Master of Business Administration - MBA Semester 4 MB0053 International Business Management

Q1. Write a note on Globalization Ans: Globalization is the process of increasing connectivity and interdependence of the worlds market and businesses. It is a way of interacting among countries to develop global economy. Globalization is the integration of economies of the world through trade and mutual exchange of technology and knowledge. In India, globalization refers to the opening up of the economy to foreign direct investment by offering facilities to foreign companies to invest in various areas of economic activity. Globalization had a strong impact in all sectors and business in India. It has created challenge for technical manpower in India. Globalization has helped India in the following ways to: Open up Indian economy to foreign direct investments and to facilitate foreign companies to invest in different sectors of economic activities. Enable Indian companies to enter into foreign collaboration. Remove restrictions for the entry of multinational companies. Have a direct and indirect impact on Indian currency and enable inflow of foreign exchange into India.

Benefits of globalisation The merits and demerits of globalisation are highly debatable. While globalisation creates employment opportunities in the host countries, it also exploits labour at a very low cost compared to the home country. Let us consider the benefits and ill-effects of globalisation. Some of the benefits of globalisation are as follows: Promotes foreign trade and liberalisation of economies. Increases the living standards of people in several developing countries through capital investments in developing countries by developed countries. Benefits customers as companies outsource to low wage countries. Outsourcing helps the companies to be competitive by keeping the cost low, with increased productivity. Promotes better education and jobs. Leads to free flow of information and wide acceptance of foreign products, ideas, ethics, best practices, and culture. Provides better quality of products, customer services, and standardised delivery models across countries. Gives better access to finance for corporate and sovereign borrowers.

 Increases business travel, which in turn leads to a flourishing travel and hospitality industry across the world. Increases sales as the availability of cutting edge technologies and production techniques decrease the cost of production. Provides several platforms for international dispute resolutions in business, which facilitates international trade. Some of the ill-effects of globalisation are as follows: Leads to exploitation of labour in several cases. Causes unemployment in the developed countries due to outsourcing. Leads to the misuse of IPR, copyrights and so on due to the easy availability of technology, digital communication, travel and so on. Influences political decisions in foreign countries. The MNCs increasingly use their economical powers to influence political decisions. Causes ecological damage as the companies set up polluting production plants in countries with limited or no regulations on pollution. Q2. Why do nations Trade ? Discuss the relevance of Porters Diamond model in todays business context . Ans: Because countries have different natural, human, and capital resources and different ways of combining these resources, they are not equally efficient at producing the goods and services that their residents demand. The decision to produce any good or service has an opportunity cost, which is the amount of another good or service that might otherwise have been produced. Given a choice of producing one good or another, it is more efficient to produce the good with the lower opportunity cost, using the increased production of that good to trade for the good with the higher opportunity cost. When a country can produce more of a good with the same resources that another country can, it is said to have an absolute advantage in the production of that good. If the second country has an absolute advantage in producing a good that the first country wants, both will be better off if they specialize and trade. But trade is usually beneficial to both countries even if one has an absolute advantage in the production of both goods that are to be traded. Given any two products, a nation has a comparative advantage in the product with the lower opportunity cost. The terms of trade must be such that both countries lower the opportunity costs of the goods they are getting from the trade. Porters diamond model In 1990, Michael Porter analysed the reason behind some nations success and others failurein international competition. His thesis outlined four broad attributes that shape the environment in which local firms compete and these attributes promote the creation

of competitive advantage. They are explained as follows: Factor endowments - Characteristics of production were analysed in detail. Heirarchies are recognised, as is distinguishing between basic factors like natural resources, climate, location and so on and advanced factors like communications infrastructure, research facilities. Demand conditions - The role of home demand in improving competitive advantage is emphasised since firms are most sensitive about the needs of their closest customers. Example, the Japanese camera industry which caters to a
sophisticated and knowledgeable local market.

Relating and supporting industries - The presence of suppliers or related industries is advantageous since the benefits of investment in advanced factors of production spill over to these supporting industries. Successful industries within a country tend to be grouped into clusters of related industries. Example, Silicon Valley.

Q3. Why do firms pay so much attention to economic factors while entering in particular market? Justify your answer with practical examples. Ans:

Because economic factors including inflation, unemployment, competition, and growth prospects the economic factors include the factors like purchasing power of consumer and spending patterns. The macro-economic factors include Gross Domestic Product (GDP), unemployment, inflation and interest rates. These macro economic factors determine the environment in which the organisation functions. The economic environment plays an important role in the trends of employment, inflation, and growth that shape the regions, nations and the world for the e-business. Exporting can be a great way to grow a company, but it also entails risk. Any entrepreneur looking to expand into foreign markets must first gather information, prepare an export plan, make a series of key decisions and line up the necessary financing. Gathering information

It's essential for exporters to have a clear understanding of the culture, customs and economic conditions of the country where they want to do business. To that end, research is needed. An online search is a good place to.

Q4.How has India reacted towards regional integration? Discuss briefly the trade agreement signed by India. Ans : Shri Anand Sharma, Commerce and Industry Minister of India met Trade/Commerce Ministers from the ten ASEAN Member States and China, Japan, South Korea and New Zealand (Australia was represented by an Official) gathered at Da Nang, Vietnam today and exchanged views on regional and global issues affecting the East Asian region as well as developments in several areas of cooperation within the East Asia Summit (EAS) framework. He reiterated India's commitment towards the 16 country regional integration initiative of Comprehensive Economic Partnership in East Asia (CEPEA) and welcomed the formation of four Working Groups to study Economic Cooperation, Rules of Origin, Customs Procedures and Tariff Nomenclature of the region. He announced that India would host the next workshop on Rules of Origin. While discussing the future steps under the CEPEA process, the Minister supported Japan's paper suggesting a procedure and timeline. He also suggested that the ASEAN+6 meetings be structured and formalized. Trade Agreements : India and Singapore Comprehensive Economic Cooperation Agreement (CECA). India-Sri Lanka Free Trade Agreement (ISFTA). India-Chile Preferential Trade Agreement (PTA). India-Afghanistan Preferential Trade Agreement (PTA). India-Bhutan Trade Agreement. India-Nepal Trade Treaty. Framework Agreement for Establishing Free Trade between India and Thailand. Free Trade Agreement (FTA) between India and Gulf Cooperation Council (GCC). India- Japan Trade Agreement. Joint Study Group between India and Korea. Trade Agreement between India and Bangladesh. Comprehensive Economic Cooperation and Partnership Agreement (CECPA) between India and Mauritius.

Q5.What is global sourcing? What makes India so attractive for global sourcing? Ans :

Global sourcing is a procurement strategy that is aimed at exploiting global efficiencies in production. Global sourcing is a strategic sourcing strategy that effectively broadens the scope of the procurement process to include companies that operate in other countries. Strategic sourcing is the internal business process used to manage the bidding and vendor selector process. Procurement is also known as purchasing and refers to the laws surrounding fair and equitable bidding opportunities. The use of global sourcing has been the driving force behind the development and expansion of the global economy. Including suppliers from Global sourcing is a procurement strategy that is aimed at exploiting global efficiencies in production. Globalisation is the process of increasing connectivity and interdependence of the worlds market and businesses. The economic liberalisation in India began in July 1991. The economic liberalisation paved way for rapid progress in India. The competitive advantage of a company is important to determine the success of its global business. Brand India is used to describe the campaign which projects India as an emerging destination for business in various fields. Corporate governance is a process of promoting corporate transparency and accountability. The strategy for international business is through incorporation of the concept of configuration and competence. Strategic alliance between potential competitors is the contract to cooperate with each other and form an alliance by entering into a cooperative agreement. India is the worlds sixth most important offshore research and development location. The country has a global reputation by being in the leading position for business process outsourcing (BPO) and call centers. Global technology leaders such as IBM, Hewlett-Packard, Nokia, Dell and others invest in operations in India. Dell has established a major production center to serve the local Indian market. With the increased degree of globalisation, the Research and Development (R&D) activities are given importance to enhance global competitiveness. There has been steady increase in the literacy rate in India. India has a large resource of educated and technical staff. India
ranks high in terms of availability of skilled labour, especially engineers. Currently, India is a service hub of the world and holds a dominant position in a variety of service and knowledge based activities.

Q6.Write short notes on: a) Cross cultural management

b) WTO Ans: Cross cultural Management : Cross cultural management is defined as the development and application of knowledge about cultures in the practice of international management, when people involved have diverse cultural identities. The factors to be considered in cross cultural management are: Cross cultural management skills. Handling cultural diversity. Factors controlling group creativity. Ignoring diversity. Cross cultural management skills Providing inspiration and appraisal systems. Establishing and applying formal structures. Identifying the importance of informal structures. Formulating and applying plans for modification. Identifying and solving disagreements.

WTO: World trade organization was established on 1st January 1995. In April 1994, the Final Act was signed at a meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April 1994 was formed to strengthen the world economy that would lead to better investment, trade, income growth and employment throughout the world. The WTO is the successor to the General Agreement of Tariffs and Trade (GATT). India is one of the founder members of WTO. WTO represents the latest attempts to create an organizational focal point for liberal trade management and to consolidate a global organizational structure to govern world affairs. WTO has attempted to create various organizational attentions for regulation of international trade. WTO created a qualitative change in international trade. It is the only international body that deals with the rules of trades between nations. Objectives Helping trade flows by encouraging nations to adopt discriminatory trade policies. Promoting employment, expanding productions and trade and raising standard of living and income and utilizing the worlds resources. Ensuring that developing countries secure a better share of growth in world trade. Providing forum for trade negotiations

 Resolving trade disputes.