3. Special features of departments of foreign economic activity in international companies.

Department of FEA is a part of company’s management system, carrying out FEA. It includes :

• Department of marketing

• Protocol department

• Department of scientific and technical cooperation

Main task of department are :

• MR activity

• Preparations of foreign trade contracts

• Participations in exhibitions, fairs, presentation

• Planning and organization of export-import operations

• Welcome foreign partners and travel own professionals abroad

Scope and content of basic functions of managers of fea

Function	Content of a function
Definition of a strategy which company use to meet FEA	Identification of sources of funding of FEA and formation of the optimal strategy to implement
Foreign market analysis	Gathering the information about the markets: the level of competition, changes in conjuncture. The main purpose – is to identify the target market and the ways of improving of our product
Evaluation of the ability of the company to export products	Determination of production opportunity of company, to compare the quality of goods of our company with the world’s standards, to predict the indicators of efficiency in the foreign market and compare it with the indicators on the domestic market
Assessment of main indicators of FEA	Analysis of the structure of FEA and its dynamics, and compare it with the trends of the domestic market.
Preparation of the contracting	Establishing the relationships with the future contractors, determining the conditions of the agreement and formation of the contract.
Improving the pricing policy	Choosing the most appropriate pricing strategy based on the product, situation on the market a nd company willing.

Theme 9. Forecasting of foreign economic activity

1.Essence and content of forecasting of fea.

Forecasting – process of making statements about events whose actual outcomes (typically) have not been observed yet.

Forecasting starts with certain assumption based on the management’s experience , knowledge and judgment.

Forecasting is the process of predicting changing conditions and future events that may significantly affect the business of an organization.

Features of forecasting:

1. Forecasting is important to both planning and decision making

2. Forecasting is used in a variety of areas of FEA such as: production planning, budgeting, strategic planning, sales analysis, inventory control, marketing planning , logistics, planning and purchasing among others.

3. Its important to look at forecasting effectiveness. Forecasting techniques are most accurate when the environment is not rapidly changing

Conditions of efficient forecasting

1. Use of simple forecasting techniques

2. Comparison of every forecast with basic situation

3. Use of complex of forecasting methods

4. Understanding of impossibility of turning points in a trend

5. Short length of the forecasts

6. Permanent improvement of forecasting skills

Organization use forecasting methods of production and operation management to implement production strategies.

Forecasting involves using several different methods of estimating to determine possible future outcomes for the business.

Merits of forecasting

An organization uses a variety of forecasting methods to assess possible outcomes for the company. The methods used by individual organization will depend on the data available and the industry in which the organization operates. The primary advantage of forecasting is that it provides the business with valuable information that the business can use to make decisions about the future of the organization. In many cases forecasting uses qualitative data that depends on the judgment of experts.

Demerits of forecasting

It isn’t possible to accurately forecast the future. Because of the qualitative nature of forecasting, a business can come up with different scenarios depending upon the interpretation of the data. For this reason , organization should never rely 100 % on any forecasting method. However, an organization can effectively use forecasting with other tools of analysis to give the organization the best possible information about the future. Making a decision on a bad forecast can result in financial ruin for the organization, so an organization should never base decisions solely on a forecast.

Principle of forecasting:

-forecasts are rarely perfect

-forecasts are more accurate for grouped data than for individual items

- forecast are more accurate for shorter than longer time periods.

Stages of forecasting:

• Find out objectives and main characteristics of the forecast: level of detail, units of analysis and time horizon required;

• Evaluate and analyze appropriate data: identify needed data and whether its available;

• Select and test the forecasting model: cost, ease of use and accuracy;

• Generate the forecast

• Monitor forecast accuracy over time.