You may ask what freedom has to do with international marketing. Freedom is about options. If there is no alternative, there is no freedom. A true alternative provides the opportunity to make a decision, to exercise virtue. In the blaze of the klieg lights, it is easy to make the “right’’ decision. at is not an exercise in virtue, because real alternatives arr effectively removed. e true selection among alternatives takes place in the darkness of night when nobody is looking.
They say more marriages might survive if the couple realized that sometimes the better comes after the worse. Unfortunately, political partners tend to have little patience and loyalty. We have seen the referendum in Scotland that nearly tore the United Kingdom asunder. Now the British exit (BREXIT) from the European Union is rearranging the deck chairs on the ship Europa.
While sailors on the ship, marketers do not have the captain’s power to change the game, but they can help to achieve a less painful adjustment by understanding and preparing for the major transformations and significant effects in marketing on both sides of the Atlantic.
History may not repeat itself very often, but when parallels are witnessed, the effects can be major and gruesome. These are tough times for many. There is the ubiquitous occurrence of major terrorism, bringing insecurity to airplanes and airports, train stations, entertainment clubs and schools. There is growing wealth concentration for few, and low income for many others. We now witness the breakups of coalitions thought to be stable, for which the British exit (BREXIT) from EU is only one major signal.
A little more than a century ago the world climate was benign and secure for many, globalization was high. National conflict seemed unlikely to emerge between the cousins who ruled England, Russia and Germany. Yet, within only a few years, World War I had led to millions of casualties and major devastations of factories and cities. What are we to do now to demonstrate our strong dedication and willingness to sacrifice in order to avoid a dramatic overall deterioration in global civility, security, and economy?
There are many tinderboxes that cause ongoing flames. In order to guarantee spheres of influence the British/French Sykes-Picot agreement signed on May 16, 1916 drew hasty and culturally poorly conceived borders for the Middle East. The accord achieved the termination of the Ottoman Empire but has provided the world with a century of acerbic and painful conflict in the Middle East. Even today, the ongoing conflicts and assassinations in Turkey are just one reflection of disharmony, augmented by religious disagreements, blood feuds, political shortfalls and economic blight.
Groups who suffer from deprivations attack others to share their pain. As governments learn to protect possible targets better, terrorists seek and find softer, less protected and less expected targets. In consequence, poor governments, poor companies and poor citizens are the ones least able to protect themselves against attacks. An uncertain environment then leads to less local investment and even more poverty. There must be new steps to mitigate the causes of terrorism.
It is ironic and sad to now see a self-inflicted British exit from the EU, which does not better the world, but rather carries the virus for conflict. Large flows of immigrants still need destinies and require support. Britain’s move triggers and encourages other nations to also demand a special lightening of their obligations. But who will be the beast of burden and at what price? Already forward-looking countries find their own solution, often ahead of the more slowly reacting larger powers. Hungary’s early efforts to measure and control immigration was such a step. But in light of disagreements with major players, the nation found itself derided and penalized.
Progress in terms of global tranquillity and cohesion needs to be renewed. Confrontations between friends and adversaries need do not require winners and losers. All need to be willing to learn from each other, acknowledge and respect special needs and make allowances for the human dimension in conflict. With all the resources now available, there must be an ongoing search for and support of the soul of relationships and individuals. Forgiveness can well become a new objective. We all must contribute conscientiously to finding ways to help others by sharing their burden as well as encouraging them to share ours. Those who now sit at the table must let others approach. Dropping crumbs may be biblical, but is perhaps an insufficient reward for a better world.
The purpose of multinational firm is to benefit from system synergism. Therefore the coordination of international logistics at corporate headquarters is important. Without coordination, subsidiaries tend to optimize their individual efficiency but jeopardize the overall performance of the firm.
Centralized logistics Management
If headquarters exerts control, it must also take the primary responsibility for its decision. To avoid internal problems, both headquarters staff and local logistics management should report to one person. This person can then become the final arbiter to decide the firm’s priorities. Of course, this individual should also be in charge of determining appropriate rewards for manager, both at headquarters and abroad, so that corporate decisions that alter a manager’s performance level will not affect the manager’s appraisal and evaluation. Further, this individual can contribute an objective view when inevitable conflicts arise in international logistics coordination.
Decentralized Logistics Management
If a firm serves many international markets that are diverse in nature, total centralization would leave the firm unresponsive to local adaption need. If each subsidiary is made a profit center in itself, each one carries the full responsibility for its performance, which can lead to greater local management satisfaction and to better adaption to local market conditions. Yet often such decentralization deprives the logistics function of the benefits of coordination.
A growing preference among international firms is to outsource, often referred to as contract or third-party logistics (3PL) Most companies have outsourced at least one major logistics function such as customs clearance, transportation management, freight payment, warehouse management, shipment tracking, or other transportation-related functions. The main thrust behind the idea is that individual firms are experts in their industry and should therefore concentrate only on their operations. 3PL providers are experts at logistics, with the knowledge and means to perform efficient and innovative services for those companies in need. The goal is improved service at equal or lower cost.
Logistics providers’ service at equal or lower cost. Logistics providers’ services vary in scope. Some may use their own assets in physical transportation, while others subcontract out portions of the job. Certain other providers are not involved as much with the actual transportation as they are with developing systems and database or consulting on administrative management services. In many instances, the partnership consists of working closely with established transport providers such as the FedEx or UPS.
One of the greatest benefits of contracting out the logistics function in a foreign market is the ability to take advantage of an existing network complete with resources and experience. One of the main arguments leveled against contract logistics does not and should not require the handing over of control. Rather, it offers concentration on one’s specialization – a division of labor.
International inventory can be used by the international corporation as a strategic tool to dealing with currency valuation changes or hedging against inflation. By increasing inventories before an imminent devaluation of a currency, instead of holding cash, the corporation may reduce its exposure to devaluation losses. Similarly, in the case of high inflation, large inventories can provide an important inflation hedge. In such circumstances, the international inventory manager must balance the cost of maintaining high levels of inventories with the benefits accruing to the firm from hedging against inflation or devaluation. Many countries, for example, charge a property tax on stored goods. If the increase in tax payments outweighs the hedging benefits to the corporation, it would be unwise to increase inventories before a devaluation.
Despite the benefits of reducing the firm’s financial risk, inventory management must still fall in line with the overall corporate market strategy. Only by recognizing the trade-offs, which may result in less than optimal inventory policies, can the corporation maximize the overall benefits.