portfolio and the earnings from the investment.
The weakening of currency reduces the value of securities as well.
Frictions in International Financial Market − There may be various kinds of market frictions in a
foreign economy. These frictions may result from Governmental control, changing tax laws, and
explicit or implicit transaction costs. The fact is governments actively seek to administer
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international financial flows. To do this, they use different forms of control mechanisms such as
taxes on international flows of FDI and applied restrictions on the outflow of funds.
Manipulation of Security Prices − Government and powerful brokers can influence the security
prices. Governments can heavily influence the prices by modifying their monetary and fiscal
policies. Moreover, public sector institutions and banks swallow a big share of securities traded on
stock exchanges.
Unequal Access to Information − Wide cross-cultural differences may be a barrier to GPM. It is
difficult to disseminate and acquire the information by the international investors beforehand. If
information is tough to obtain, it is difficult to act rationally and in a prudent manner.
Global Entry Strategy - Global market entry strategies
How you enter your new market will be determined by the nature of your product and/or service, and the
conditions and requirements of your chosen market segment and location.
Exporting strategies
Direct strategies
When you sell directly to end-users, you eliminate the middlemen making it easier to customize your market
entry strategy to reflect the market conditions you may face.
Sales can be made directly between you and end-users, or they can be made through local sales
representatives who promote your product and/or service without taking ownership. You can use a distributor
to sell your products directly to buyers.
When you sell directly to end-users, you'll be responsible for:
market research
marketing
distribution
warehousing and delivery of your product and/or service
customer and after-sales service
Sales order, and billing.
Indirect strategies
When you sell indirectly to end users, exports are not handled directly by the manufacturer or producer, but
through intermediaries such as agents, export management and trading companies.
In most cases, the exporting process is simplified and export management companies are usually responsible
for:
providing market information
appointing sales representatives in the importing country
devising promotional strategies
organizing shipping
export documentation
Export trading companies usually provide support services such as distribution, warehousing, shipping,
billing and insurance.
Countertrade
A countertrade is a form of exporting where goods and services are paid for in full, or in part, with other
goods and services.
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Selling online
There are a few different approaches to selling online. You can:
set up your own website in the export destination country which incorporates an online store, known
as Business-to-Consumer
sell your product wholesale to major e-commerce sites, which will then manage the marketing, sales
and distribution to customers, known as Business-to-Business
set up an online store within a major e-commerce site, known as Business-to-Consumer
Sell your product through a third-party store or online supermarket, known as Business-to-Business-
to-Consumer.
Contractual entry modes
Licensing
Licensing allows an individual or a company that owns intangible property (such as copyright or a
trademark) to grant another party the right to use that property for a specified period of time, and under
specified conditions. Payment is received in the form of royalties.
Pros Cons
Can reduce risk and be an effective way to finance Your licensing agreement may restrict any future
international expansion. activities, or reveal information to a possible future
competitor.
Franchising
Franchising is when the owner of the business providing a product and/or service (the franchiser) assigns to
independent people (the franchisees) the right to market and distribute the franchiser's products and/or
service, and to use the business name for a specified period of time, and under specified conditions.
Pros Cons
It's a low-cost, low-risk mode of entry into new As a franchiser, you're obliged to continue to support
markets allowing you to use the cultural knowledge the franchisee after the initial one-time transfer of
and know-how of local managers. property is complete.
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Strategic alliances
A strategic alliance is when two or more entities cooperate to achieve a strategic goal. Depending on the
goals, alliances can be formed between a company and its suppliers, customers, or even its competitors in
some instances, for short, medium or long-term periods.
Pros Cons
You can share costs and utilise member strengths. There's risk of conflict between partners, not to
mention the creation of a future local or international
competitor.
Wholly owned subsidiaries
A wholly owned subsidiary is a company that is completely owned and controlled by a single parent
company.
Pros Cons
You have complete control over the day-to-day It requires substantial resources, so the exposure to
operations in markets overseas, while at the same risk is high.
time acquiring valuable processes and technologies.
1. Exporting: Exporting means producing/procuring in the home market and selling in the foreign
market. Exporting is not an activity just for large multinational enterprises; small firms can also make
money by exporting. In recent days, exporting has become easier though it remains a challenge for
many firms.
2. Licensing: A licensing is an agreement whereby a licencor grants the rights to intangible property
(patents, intentions, formulas, processes, designs, copyrights and trademarks) to another entity
(licensee) for a specified period and in return the licencor receives a royalty/fee from the licensee.
3. Franchising: Franchising is basically o specialized form of licensing in which the franchiser not only
sells intangible property to the franchisee but also insists that the franchisee agrees to abide by strict
rules as to how it does business.
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4. Joint venture: A joint venture entails establishing a firm that is jointly owned by two or more
independent firms.
5. Management Contracts: A firm in one country agrees to operate facilities or provide other
management services to a firm in another country for an agreed upon fees.
6. Turnkey projects: In a turnkey project, the contractor agrees to handle every details of the project
for a foreign client, including the training of operating personnel. At completing of the contract the
foreign client handles the ‘key’ of a plant that is ready for full operation
7. Strategic international alliances: A strategic international alliance is a business relationship
established by two or more companies to cooperate out of mutual need and to share risk in achieving
a common objective.
8. Direct foreign investment: Direct foreign investment is another important form of international
business. Companies may manufacture locally to capitalize on low cost labor, to avoid high import
taxes, to reduce the high cost of transportation to market, to gain access to raw materials or gaining
market entry.
Advantages of DifferentForms of IB
Direct Exporting
You can select your foreign representatives in the overseas market.
You can utilize the direct exporting strategy to test your products in international markets before
making a bigger investment in the overseas market.
This strategy helps you to protect your patents, goodwill, trademarks and other intangible assets.
Licensing and Franchising
Low cost of entry into an international market
Licensing or Franchising partner has knowledge about the local market
Offers you a passive source of income
Reduces political risk as in most cases, the licensing or franchising partner is a local business entity
Allows expansion in multiple regions with minimal investment
Joint Venture
Both partners can leverage their respective expertise to grow and expand within a chosen market
The political risks involved in joint-venture is lower due to the presence of the local partner, having
knowledge of the local market and its business environment
Enables transfer of technology, intellectual properties and assets, knowledge of the overseas market
etc. between the partnering firms
Strategic Acquisitions
Your business does not need to start from scratch as you can use the existing infrastructure,
manufacturing facilities, distribution channels and an existing market share and a consumer base
Your business can benefit from the expertise, knowledge and experience of the existing management
and key personnel by retaining them
It is one of the fastest modes of entry into an international business on a large scale
Foreign Direct Investment
You can retain your control over the operations and other aspects of your business
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Leverage low-cost labour, cheaper material etc. to reduce manufacturing cost towards obtaining a
competitive advantage over competitors
Many foreign companies can avail for subsidies, tax breaks and other concessions from the local
governments for making an investment in their country
Organisational Issues of IB
Expanding business overseas means reaching new clients or customers and potentially boosting profits.
Despite all the uncertainty and the challenges that have yet to reveal themselves, there are some guidelines
for conducting business on a global scale that we should always consider before leaping into new
international operations. Here is some advice on how to tackle the 11 biggest challenges for international
business:
1. International company structure
2. Foreign laws and regulations
3. International accounting
4. Cost calculation and global pricing strategy
5. Universal payment methods
6. Currency rates
7. Choosing the right global shipment methods
8. Communication difficulties and cultural differences
9. Political risks
10. Supply chain complexity and risks of labor exploitation
11. Worldwide environmental issues
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It’s important to note that employment and labor requirements also differ by country. For instance, European
countries stipulate that a minimum of 14-weeks maternity leave be offered to employees, while on the other
hand, there is no such requirement for U.S. employers.
3. International Accounting
Of the main legal areas to consider when it comes to doing international business, tax compliance is perhaps
the most crucial. Accounting can present a challenge to multinational businesses who may be liable for
corporation tax abroad. Different tax systems, rates, and compliance requirements can make the accounting
function of a multinational organization significantly challenging.
Accounting strategy is key to maximizing revenue, and the location where your business is registered can
impact your tax liability. Mitigating the risk of multiple layers of taxation makes good business sense for any
organization trading abroad. Being aware of tax treaties between countries where your business is trading
will help to ensure you’re not paying double taxes unnecessarily.
4. Cost Calculation and Global Pricing Strategy
Setting the price for your products and services can present challenges when doing business overseas and
should be another major consideration of your strategy. You must consider costs to remain competitive,
while still ensuring profit. Researching the prices of direct, local-market competitors can give you a
benchmark, however, it remains essential to ensure the math still works in your favor. For instance, the cost
of production and shipping, labor, marketing, and distribution, as well as your margin, must be a taken into
account for your business to be viable.
Pricing can also come down to how you choose to position your brand — should the cost of your product
reflect luxury status? Or will low prices help you to penetrate a new market?
Swedish furniture giant Ikea, known in Europe for its low-cost value, struggled initially in China due to local
competitor costs of labor and production being much cheaper. By relocating production for the Chinese
market and using more locally sourced materials, the company was able to successfully cut prices to better
reflect its brand and boost sales among target consumers.
5. Universal Payment Methods
The proliferation of international e-commerce websites has made selling goods overseas easier and more
affordable for businesses and consumers. However, payment methods that are commonly accepted in your
home market might be unavailable abroad. Determining acceptable payment methods and ensuring secure
processing must be a central consideration for businesses who seeks to trade internationally.
Accepting well-known global payment methods through companies like Worldpay, as well as accepting local
payment methods, such as JCB in Asia or Yandex Money in Russia, can be a good option for large
international businesses. Accepting wire transfers, PayPal payments, and Bitcoin, are other possibilities.
6. Currency Rates
While price setting and payment methods are major considerations, currency rate fluctuation is one of the
most challenging international business problems to navigate. Monitoring exchange rates must therefore be a
central part of the strategy for all international businesses. However, global economic volatility can make
forecasting profit especially difficult, particularly when rates fluctuate at unpredictable levels.
Major fluctuations can seriously impact the balance of business expenses and profit. One way to protect
yourself against large fluctuations in currency is to pay suppliers and production costs in the same currency
as the one you’re selling in.
Another option for mitigating the risk of unpredictable currency rates can be setting up a forward contract
and agreeing a price in advance for future sales. Of course, this potentially means missing out on greater
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profit should rates shift in your favor. However, it can protect your sales from the risk presented by unstable
currency.
7. Choosing the Right Global Shipment Methods
The potential of online sales presents a huge international business opportunity for retailers in the 21 st
century, but finding reliable, fast, and cost-effective shipment and distribution methods can be a difficult
balance in some markets. Depending on the volume and destination of your shipments, will you send by land,
sea, air, or a combination. Your choice of shipping method can be a major influence on your revenue and
may be a limiting factor to the products you can viably sell overseas.
Other considerations to address according to your company’s products and your target markets include
customs fees, the need and cost of storage, and local methods of distribution. There are also country-specific
regulations and shipping requirements to take into account.
8. Communication Difficulties and Cultural Differences
Good communication is at the heart of effective international business strategy. However, communicating
across cultures can be a very real challenge.
Effective communication with colleagues, clients, and customers abroad is essential for success in
international business. And it’s often more than just a language barrier you need to think about — nonverbal
communication can make or break business deals too. Do your research and know how different cultural
values and norms — such as shaking hands — can and should influence the way you communicate in a
professional context. Being aware of acceptable business etiquette abroad, and how things like religious and
cultural traditions can influence this, will help you to better navigate potential communication problems in
international business.
Cultural differences can also influence market demand for your product or service. The need your business
may address at home may already be met or not exist at all overseas. Local market insight is key, and there
are a number of successful brands whose business models simply weren’t viable in overseas markets. For
instance, American coffee company Starbucks seriously struggled in Australia, where the demand for local,
independent cafes and coffee shops vastly outweighed the appeal of the corporate giant.
9. Political Risks
An obvious risk for international business is political uncertainty and instability. Countries and emerging
markets that may offer considerable opportunities for expanding global businesses may also pose challenges,
which more established markets do not. Before considering expansion into a new or unknown market, a risk
assessment of the economic and political landscape is critical.
Issues such as ill-defined or unstable policies and corrupt practices can be hugely problematic in emerging
markets. Changes in governments can bring changes in policy, regulations, and interest rates that can prove
damaging to foreign business and investment.
10. Supply Chain Complexity and Risks of Labor Exploitation
When it comes to sourcing products and services from overseas, managing suppliers and supply chains can
also be a tricky process. Unfortunately, the length and complexity of supply chains increases the chance of
working with suppliers who have unethical — and even illegal — business practices. Of growing concern is
the risk in international business of forced labor and worker exploitation.
11. Worldwide Environmental Issues
As the environmental risks and effects of climate change are becoming better understood, sustainability is
high on the agenda of many major global corporations. Recent international legislations and proposals, such
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as the UN’s Sustainable Development Goals, have put environmental issues at the forefront of international
business development.
On a practical level, if you’re considering expanding your business overseas, it’s important to be aware of the
country-specific environmental regulations and issues associated with your industry. Some key
considerations include how your production methods might impact the local environment through waste and
pollution.Beyond a legal or ethical incentive to be more eco-friendly, establishing environmentally conscious
business practices can attract new, forward-thinking consumers to your company.
Organizational Structures
Every international business firm has to face various issues related to organizational policies. These
organizational issues are to be addressed carefully in order to keep the business healthy and profitable.
Although there are numerous issues, both small and big, we will primarily concentrate only on the major
issues that need to be addressed.
Centralization vs. Decentralization
Centralization is the systematic and consistent reservation of authority at central points in the organization.
In centralization,the decision-making capability lies with a few selected employees. The implications of
centralization are
Decision making power is reserved at the top level.
Operating authority lies with the mid-level managers.
Operation at lower level is directed by the top level.
Almost every important decision and operational activities at the lower level are taken by the top
management.
Decentralization is a systematic distribution of authority at all levels of management. In a decentralized
entity, major decisions are taken by the top management to build the policies concerning the entire
organization. Remaining authority is delegated to the mid- and lower-level managers.
Use of Subsidiary Board of Directors
International firms, especially the fully-owned ones, usually have a board of directors to oversee and direct
the top-level management. The major responsibilities of board-members are to −
Advice, approve, and appraise local management.
Help the management unit in providing response to local conditions.
Assist the top management in strategic planning.
Supervise the firm’s ethical issues.
Organizational Structures
Any international business organization, depending on its requirements and operations, would have an
organization structure to streamline all its processes. In this section, we will try to understand some of the
major types of organizational structures.
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Advantages
International attitude gets the attention of top management
United approach to international operations
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Disadvantages
Separates domestic managers from their international counterparts
Difficulty in ideating and acting strategically and in allocating resources globally
Global Product Division
Global product divisions include domestic divisions that are allowed to take global responsibility for
product groups. These divisions operate as profit centers.
Advantages
Helps manage product, technology, customer diversity
Ability to cater to local needs
Marketing, production, and finance gets a coordinated approach on a product-by-product, global basis
Disadvantages
Duplication of facilities and staff personnel within divisions
Division manager gets attracted to geographic prospects and neglects long-term goals
Division managers spending huge to tap local, not international markets
Global Area Division
Global area division structure is used for operations that are controlled on a geographic rather than a product
basis. Firms in mature businesses with select product lines use it.
Advantages
International operations and domestic operations remain at the same level
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Advantages
It emphasizes on functional leadership, centralized-control, and leaner managerial staff
Favorable for firms that require a tight, centralized coordination and control over integrated
production mechanisms
Helps those firms that need to transport products and raw materials between geographic areas
Disadvantages
Not suitable for all types of businesses. Applicable to only oil and mining firms
Difficult to coordinate manufacturing and marketing processes
Managing multiple product lines can be challenging, as production and marketing are not integrated.
Mixed Matrix
This structure combines global product, area, and functional arrangements and it has a cross-cutting
committee structure.
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Advantages
Can be designed to meet individual needs
Promotes an integrated strategic approach tailored to local needs and priorities
Disadvantages
Complex structure, coordinating and getting everyone to work toward common goals becomes
difficult.
Too many independent groups in the structure
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The firms need to prioritize and focus to address only the key performance indicators.
Performance Evaluation System
A performance evaluation system must contain periodic review of operations so that the objectives of the
firm are accomplished. It is important to have the accounting information to evaluate domestic and foreign
operations’ costs and profitabilities.
It is not all that simple to measure the performance of an individual, a division, a subsidiary, or even a
company as a whole. It is a lengthy and hectic process. The objectives of performance evaluation are to −
Find the economic performance of the firm
Analyze each unit’s management performance
Monitor the progress of objectives, including the strategic goals
Assist in appropriate allocation of resources
Financial and Non-Financial Measures of Evaluation
ROI (Return on Investment) − ROI is the most common method to evaluate the performance of an
international firm. It shows the relationship between profit to invested capital and encompasses almost all
important factors related to performance. An improved ROI can act as a logical motivator of the managers.
Budget as Success Indicator − Budget is an accepted tool for measuring and controlling the operations. It is
also used to forecast future operations. A budget is a clearly expressed set of objectives that guide the
managers to set their individual performance standards. A good local or regional budget helps the company
to facilitate its strategic planning process smoothly.
Non-Financial Measures − The major non-financial measures that can be used to evaluate performance are
− Market Share, Exchange Variations, Quality Control, Productivity Improvement, and Percentage of Sales.
Types of Performance Evaluation Systems
Performance evaluation systems can be of the following types −
Budget Programming − Budget programming is prepared for operational planning and financial
control. It is an easy-to-calculate system to evaluate the variance. It is used to measure the current
performance in relation to some comparable performance metric from the past.
Management Audit − It is an extended form of financial audit system which monitors the quality of
management decisions in financial operations. It is used for appraisal and performing audit for
management.
Programme Evaluation Review Technique (PERT) − Based on CPM, PERT delineates a given
project or program into network of activities or sub-activities. The goal is to optimize the time spent
by the managers. In this process, performance is measured by comparing the scheduled time and the
cost allocated with the actual time and the cost.
Management Information System (MIS) − MIS is an ongoing system designed to plan, monitor,
control, appraise, and redirect the management towards pre-defined targets and goals. It is a
universally acceptable practice which encompasses the financial, budgeting, audit and control systems
of the PERT.
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