Question

Explain why both effective international pricing and working capital management are crucial. What does the international manager need to do both alone and in conjunction with managers of other business functions, such as marketing, human resources, and operations, to effectively manage these areas? (600 WORDS)

Answer 1

Both effective international pricing and working capital management will be a significant focus area for a business.

The reasons for each are as follows:

International pricing strategy :

1. Pricing directly affects the topline of the income statement. Any faulty pricing strategy can lead to a couple of outcomes:

A. Low margins

B. Low sales

2. In case an ineffectual pricing sttatrgy is done, it could be either over priced or underpriced.

A. Being over priced can lead to low sales and the Market share can be captured by competition.

B. Being under priced can lead to low gross margins and low margins can cause the fixed costs to be unrecovered.

Items the international manager needs to manage alone:

1. Pricing strategy for the international market targeted.

2. Working capital needs of the foreign branches.

3. Effective marketing budget management to prevent over spending.

How to coordinate with other teams:

HR - the HR team needs to effectively guide the international manager to manage staff in other locations and also be upfront about labor laws and workplace ethics specific to various regions.

Marketing- coordinate with the marketing manager to ensure the budgets are not over shot, but also predominantly ensure that adequate marketing is done in new markets to ensure the requisite market capture.

Operations - operations managers of the various international markets are responsible for the running of the show. Hence they would need to appraise the manager of their working capital needs, profitability, budgets etc, in other to evaluate how to proceed with the respective locations.