Human Resource Knowledge

Built in and separate Export departments

The built-in export department is the simplest form of export organization and, therefore, the easiest. Under this arrangement, as the names indicates, the export organization is built into the regular domestic system. The function of the special department is usually confined to the actual selling or directing; and all such different functions connected with export transactions, credit, traffic, shipping, and accounting are handled by the appropriate domestic departments.

The built-in export department is suitable under certain conditions, such as when the export business is small the company is new to international marketing. The management philosophy is not oriented towards growth in overseas business because the company resources are limited etc.

The built-in export department in a company’s marketing set up may also be regarded as the initial arrangement to do export business. In course of time, as the business expands, it may be developed into a separate Export department.

The built-in export department suffers from some disadvantages. Under this arrangement, many of the activities connected with international business are carried out by domestic departments. Sometimes, therefore, there may be a tendency to regard export activities as subsidiary to domestic business. Further, the personnel of the domestic departments may not have sufficient knowledge or experience to deal with matters connected with the overseas market. Another is that the export manager may not get the required amount of cooperation from the personnel of other departments who are not under his control.

Although a relatively large volume of export business may be handled by a built-in form of organization, this arrangement, when the overseas business substantially increases, becomes unsatisfactory. A separate export department may therefore be established to take effective care of all the activities connected with the export business. Further, a company which wants to expand its international business substantially would find a separate export department more useful than in built-in arrangement.

Unlike the built-in department, the separate export department is essentially self sufficient; and it is well equipped to handle all the activities connected with the export business. It is not, therefore, at the mercy of domestic departments.

The organizational structure of the export department may vary between companies. The internal organizational structure of a separate export department may be based upon functions, territory, product or a combination of these. Needless to say, any such orientation of the internal organizational structure of the department will depend primarily upon how the marketing task varies.

A separate marketing department avoids some of the problems of the built-in department, such as the clash between the international and domestic sides of the firm regarding the time to be spent by domestic marketing personnel on overseas business matters. As a separate department is a full fledged department, it can do the job more efficiently. It can have personnel trained to perform the international marketing functions. A separate department will also impart an export orientation to the company. Another advantage is that a separate export department may, unlike the built in department, be located at the most suitable place, which may not be the headquarters of the company.

The next step after gaining good ground in foreign countries for Indian products and services, the organization can look forward to make their presence felt in that country by setting up their manufacturing and service providing units including making investments.

The domestic firms from two Asian countries such as India’s Tata group and Infosys are creating new investment projects and are hiring sales and service staff worldwide including the US.

India is reputed as an IT and ITeS service provider in U.S and West European countries. Now in a reversal of trends, Indian companies are now exporting jobs to America by expanding their presence on the US soil – hence proving that the global tech trade can create win-win opportunities for all nations involved.

Labels: Management

posted by Paresh @ 7:56 PM