International Purchasing and Supply

International Purchasing and Supply

Assessment Task Two

Class: 2012 Global Trade and Business

SCN: 135738026

Name of Student: Qian yan

Name of Tutor: Xiao yan

Submission Date: 26/11/2014

Table of contents

1 Introduction…………………………………………………………….1

2 The factor which affect overseas purchasing…………………………..2

3 The factors affecting foreign exchange rates…………………………..3

4 The ways to avoid financial risk caused by exchange rate…………….4

5 The effect of counter-trade on overseas trading……………………….6

6The need for the IPD to achieve continuity and security of supply requirements……………………………………………………………..7

7 Conclusion……………………………………………………………..8

4 References……………………………………………………………...9

1 Introduction

Siemens AG is a German multinational conglomerate company headquartered in Berlin and Munich. It is the largest engineering company in Europe. The principal divisions of the company are Industry, Energy, Healthcare, and Infrastructure & Cities, which represent the main activities of the company.

In this report, I will explain how culture, language and communication affect the Siemens' overseas purchasing, and evaluate the factors affecting foreign exchange rates when the Siemens are go to overseas purchasing. I will also evaluate the ways to avoid financial risk caused by exchange rate. Thus there can use the forward buying to avoid risk. When the Siemens are on overseas trading, there may occur counter-trade, then I will evaluate the effect of counter-trade. At last, I will evaluate the ways for the IPD to achieve continuity and security of supply requirements.

2 The factor which affect overseas purchasing

Culture

“Culture is the integrated sum total of learned behavioral traits that are shared by members of a society”. (Terpstra, 1994)

Hofstede’s cultural dimensions can be used to explain observed differences between cultures. This model include six dimensions of culture, they are power distance, individualism versus collectivism and uncertainty avoidance, masculinity versus femininity, long-term orientation, vs. short term orientation and indulgence versus restraint. Hofstede's six-dimensions model also allows international comparison between cultures. Thus, the Siemens can use this model to understand the differences of culture when they are on sourcing overseas.