Global Business Operations

GLOBAL MANUFACTURING STRATEGIES

The success of a global manufacturing strategy depends on four key factors:

(i) compatibility,
(ii) configuration,
(iii) coordination and
(iv) control. 

Virtual manufacturing describes the situation in which a firm

subcontracts the manufacturing process to another company, i.e., the firm
chooses to outsource.

A. Manufacturing Compatibility

Compatibility refers to the degree of consistency between a firm’s foreign

direct investment decisions and its competitive strategy. Cost-
minimization and the drive for globalization force MNEs to pursue
economies of scale in manufacturing, often by producing at low labor-cost
sites. Other key variables include dependability, quality,
flexibility and innovation. Offshore manufacturing refers to
manufacturing activities that occur beyond the borders of a firm’s home
country.

B. Manufacturing Configuration

MNEs consider three basic configurations en route to developing their

global manufacturing strategies. They are:
         centralized manufacturing in a single country
                                    (a global export approach)
         regionalized manufacturing in the specific regions served
                                    (a regionalized marketing and manufacturing approach)
         local manufacturing in each country market served
                                    (a multidomestic marketing and manufacturing approach).

Rationalization represents the specialization of production by product or

process in different parts of the world in order to take advantage of varying
costs of labor, capital and raw materials.

C.                Coordination and Control

Coordination represents the linking or integrating of participants all along the global

supply chain into a unified system. Control embraces systems, such as organizational

1
structure and performance measurement, which are designed to help ensure strategies
are implemented, monitored and revised, when appropriate.

SUPPLIER NETWORKS

Sourcing strategy is the path a firm pursues in obtaining materials, components

and final products either from within or outside of the organization and from both
domestic and foreign locations. Global sourcing represents the first step in the
process of global materials management (logistics). Firms pursue global
sourcing strategies in order to reduce costs, improve quality, increase their
exposure to worldwide technology, strengthen the reliability of supply, improve
the supply delivery process, gain access to strategic materials, establish a
presence in a foreign market, satisfy offset requirements and/or react to
competitors’ offshore sourcing practices. The three major configurations that
have emerged for global sourcing are: (i) vertical integration (ii) arm’s length
purchases from independent suppliers and (iii) Japanese keiretsu relationships
with suppliers.

A. Make or Buy Decisio

B.
Outsourcing refers to those production activities that occur outside of the
firm, i.e., the use of external (foreign) suppliers to provide materials,
components, services, or finished goods. In determining whether to make
or buy, MNEs should focus on making those parts and performing those
processes critical to a product and in which they have a distinctive
advantage. Other things can potentially be outsourced.

C. Supplier Relations

When an MNE decides to outsource rather than integrate vertically, it must

determine the nature and extent of its involvement with suppliers.

D. Purchasing Function 

Global progression in the purchasing function includes four phases:

         domestic purchasing only

         foreign buying based on need
         foreign buying as a part of procurement strategy
         integration of global procurement strategy.

2
 The last phase is reached when a firm realizes the benefits from the
integration and coordination of purchasing on a global basis. At this point,
the MNE may once again be faced with the centralization vs.
decentralization dilemma. Global sourcing options include:
         assigning domestic buyers international purchasing duties
         using foreign subsidiaries or business agents
         establishing international purchasing offices
         assigning the responsibility for global sourcing to a specific
business unit or units
         integrating and coordinating sourcing on a worldwide basis.

                        E-sourcing, i.e., the use of the Internet in the purchasing process, is

rapidly growing in popularity.

Global Marketing:

Global marketing is more than simply selling a product internationally.

Rather, it includes the whole process of planning, producing, placing, and
promoting a company’s products in a worldwide market. Large businesses often
have offices in the foreign countries they market to; but with the expansion of the
Internet, even small companies can reach customers throughout the world. 

Globalization of markets:

Globalization of markets is best reflected in the "internationalization" of

business transactions. Th is means that one or more aspects of economic
activity carries an international character. One of the parties to the transaction
may be a foreign partner; the transaction may involve a foreign currency;
financing may involve foreign lenders; technology may originate from a foreign
partner; and so on. It is possible to identify at least five dimensions or facets of
the globalization of markets.

First is the fluid nature of manufacturing and sourcing activities. Today,

business activity flows freely to places best equipped to perform it most
economically and efficiently.
Second, competition for customers and markets has intensified
significantly as a result of globalization. 5 Whereas only a handful of multinational
companies dominated international trade a couple of decades ago, today
companies from all parts of the world are participating in worldwide business.
Third, the types of international business transactions have proliferated. In
the past, much of international business activity was in the form of export-import

3
 and foreign direct investment. Today, transactions are varied and more complex:
contract manufacturing, franchise operations, countertrade, turnkey construction,
technology transfers, international strategic alliances, and more.
Fourth, technology spreads freely and rapidly between markets and
players. Technological leadership does not provide a monopolistic advantage for
very long. Companies must capitalize on their discoveries quickly, before others
match them.
Fifth, borrowing-financing activity has become worldwide as well.
Businesses finance their growth and expansion through international capital
markets.

Global Market Segmentation:

The Four Types of Global Market Segmentation
The four bases of market segmentation are:

 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation
 Geographic segmentation

Within each of these types of market segmentation, multiple sub-categories further

classify audiences and customers.

4
Demographic Segmentation
Demographic segmentation is one of the most popular and commonly used types of
market segmentation. It refers to statistical data about a group of people.

Demographic Market Segmentation Examples 

 Age
 Gender
 Income
 Location
 Family Situation
 Annual Income
 Education
 Ethnicity

Where the above examples are helpful for segmenting B2C audiences, a business
might use the following to classify a B2B audience:

 Company size
 Industry
 Job function

Because demographic information is statistical and factual, it is usually relatively

easy to uncover using various sites for market research.

A simple example of B2C demographic segmentation could be a vehicle

manufacturer that sells a luxury car brand (ex. Maserati). This company would likely
target an audience that has a higher income.

Another B2B example might be a brand that sells an enterprise marketing platform.
This brand would likely target marketing managers at larger companies (ex. 500+
employees) who have the ability to make purchase decisions for their teams.

5
Psychographic Segmentation
Psychographic segmentation categorizes audiences and customers by factors that
relate to their personalities and characteristics.

Psychographic Market Segmentation Examples 

 Personality traits
 Values
 Attitudes
 Interests
 Lifestyles
 Psychological influences
 Subconscious and conscious beliefs
 Motivations
 Priorities

Psychographic segmentation factors are slightly more difficult to identify than

demographics because they are subjective. They are not data-focused and require
research to uncover and understand.

For example, the luxury car brand may choose to focus on customers who value
quality and status. While the B2B enterprise marketing platform may target
marketing managers who are motivated to increase productivity and show value to
their executive team.

Behavioral Segmentation
While demographic and psychographic segmentation focus on who a customer
is, behavioral segmentation focuses on how the customer acts.

6
Behavioral Market Segmentation Examples 

 Purchasing habits
 Spending habits
 User status
 Brand interactions

Behavioral segmentation requires you to know about your customer’s actions.

These activities may relate to how a customer interacts with your brand or to other
activities that happen away from your brand.

A B2C example in this segment may be the luxury car brand choosing to target
customers who have purchased a high-end vehicle in the past three years. The B2B
marketing platform may focus on leads who have signed up for one of their free
webinars.

Geographic Segmentation
Geographic segmentation is the simplest type of market segmentation. It
categorizes customers based on geographic borders.

7
Geographic Market Segmentation Examples   

 ZIP code
 City
 Country
 Radius around a certain location
 Climate
 Urban or rural

Geographic segmentation can refer to a defined geographic boundary (such as a

city or ZIP code) or type of area (such as the size of city or type of climate).

An example of geographic segmentation may be the luxury car company choosing

to target customers who live in warm climates where vehicles don’t need to be
equipped for snowy weather. The marketing platform might focus their marketing
efforts around urban, city centers where their target customer is likely to work.

Global Distribution Strategy:

a. Direct Distribution Channel:

This figure is illustrative of distribution of channel of consumer goods. In case of

industrial products, the channel will be shorter because there is no need of
retailers. In fact, in many cases, there may not be any wholesaler.

8
Producer → Agent → Industrial buyer

b. Indirect Distribution Channel:

In indirect exporting, the firm delegates the task of selling products in a foreign country
to an agent or export house.

This figure is illustrative of distribution channel of goods. In case of industrial products,

the channel will be shorter because there is no need of retailers. In fact, in many cases,
there may not be any wholesaler.

The channels of distribution may differ from country to country, market to market and
product to product. So, the first task of the producer is to find out the possible
distribution channel through which he wants to reach the consumers on the foreign
market, keeping in view the characteristics of his product and the marketing strategy he
wants to follow in the market.

While selecting a distribution channel for foreign markets, the management of the
exporting company should consider the following aspects:

(i) Who are the consumers? Which are the available retail outlets to reach them?

(ii) Which type of market coverage is required, keeping in view the product and
consumer characteristics?

(iii) Are there any internal constraints for the exporter like finance which will influence
the decision regarding choice of the distribution channel?

(iv) What are the expectations from the channel members? Are there some specific
expectations?

(v) What is the required support system to satisfy the expectations of the channel
members?

9
It should be realised that the distribution channel is the mechanism through which the
seller reaches the consumers and, therefore, the selected channel must be suitable to
the company’s operations and marketing strategy.

Export Distribution Channels:

The distribution process for international marketing involves all those activities related to
time, place and ownership utilities for industrial and end consumers. The selection,
operation and motivation of effective channels of distribution often turn out to be
important factor in firm’s differential advantage in international markets. The diverse
cultural differences play an important role in formulation of distribution strategies for any
exporter entering foreign markets.

International marketing distribution is similar to that in domestic marketing. Main

difference is in environmental effects. The exporter, therefore, needs to understand how
environmental factors affect the distribution policies. Using this knowledge the exporter
must use the most appropriate channels on a country-to-country basis.

The distribution system available in a country is also influenced by the economic

development of the country, the personal disposable income of consumers and as well
as some other factors such as culture, physical environment and the legal/political
system. Exporters, while developing a distribution strategy must focus on how the
goods can be transported from the manufacturing locations to the consumer most
effectively.

Although distribution can be totally handled by the manufacturer, often the goods are
moved through middlemen such as wholesalers, distributors, retailers or agents. An
understanding of the available distribution system in a particular county is extremely
important in the development of a sound distribution strategy.

Global Pricing Strategy:

Price Skimming: Companies that invent new products or when a company has a
competitive advantage and this advantage is not sustainable (because the high prices
attract rivals into the market, and the price will fall because of the increased supply),
companies offer products at high prices to compensate for production and investment

10
costs. The company charges a high price in an attempt to maximize returns on a new
product before the competition is building.
Penetration Pricing: In this strategy, the product comes at a low price and increases
sales volume. The prices are set low for products and services intentionally, in order to
increase the market share. When they achieved the goals, they will increase the price.
As a result, costs are down to the scale and it is possible to lower the price of the
product again. This method is aimed at increasing market share in a situation where the
demand sensitivity to price is high, fixed costs are high, and also competitors do not
have the ability to cope with the strategy. 

Prestige Pricing:A long-term strategy that is based on high prices and more for luxury
and non-essential goods with the aim of product placement among wealthier people.
Psychological Pricing: In this strategy, the psychological aspect of the price is taken
into account, so that shoppers assume that they will buy a higher quality product at
higher prices. In this strategy companies want the consumer to respond emotionally,
rather than rationally.
GeographicalPricing: In this strategy, the price is determined depending on where the
buyer is located at a distance from the manufacturer.  This strategy set different prices
for different parts of the world. There are some factors that affect pricing, for example,
scarcity, shipping costs, tax on certain types of product which reduce or increase the
price, tariffs, and legislation. This force companies to set different prices for one product
in each location.
Economy Pricing: This is a no frills low price. The costs of marketing and promoting a
product are kept to a minimum.
Value Pricing: This approach is used where external factors such as recession or
increased competition, force companies to provide valuable products and services to
retain their sales.
Flexible Pricing: Flexible, or variable, pricing involves offering identical products to
different customers in the market at different prices. In essence, the seller positions the
product differently, pointing out different sources of value to different groups of
customers.

11
Static Pricing: Companies using static or uniform pricing offer the same price to all
customers. Benefits of this strategy include the ease of administration and the customer
goodwill created by such a policy. In general, many factors affect the process of
selecting export pricing strategies for companies, and can be categorized according to
the company’s internal and external goals and objectives.

Global HRM
Global Human Resource Management
Most of us have heard the term 'human resources,' usually termed as 'HR.' And most of
us realize that human resources is the department that handles the needs of the
employees. They recruit, they hire, and they train employees. They explain and
administer benefits and help with conflict resolution.
But what happens when the human resource department is no longer overseeing the
needs of a small, local company? What happens when the HR department goes global?
Do they have the same responsibilities? Do they face the same difficulties? In this
lesson we'll explore the nature of the tasks and functions of global human resources
management (HRM), such as recruiting and hiring. And we'll also explain some of the
challenges they may face, like cultural differences and labor laws.

Global HR Functions
Much like domestic companies, the roles for the HR department working for a global
company consist of five main functions. Here we will look at each one and explain how
they differ when they're being conducted on a global scale.
1. Recruiting and Hiring
The goal of recruiting is finding a qualified candidate that can fulfill the duties of the
position. It involves understanding the job description and interviewing, after which
comes hiring the candidate that is the best match. When completing this function on a
global level, there are some important considerations. First, the HR department needs
to understand the tasks for the position in that part of the world and the skills needed to
be successful. Education levels and differences are also a consideration since they may
not be the same from country to country.
2. Training
Once the employee has been selected, they need to be trained. Most employees need
some training in order to learn the ways a company does things. When the company is
global, it's crucial that processes and policies are similar from one global area to the
next in order to clearly communicate and to be able to use resources and materials in a
variety of different places. Using the same processes and policies avoids

12
miscommunication among offices and staff, and it cuts costs when the resources can be
passed around to all of the different locations.
3. Developing and Administering
Most companies, global or not, offer opportunities for additional training in order to
develop the skill sets of their employees. When this happens on a global level,
employees may have an opportunity to visit another country to receive valuable training.
This increases the value of the employee because they can now become successful in
a variety of locations. As for administration, companies also need to make sure that they
oversee their employees in a professional manner. This may mean training,
compensation, or adhering to laws and regulations. On a global level, this is especially
important because working hours may vary from location to location. Following the local
laws is a priority for global HR departments.

Global Performance Appraisal

Challenges of international performance management

There are many challenges associated with expatriate performance management.
Although we have listed some below, they are likely to vary by business. Ideally work to
identify the challenges your company is likely to encounter and attempt to mitigate them
in the expatriate performance management plan.

Environmental variations
Performance management systems rarely work in the same way domestically and
internationally. Environmental variations including; different growth rates, the immediate
environment and differences in performance, usually mean international performance
appraisals need to be unique to each expatriate manager.

Time and distance

Improvements in technology make this less of an issue than it once was, but time
differences and local infrastructure will impact on performance and appraisals. This is
particularly true of expats working in underdeveloped countries.

Cultural adjustment
The employee’s ability to adjust to the organisational culture within the subsidiary, as
well as the wider culture within their new country, is likely to impact performance. An
understanding of the local organisational culture by the HR team, the management

13
team and the employee will facilitate the creation of a measurable international
performance management system.

Inconsistency of implementation
Like all performance development, it will only be successful if implemented consistently
in company subsidiaries. Oversight of this may be a challenge if most Human Resource
functions are centralised to headquarters, meaning some employees thrive while others
are left directionless.

Tips for international performance management

Developing a system that will work successfully across markets is a significant
challenge for a global human resources manager. To further compound the situation,
there is very little best practice research as existing studies do not focus on the same
variables or countries.

Define, facilitate and encourage performance

Ultimately the goal of an expatriate performance management system is to define,
facilitate and encourage performance in the individual and the teams they work with.
Your company’s international performance management system should enable
managers of expat employees to set specific, realistic, measurable goals that feed into
the overall objectives of the business. However, setting goals is not sufficient for
success, the programme should also contain a method of assessing performance on
several occasions over a year.
To achieve the goals that have been set, employees need to be able to facilitate
performance through removal of barriers like outdated equipment or software, poor
procedures and micro-management. However, international employees may encounter
further difficulty with government requirements or personal safety depending on where
they are based. Flexibility needs to be included in this regard when developing an expat
performance management system.
Finally, encouraging performance has been shown to be another marker of  a
successful international assignment. The methods for encouraging performance may
vary from country to country. While additional remuneration may work successfully at
headquarters, time off or other special privileges may be more valued in other countries.
The easiest way to find out what may work best is to survey international employees.
Once agreed it is essential that the appraisal process is transparent and fair.

14
Global Compensation
Key Factors Informing Global Pay Strategies
Currency Fluctuation/Inflation

The dollar is the strongest it has been in almost a decade. This affects United States-
based companies’ ability to penetrate markets overseas — and in return, affects the
ability of non-U.S. headquartered companies to export goods to the U.S. Beyond the
impact on the cost of goods, it also affects the cost of labor.

For U.S. companies paying executives overseas, the strong dollar reduces
compensation costs.

LTIs, which are generally tied back to the U.S., are a windfall for global executives as
their awards are worth considerably more after currency conversion. Today, this is
especially true for United Kingdom and European Union-based executives who have
seen the pound and euro devalued with the ongoing uncertainty surrounding Brexit.

Even as companies recognize that currency fluctuation is affecting employees across

the globe, most companies are not addressing the issue annually. According to Aon’s
“2017 Global Pay Practices Survey,” 67% did not expect to adjust pay in the near future.

The impact of currency fluctuations should be reviewed when designing pay programs.
Some questions to ponder include:

 Should current global reward opportunities be adjusted to reflect the strong

dollar?

 If so, how often should they be reviewed?

 If the currency fluctuation reverses, should the compensation targets be

reduced?

 If companies decide to maintain the status quo, how is this communicated to their
executives?

The answers to these questions have to be balanced against a company’s goal of

simple administration, the ongoing compensation strategy, and employee engagement.

Local inflation can also play a role in influencing global compensation design, with Latin
America, Asia Pacific and Europe representing the most affected regions currently.

15
Despite this, two-thirds (66%) of the companies we surveyed did not expect inflation to
affect pay design. Many of the surveyed companies cited Latin America as a concern.

When companies expand and design local compensation packages, they need to plan
for possible inflation impact by answering the following questions:

 Should we pay in our headquartered currency?

 If we choose to pay in local currency, does our compensation have to be

consistently adjusted? If so, how often?

 If annual compensation reviews are customary, is there concern about retention

over a 12-month period?

 Should salary compensation be paid in local currency, but incentive opportunities

paid in another currency?

Again, companies balance plan administration versus employee engagement. Most

companies adopt a philosophy that base pay and annual incentives are locally
designed, benchmarked to local peers, and should be paid with local currency. In
general, only LTIs are denominated in the headquartered company currency.

Single Compensation Tier for Global Executives

A trending approach to designing pay programs for multinational executives is to create

a group of “global executives.” These executives share similar responsibilities, such as
implementing key strategic business initiatives and supervising a multinational
workforce that resides in numerous countries and typically reports directly to a named
executive officer.

A unique aspect of their compensation package design is that they are paid and
incentivized within a single band. Their base salary is not tied to their current global
locale, but instead to their “global executive” peers. Annual incentive metrics are
designed to align with the central goals of the company, but have regional influence.
Performance based LTIs are also aligned with the headquartered company goals, which
are generally determined or influenced by the board of directors.

These global executives are expected to be future leaders, and their success or failure
plays a role in company earnings and future growth. In addition, these executives will be
expected to relocate several times during their careers and lead regional operations
across the globe before returning to the company headquarters.

As companies continue to look for growth globally and supply chains across continents,
we expect this band of single-tier executives to expand. Future leaders are expected to
understand and engage their global population while the home country wants to
continue to exercise oversight and judge performance.

16
Benchmarking Pay — Global vs. Local

Companies often struggle with benchmarking pay for their global subsidiaries because
the design is largely influenced by local and regional pay practices.

Many times, companies begin trying to align compensation across the globe by
maintaining internal pay equity. For example, a goal may be to have all country leaders
paid within 10% of each other. However, this can have the opposite effect, as country
by- country purchasing power will result in pay inequality. A country leader living in a
locale with a lower cost of living will be enriched by such a program. The pay inequity is
only exacerbated by annual and long-term incentives that are generally allocated as a
percentage of base pay.

Rather than try to create equality within a pay band, companies should try to develop
equality within a subsidiary’s geographic location. As noted above, local benchmarking
for base salary, cash compensation and total direct compensation creates a more
harmonized approach to pay by aligning executives’ pay to the local market. This also
will filter down to all local employees, creating a competitive compensation arrangement
that will aid in retention and align with a company’s business strategy. This type of
approach is also preferred when the local labor market is undergoing dramatic change
and adjustments are needed in real time.

Other Influences on Pay Design

Many countries offer an “enhanced” base salary or “guaranteed cash compensation”

that includes allowances for things like housing, conveyance, education or even a 13th
month of pay, which is sometimes referred to as a Christmas bonus. Balancing a global
pay strategy to remain compliant with local laws and be locally competitive can prove
more complex and costly than expected.

But companies often struggle when determining which markets require allowances as
well as how much they should allot. As both annual and long term incentives are
typically tied to base salaries, should the opportunities be calculated using straight pay
or straight pay plus allowances? These are small nuances that illustrate the difficulty of
developing global pay programs and the hidden expenses.

Another area to review when determining global compensation levels are acquired
rights. Often, a company may provide special, ad hoc payments to global employees in
multiple years that in many jurisdictions, if deemed an acquired right, will become a part
of an employee’s regular remuneration. As such, these rights could affect target base
salary and incentive design opportunities and are more frequently addressed in LTI
design.

In addition, global executive pay is moving toward a U.S. model where incentives are
tied more directly to performance goals, and base salaries are a smaller portion of total
compensation. However, there is still a big gap in pay practices in some markets. In

17
India and China, for example, the ratio of fixed pay versus variable pay is generally
40:60 or 50:50, whereas for executives in the U.S., it can be closer to 20:80.
Synchronizing this for executives across the globe is yet another challenge.

Adding an additional challenge in the local versus global pay practices is the granting of
LTIs. As noted, cash compensation is generally locally driven and LTIs are delivered
and administered from the home country. Metrics are designed globally, awards are
denominated and paid in one currency. However, adjustments to award sizes are made
locally to balance award opportunities and prevent unjust enrichment. Often, LTIs can
be used to balance the shortcoming of a deficient local compensation design for key
talent.

Lastly, historical practices can also affect global pay programs. In Japan, for example,
market practice results in executive pay levels that are generally less than their global
peers. When executives in Japan take international assignments, they appear to be
underpaid, which in turn causes internal pay equity issues. Companies that find
themselves in this situation may ask themselves questions such as:

 Should pay adjustments be made?

 When should the adjustments be made — right away or over time?

 What should be adjusted — salary, incentive opportunities?

 What happens when the executive returns to the home country? Does the
reverse occur?

Expatriate pay design and repatriation issues should be addressed when developing a
global compensation philosophy 

Global E-Business
Introduction to e-Business

E-business or Online business means business transactions that take place online with
the help of the internet. The term e-business came into existence in the year 1996. E-
business is an abbreviation for electronic business. So the buyer and the seller don’t meet
personally.

18
Features of Online Business

Some of the features of Online Business are as follows :

 It is easy to set up

 There are no geographical boundaries

 Much cheaper than traditional business

 There are flexible business hours

 Marketing strategies cost less

 Online business receive subsidies from the government

 There are a few security and integrity issues

 There is no personal touch

 Buyer and seller don’t meet

 Delivery of products takes time

 There is a transaction risk

 Anyone can buy anything from anywhere at anytime

 The transaction risk is higher than traditional business

Types of e-Commerce

Now there are actually many types of e-Businesses. It all depends on who the final
consumer is. Some of the types of e-commerce are as follows :

Business-to-Business (B2B)

Transactions that take place between two organizations come under Business to
business. Producers and traditional commerce wholesalers typically operate with this type
of electronic commerce. Also. it greatly improves the efficiency of companies.

19
Business-to-Consumer (B2C)

When a consumer buys products from a seller then it is business to consumer transaction.
People shopping from Flipkart, Amazon, etc is an example of business to consumer
transaction. In such a transaction the final consumer himself is directly buying from the
seller.

Consumer-to-Consumer (C2C)

A consumer selling product or service to another consumer is a consumer to consumer

transaction. For example, people put up ads on OLX of the products that they want to sell.
C2C type of transactions generally occurs for second-hand products. The website is only
the facilitator not the provider of the goods or the service.

Consumer-to-Business (C2B)

In C2B there is a complete reversal of the traditional sense of exchanging goods. This type
of e-commerce is very common in crowdsourcing based projects. A large number of
individuals make their services or products available for purchase for companies seeking
precisely these types of services or products.

Consumer-to-Administration (C2A)

The Consumer-to-Administration model encompasses all electronic transactions

conducted between individuals and public administration. Some examples of applications
include

 Education – disseminating information, distance learning, etc.

 Social Security – through the distribution of information, making payments, etc.

 Taxes – filing tax returns, payments, etc.

 Health – appointments, information about illnesses, payment of health services,

etc.

Business-to-Administration (B2A)

This part of e-commerce encompasses all transactions conducted online by companies

and public administration or the government and its varies agencies. Also, these types of

20
services have increased considerably in recent years with investments made in e-
government.

GLOBAL SUPPLY CHAIN MANAGEMENT

Global supply chain management concerns the sourcing and coordination of

materials, information and funds from the initial raw material supplier to the
final customer. A comprehensive supply chain strategy should include the
following 10 elements:
         customer service requirements
         plant and distribution center network design
         inventory management
         outsourcing and third-party logistics relationships
         key customer and supplier relationships
         business processes
         information systems
         organizational design and training requirements
         performance metrics
         performance goals.

The key to making a global information system work effectively is

information. Electronic data interchange (EDI) refers to the electronic
movement of money and information via computers and telecommunications
equipment in a way that effectively links suppliers, customers and third-party
intermediaries, and ultimately enhances customer value. Enterprise resource
planning (ERP) refers to the use of software to link information flows from
different parts of a business and from different parts of the world. E-
commerce refers to the use of the Internet to link suppliers with firms and firms
with customers. The extranet refers to using the Internet to link a company
with external constituencies. Finally, the Private Technology Exchange
(PTX) refers to an online collaboration model that brings manufacturers,
distributors, resellers and customers together to execute trade transactions and
to share information regarding demand, production, availability, etc. While
many networks can in fact be managed via the Internet, others (especially those
in developing countries) cannot because of the lack of available, leading-edge
technology.

E-Logistics
21
The difference between traditional logistics and e- logistics are as follows. In case of
traditional logistics the volume is very low because large amounts of goods are sent to
lesser location like retail stores. But in case of e- logistics the lesser amount of materials
are sent to many customers quickly. In case of traditional logistics the objective is that it
is efficient and cost effective but in case of e- logistics it is more speed and can meet
customer expectation.In case of traditional logistics the information is gathered through
fax, paperwork and Management Information System(MIS) but in case of e- logistics the
information is gathered through Internet, Electronic Data Interchange (EDI), Radio
Frequency Identification (RFID) and Integrated IS. The E- logistics is more reliable and
fast than traditional logistics.

22