International Business Travel Engine of Innovation

Question: Discuss about the International Business Travel for Engine of Innovation. Answer: Introduction: A cost oriented strategy of pricing implied that the price set by the corporation was founded on costs of production. In itself, the primary aim was to gain advantage from the savings of costs from diverse other business areas, for instance, employment of local managers over specialised experts, maintenance of no sustainability. Buckley (2016) asserts that the fact pricing strategy can be regarded as one of the most important factors at the time of production of different standardized products and particularly when there is scope for estimation of demand, thereby permitting full authority to all the local managers. Even though the ultimate goal of cost leadership is to gain competitive in the market, it is uncertain in the present case whether low cost regional producers actually existed in different foreign markets (Clarke et al. 2013). This might increase the overall risk of higher competition as well as market oriented strategy of pricing. Thus, the company focussed on a resource based view for understanding the strengths, weakness rather than finding the opportunities as well as threats of the specific market within an industry based approach of pricing (Cavusgil et al. 2014). Country Priorities Country Priority Netherland High Priority Australia Normal Priority United Kingdom Low Priority Denmark As per the results of the round 1, it can be hereby said that the country priority is highest for Netherland as the profit figure for carrying out business in the nation is positive. Thereafter, the next country priority is that of Australia. This is because although there is lower negative profit as compared to the other nations such as United Kingdom and Denmark. Capacity across Production Lines In particular, cost leadership can be attained by means of antagonistic pursuit of economies of scale since output of the firm increases and subsequently the mean cost for per unit also declines (Hamilton and Webster 2015). The capacity across different lines of production can be understood from the sales outlines at different locations. As per the outline of sales, it can be hereby stated that Netherland has the highest production and normal bicycle has the highest supply, followed by the racing bicycle and delivery bicycle. Again, as per production outline presented in round 6, Netherland has produced 260000 units of the normal bicycle, Australia has produced 85000 unit of racing bicycle, China has produced 150000 of racing bicycle. Again, Australia has produced 50000 units of delivery bicycle and Belgium has produced 97500 units of delivery bicycle. As bases for production, the company entered the Chinese market as the number of units production in this country were that is around 150000 units of racing bicycle and the related costs is also comparatively low that is approximately 9545519 euro. Thus, it can be hereby mentioned that the company entered into the Chinese as there is lower cost of production in this nation. Thus, China can be regarded as the prime location in comparison to Australia and Belgium among many others. So, the entry into this nation is said to be justified. In addition to this, the production outline also shows that the production is very high and the cost is comparatively lower in the market of Netherland, therefore, the market of Netherland can also be considered to be productive when viewed from the perspective of production base (Hovhannisyan and Keller 2015). Evaluation of the strategy: Analysis of financial declarations The period of round one is considered to be first half of the year 2005 and the second half of the year 2005. The fixed assets of the firm increased from 3170156 recorded during the first half to 4490313 registered during the second half of the same year. However, the total assets of the firm decreased during the second half of the year to 6068889 from 7240537. This is mainly due to presence of inventory during the first half of the year as well as higher amount of cash of the firm. Analysis of the cash flow statement of the firm reflects that the cash flow from operating activities was positive during the first half of the year, whereas it was registered to be negative during the second half. This was mainly due to higher cash outflow for different expends recorded to be 18407673 in the second half as compared to 15171716 in the first half of the year. Therefore, there was a net inflow of 77276 during the first half and a net cash outflow of -915784 during the second half. Again, th e cash flow from financing activities was also positive during the first half and 0 during the second half. This was mainly because of the change of loan that the cash flow from financing activities was positive and higher during the first half. It can be said that there was greater cash inflow from the investing activities of the firm during the second half of the year mainly due to higher investment in property and machinery. Analysis of the income statement replicates that the company had a higher gross sales margin during the second half of the year recorded to be 4734539 as compared to 2943843 recorded during the first half of the year. However, the total cost of sales was also higher during the second half as compared to the first half. Although the cost of sales was higher, the higher sales margin exceeded the cost and led to higher operating income during the second half of the year. However, the financial costs of the firm was very high during the second half and was record ed to be -1605000 as compared to 105000. This led to the negative operating income before taxes during the second half of the year. Thus, it can be mentioned that the operating income before of the company was recorded to be -1171728 as compared to 273533 recorded during the first half of the same year. This is mainly due to the fact that the company costs increased during the second half of the year. In addition to this, the operating earnings of the firm was also recorded to be -171728 during the second half, whereas it was 273533 during the first half. The period considered in the round 2 is the first half of the year 2006 and the second half of the year 2005. Analysis of the balance sheet statement of the firm during the two period reveals the fact that the total assets of the firm increased to 11554855 during the first half of the year 2006 from 6068809 registered during second half of the period 2005. The inventory was recorded to be 0 during both the period. However, the long term credit from the bank was higher during the first half of the year 2006 as compared to the second half of the year 2005. Analysis of the cash flow statement of the firm reveals there was cash outflow of 2265784 during the second half of 2005 and a cash inflow of 3331619 during the first half of the year 2006. This change in net cash position is mainly due to higher cash inflow from mainly the operational activities of the firm during the first half of the year 2006 as compared to the second half of 2005, higher cash inflow from financing activities as well as investment activities. Remarkably, the cash inflow from financing activities was 0 during the second half of 2005, whereas it was registered to be 5000000 during the first half of the year. The positive cash flow during the first half of 2006 indicates a favourable cash position of the firm. The income statement of the firm shows that the gross sales margin of the firm has increased during the first half of 2006 to 5553601 from 4734539 during second half of 2005. However, the total cost also increased from 4301267 to 5278366 during the same period. However, the operating income of the firm also increased to 210811 from a loss figure of 1605000. The round 3 refers to the time period of second half of 2006 and the first half of the year 2006. Analysis of the balance sheet statement of the firm for the particular period reflects the fact that the fixed assets of the corporation increased to 8750573 during the second half of 2006 from 6644740 recorded during the first half of the year 2006. However, analytical evaluation of the statement also replicates the fact that the total assets of the firm also increased from 11554855 during the period of first half of the year 2006 to 27086923 recorded during the period of second half of 2006. This is mainly due to increase in the inventory of the firm to 18336350 during the second half of 2006, whereas the inventory was recorded to be 0 during the period of first half of the year 2006. As per the balance sheet statement of the firm the total liabilities of the firm also increased from 11554855 in the first half of the period 2006 to 27086923 recorded during the second half of the period 2006. Again, analysis of the cash flow statement of the firm replicates that there was net cash inflow of 3331619 during first half of 2006 and a net cash outflow of -4910116 during the second half of 2006. This is mainly because of cash outflow from operational activities during the second half of the year. Analysis of the income statement reflects the fact that the operational income of the company increased to 10432287 during the second half of the year 2006 as compared to 210811 registered during first half of the year 2006. Round four signifies the period of second half of 2006 and the first half of the year 2007. Analysis of the balance sheet statement during the round four shows that the fixed assets of the firm increased from 8750573 during the second half of 2006 to 10999948 during the first half of 2007. Essentially, the total assets of the firm increased to 43018145 in 2007 as compared to the figure of 27086923 recorded during the second half of 2006. However, the long term credit of the firm remained the same at 8500000. However, the group equity of the firm increased from 13487142 to 34518145 during the first half of the year 2007. In addition to this, the liability of the firm also increased to 43018145 during the 2007 as compared to the second half of 2006. However, the figure of inventory shows that the inventory of the firm decreased to 13316870 as compared to 18336350 recorded during the period 2006. This shows that the management was successful in lowering the level of inventory of the fir m, indicating a favourable condition for the firm. Analysis of the cash flow statement reveals the fact that there has been net cash outflow of -4910116 during the second half of 2006 as compared to the cash inflow of 18701327 recorded during the first half of 2007. Therefore, the cash position was more favourable during the period 2007 as compared to the period of 2006. Analytical evaluation of the income statement also reveals the fact that the operating income after taxes of the company also increased from 10432287 during the period of 2006 to 21031003 during the particular period of 2007. This too indicates a favourable financial position of the company during the first half of the year 2007 as compared to the second half period of 2006. The fifth round of the game signifies the time period of first half of 2007 and the second half of 2007. Analysis of the balance sheet during the round 5 reveals the fact that the fixed assets of the company declined by nearly 1.2% in the second half as compared to the first half of the year 2007. However, the fixed financial assets of the company was recorded to be 5000000 during the second half of the year, while it was registered to be 0 during the first half of the year. This is because the investment was 0 during the first half of 2007. Moving further, it can be noticed that the current assets of the company also increased during the second half by nearly 87% owing to increase in cash as well as inventory. Also, the total assets of the firm also increased from 43018145 in the first half to 75805265 in the second half of the year. Analysis of the cash flow operations reflects the fact that the cash flow from operational activities increased from 26151108 to 35233594 during the second half of the year 2007 owing to higher sales revenue. However, there occurred cash outflow from financing activities and the cash outflow also increased from 5099781 to 13500000 in the second half of 2007 as compared to the first half. Also, the cash inflow declined to zero in the second half of the year as compared to the half that registered cash inflow of 2350000. Analysis of the income statement of the corporation reveals the fact that the gross margin of the firm declined from 32474421 during the first half of 2007 to 39102928 during second half of 2007. On the other hand, the cost of sales of the firm also declined. Thus, the total operating income of the firm increased to 28959101 in the second half as compared to the figure of 21591651 recorded during the first half of the year. Thus, it can be hereby said that the operating income of the firm increased by around 34%. Analysis of the balance sheet in the round 6 reveals the fact that fixed assets of the firm increased during the first half of the year 2008 as compared to the second half of the year 2007 from 10867865 to 11085781.However, the financial fixed assets of the firm decreased to 400000 from the level of 500000. The segment for current assets show that the current assets of the firm has also increased to 83295058 during first half of 2008 from 59937400 during second half of 2007. Although the inventory is zero during the first half of the year 2008, the cash available to the business formed the current assets of the firm. However, current assets recorded during second half of the year 2007 comprised of inventory and cash. This shows that the firm was able to clear off the inventory. Analysis of the balance sheet during the round 6 also reflects the fact that the total assets of the firm has also increased from 75805265 recorded during second half 2007 to 134380839 during first half of the year 2008. This is mainly because the increase in both the fixed assets as well as current assets of the firm. However, the group equity has also increased considerably from 75805265 recorded during second half 2007 to 134380839 during first half of the year 2008. In the end, as per the analysis of the financial statements of the company, it can be said that fixed assets of the company increased by nearly 2% whereas financial fixed assets also increased manifold 700% due to huge investment made in 2008 (first half). The current assets of the company also increased by 38.9%. Thus, the total assets of the firm increased by nearly 77%. Analysis of the cash flow statement reveals the fact that the cash flow from operational activities of the firm has increased from 35233594 to 78210137 during the first half of 2008. This is mainly owing to increase in the sales revenue. However, the cash outflow from financing activities mainly due to higher investments. Again, the cash flow from investment activities has also increased in the first half of the year 2008 owing to investment in property. Analysis of the cash flow statement reveals the fact that the cash inflow has increased during the period of 2008 as compared to the year ago period indicating a favourable financial condition for the business concern. The higher positive net change in cash is mainly owing to higher cash inflow from operational activities of the firm during 2008 as compared to the second half of the year 2007. Analysis of the income statement reflects the fact that the gross sales margin of the company has increased during the first half of the year 2008 as compared to the second half of the year 2007. The increase in the gross sales margin is mainly because of overall higher net turnover of the firm. However, analytical evaluation of the income statement also reflects the fact that the total costs of the firm has also increased during 2008 owing to higher cost of sales. Again, analysis of the profit and loss declaration also divulges the fact that the financial results of the corporation has also improved during the period of first half of 2008 as against the period of second half of 2007. Accordingly, the operating earnings of the company before taxes also improved from 41287120 in 2007 (second half) to 58575574 in 2008. Thus, it is evident that the operating income of the company increased 41.8% during 2008. Companys Statement:- the future Particularly, Dunnings Eclectic Paradigm provides a clear background to the entire international environment for production. The employment of this framework, the company decided to initially capitalize upon specifically the ownership benefits or advantages in domestic market, counting on the better know-how regarding the conditions of the local market, regional economies, language, social factors and culture (Collinson et al. 2016). Nevertheless, it is important to keep in mind that this framework is an academic notion and cannot be used as a tool for strategic planning for commercial businesses (Forsgren and Johanson 2014). Thus, it is also important to attain growth in business by means of productive export business. Netherland has the highest country priority as it has the profitability and Denmark has the lowest priority as there is high negative profitability as compared to nations that is Australia as well as United Kingdom. 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