ASSIGNMENT SUBJECT CODE: - MB0053Q1:-Environment scanning is an important part of international business. Explain your views on this statement and discuss what factors need to be scanned.Ans:-Discuss the statement:-Scanning the global business environment is a must for any firm whether doing business domestically or internationally as the domestic markets are now open to global competition by opening to foreign players. This analysis is part of a companys analysis-system, involving both internal as well as external factors. The analysis system may comprise the following areas in order to explore the business opportunities and challenges in key markets for any firm. Conducting business within your own country is different than in a global environment, where you will be dealing with international features, prospects and challenges. It is important that managers take an active interest in these economic, political, demographic and legal environments of a country in order to: Analyses market conditions of different countries. Assess risk. Identify growth sectors. Make investment decisions. In order to succeed, a company needs to gather data on national economies, interpret and make cross border comparisons using standard criteria. Knowledge of the IB environment allows management to allocate resources so that they reap the benefits and operate with high efficiencies in any country. For instance, garment companies use manufacturing facilities in China and save on costs, which will be higher in the nation of origin.

Factors-There are the factors:-

Economic Environment-The economic environment refers to the economic conditions under which a business operates and takes into account all factors that have affected it. It includes prime interest rates, legislation concerning employment of foreigners, return of profits, safety of country, political stability and so on.

Political Environment-In the previous section, the economic environment of international business was discussed. Now, let us focus on the political environment. Political factors influence the economic and legal environment in which the business operates to a larger extent, especially in contract law and rules on advertising and consumer protection. It also affects the business practices, restrictions on market entry, tariffs charged and ability to repatriate profits. Other factors include: Regulatory frameworks. Governmental control over multinational activity. Importance of pressure groups. Trade embargoes. Likelihood of having insurance against losses due to political risk. Strikes and labour unrest due to political turbulence.

Political and economic environments are often inter-related. The political environment affects the economic environment. For example, a government which is perceived as anti-business by the business community may lead to capital outflows resulting in the fall of the currency, lower savings and investment and hence higher interest rates and lower economic growth.

Demographic Environment-In international business; scanning of demographic environment plays an important role as it helps firm understand the various demographic factors such as gender; age; religious background and ethnicity. Firms; while appraising international markets for new business opportunity or product launch; use demographic environments to identify target markets for specific products or services it wishes to cater. There are both advantages and disadvantages in scanning the demographic environment of the country. One has to understand both sides of the demographic environment while planning strategy for international markets.

Socio-cultural environment-The cultural and social norms of people differ worldwide in all key markets as they have been shaped over centuries passing from one generation to another. Language, material culture, customs, aesthetics, religious beliefs, attitudes, values and social organisation has been important for survival and development of societies globally. Due to these socio-cultural factors, the customers/consumers of a particular country/region become conditioned to accept certain things as per conditioned behaviour. The increasingly competitive international business environment necessitate the exporters/ companies doing business overseas to customize their organisational polices keeping in mind the local cultural norms. For example, Coca-Cola has to sweeten its drinks in India as Indians have an affinity towards sweet taste.

Legal Environment-International businesses confront different sets of laws in various countries of operation. IB must not only abide by the domestic laws of each nation but also by the supranational laws which impose obligations beyond those of national legal systems. For example, the European Union. Major disparities in national law affecting business are: Intellectual property protection. Consumer protection and product liability. Competition among businesses. Payment of bribes and other practices. Formation and termination of contracts. Marketing practices. Carriage of goods.

Q2:-What is green field investment? Why is it considered as the best option for a developing country like India?Ans:-Green field investment-When the FDI comes into new facilities or expansion of existing facilities, it is known as green field investment. Greenfield investments are most welcome in any country of the world, be it developed or developing as the primary target of green field investments is to create new production capacity and jobs, transfer technology and know-how in the host country. Brown field investments, on the other hand refer to the purchasing of an existing production or business facility that has become sick or its products do not have significant demand in the markets or its sales are on decline due to variety of factors like obsolete technology, higher unit cost, poor distribution etc. Such a firm is acquired by companies or government agencies for the purpose of starting new product or service production activity. This type of investment does not involve construction of plant operation facilities. Green field investments also establish linkages from the place of production to the global marketplace. Green field investments are ideal for generating increased employment in the host country at higher wages, upgrading research facilities and overall process of economic development of the host country. However, some critics say that efficiencies generated in host country through Greenfield investments include the loss of market share for competing domestic firms. Greenfield investments also result in perceived profits and losses to foreign multinationals. Profits generated by multinationals may be repatriated to home country, thus making the host countrys job immensely tough by putting a recurring and continuous load of outflow of hard currency from host countries.

Benefits-Following are some of the advantages due to which nations give emphasis to their economic Development.

A. Easier integration into global economy: A developing country like India is keenly interested to have foreign investment in their economy as it can gain greater access and foothold in other economies of the world. Foreign investor may manufacture the products that may be meant for global markets resulting in greater exports of the country and improving the employment scenario in the country. B. Up gradation in technology and advancement in technical knowhow: Foreign investment facilitates the transfer of advanced level of technology mainly from developed countries to developing countries. Thus, less developed countriess and developing countries can have world-level technology and technical know-how to process their physical and non physical resources. Foreign expertise mainly coming from developed countries can be of immense use in upgrading the existing technical processes in the least developed or developing countries. For example India has got access to nuclear technology by signing the deal with Nuclear Supplier Group; thus having an access to advanced nuclear technology form countries like France, USA, Russia, Britain, Germany and Japan. India has also been benefited with advanced technology in areas of ports, ship building, power sector, energy sector and telecommunication in the recent year.

C. Increased competition improved productivity: Foreign investment from the foreign players brings in advances in technology, technical knowhow and processes. This helps in increasing competition and resultant productivity in the domestic economy of the developing country. As a catalyzing effect, its competitors in the domestic markets also start improving their technology or start tying up with foreign players in search of technology. It acts as a spill over effect in improving the productivity in a particular sector or sub sectors of the industry. Each company tries to stay competitive so as to retain the market share and sales turnover. D. Improvement in human development skills: There comes a significant improvement in human resources skills of the country that attracts foreign investment as its employees get exposure to globally valued skills. Foreign investors come with improved skill set to perform in a particular industry. Thus the host country is benefitted from the training and skills up gradation of the foreign investor. For example in the automobile sector in India, Japan has contributed various aspects on quality improvement of the employee.Some of the other advantages of foreign investment are access to a larger market for foreign investor in the host country. Foreign investor also has other advantages of tapping the potential of a cheap and skilled labor, making effective use of raw material and other physical resources in the host country. Foreign investor also has the benefit of expansion in capacity thus generating economies of scale and optimization in costs along with gaining diversification in different product categories.

Q3:-Regional integration is helping the countries in growing their trade. Discuss this statement. Describe in brief the various types of regional integrations.Ans:-Regional integration-Regional integration can be defined as the unification of countries into a larger whole. It also reflects a countrys willingness to share or unify into a larger whole. The level of integration of a country with other countries is determined by what it shares and how it shares. Regional integration requires some compromise on the part of participating countries. It should aim to improve the general quality of life for the citizens of those countries. In recent years, we have seen more and more countries moving towards regional integration to strengthen their ties and relationship with other countries. This tendency towards integration was activated by the European Union (EU) market integration. This trend has influenced both developed and developing countries to form customs unions and Free Trade Areas (FTA). The World Trade Organisation (WTO) terms these agreements of integration as Regional Trade Agreements (RTA). Table 6.1 gives a list of regional trade integration initiatives taken by India.Types of Integration-Different types of regional integration are discussed in this section.

1. Preferential trading agreement Preferential trading agreement is a trade pact between countries. It is the weakest type of economic integration and aims to reduce taxes on few products to the countries who sign the pact. The tariffs are not abolished completely but are lower than the tariffs charged to countries not party to the agreement. India is in PTA with countries like Afghanistan, Chile and South Common Market (MERCOSUR). The introduction of PTA has generated an increase in the market size and resulted in the availability and variety of new products.

2. Free trade area Free Trade Area (FTA) is a type of trade bloc and can be considered as the second stage of economic integration. It comprises of all countries that are willing to or agree to reduce preferences, tariffs and quotas on services and goods traded between them. Countries choose this kind of economic integration if their economical structures are similar. If countries compete among themselves, they are likely to choose customs union. The importers must obtain product information from all suppliers within the supply chain in order to determine the eligibility for a Free Trade Agreement (FTA). After receiving the supplier documentation, the importer must evaluate the eligibility of the product depending on the rules pertaining the products. The importers product is qualified individually by the FTA. The product should have a minimum percentage of local content for it to be qualified.

3. Custom union Custom Union is an agreement among two or more countries having already entered into a free trade agreement to further align their external tariff to help remove trade barriers. Custom union agreement among negotiating countries may encompass to reduce or eliminate customs duty on mutual trade. Under customs union agreement, countries generally impose a common external -tariff (CTF) on imports from non-member countries. 4. Common market Common market is a group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members. European community is an example of common market. Common markets levy common external tariff on imports from non-member countries. A single market is a type of trade bloc, comprising a free trade area with common policies on product regulation, and freedom of movement of goods, capital, labour and services, which are known as the four factors of production. This agreement aims at making the movement of four factors of production between the member countries easier. The technical, fiscal and physical barriers among the member countries are eliminated considerably as these barriers hinder the freedom of movement of the four factors of production. The member countries must come forward to eliminate these barriers, have a political will and formulate common economic policies.5. Economic union Economic union is a type of trade bloc and is instituted through a trade pact. It comprises of a common market with a customs union. The countries that are part of an economic union have common policies on the freedom of movement of four factors of production, common product regulations and a common external trade policy. The purpose of an economic union is to promote closer cultural and political ties while increasing the economic efficiency between the member countries. Economic unions are established by means of a formal intergovernmental legal agreement among independent countries with the intention of fostering greater economic integration. The members of an economic union share some elements associated with their national economic jurisdictions. 6. Political union A political union is a type of country, which consists of smaller countries/nations. Here, the individual nations share a common government and the union is acknowledged internationally as a single political entity. A political union can also be termed as a legislative union or state union.

Q4:-Write short note on: a) Foreign subsidiary structure b) International matrix structureAns:-Foreign subsidiary structure-In this structure, each of the companys foreign subsidiary reports directly to the headquarters. This structure eliminates the necessity of a regional manager. Though strategic decisions are taken at the headquarters, each subsidiary acts autonomously for their local operations.International matrix structure-This structure is the most complex organizational structure. This form of structure is suitable where several functional divisions from across the globe performing related duties are grouped together into an international product division. These product divisions can then plan, design, develop, produce the products or services required. The product divisions are dissolved or the teams are assigned to some other division after the project is executed.Q5:-Explain the Top-down and Bottom-up approach of planning.Ans:-Top-down- Top-down planning is a common strategy that is used for project planning. It helps maintain the decision making process at the senior level. Goals and allowances are established at the highest level. Senior-level managers have to be very specific when laying out expectations because the people following the plan are not involved in the planning process. It is very important to keep the morale of the employees high and motivate them to perform the job. Since employees are not included in any of the decision making processes, they are motivated only through fear or incentives. Management must choose techniques to align projects and goals with top-down planning. Management alone is held responsible for the plans set and the end result. The benefits of talented employees with prior experience on definite aspects of the project are not utilized based on the assumption that the management can plan and perform a project better without the inputs from these employees. Some think that the top-down planning process is the right way to make a plan, and that the plan development is not important. It permits the management to segregate a project into steps, and then break the work into smaller executable parts of the project. Simultaneously, the work that is broken down is analyzed until all the steps could be studied, due-dates are precisely assigned, and then parts of the project are given to employees. However, the focus is on long-term goals and the short-term and uncertain goals can get lost. This approach is best applicable for small projects.Top-down planning Top-down planning helps: Determine all the goals at the initial stage of the process. Identify the lack of ground level staff participation. Estimate the inflexibility. Find how management imposes the processes. Determine the lack of motivation. Find whether the staffs feel that their input is valued or not.

Bottom-up- Bottom-up planning is commonly referred to as tactics. With bottom-up planning, an organization gives its project deeper focus because each organization has a huge number of employees involved, and each employee is an expert in their own area. Team members work side-by-side and contribute during each stage of the process. Plans are developed at the lowest levels, and then passed on to each of the subsequent higher levels. Finally, it then reaches the senior management for approval. Lower-level employees take personal interest in a plan that they are involved in planning. Employees are more encouraged which in turn improves their morale. Project managers are responsible for the successful completion of the project. Let us now consider the key points of top-down and bottom-up planning.Bottom-up planning Bottom-up planning helps: As there are no long term vision here. Encourage teamwork. Estimate flexibility. Determine whether team motivation is of high level. Identify whether the project is team driven. Find whether the staff feels valued or not. Finally, a combination of these two project management methods is most effective. Using the positive aspects of each, the organization can align each step so that the requirements of the project are met. An organization can determine the top requirements of the project and allow accountability to get down with the lower levels. With this combination, the vision of senior management with the skills of lower level employees is merged. This helps in completion of the project more efficiently using the best employees of the organization.Q6:-Discuss the importance of ethics in international business.Ans:-Importance of business ethics-Ethics is significant in all areas of business and plays an important role in ensuring a successful business. The role of business ethics is evident from the conception of an idea to the sale of a product. In an organization, every division such as sales and marketing, customer service, finance, and accounting and taxation has to follow certain ethics.

Public image In order to gain public confidence and respect, organizations must ascertain that they are honest in their transactions. The services or products of a business affect the lives of thousands of people. It is important for the top management to impart high ethical standards to their employees, who develop these services or products. A company that is ethically and socially responsible has a better public image. People tend to favor the products and services of such organizations. This in turn will help gain investors trusta company that practices good ethical creates a positive impression among its stakeholders.

Managements credibility with employees Common goals and values are developed when employees feel that the management is ethical and genuine. Managements credibility with employees and the public are inter-related. Employees feel proud to be a part of an organization that is respected by the public. Generous compensations and effective business strategies do not always guarantee employee loyalty, organizational ethics is equally significant. Thus, companies benefit from being ethical because they attract and retain good and loyal employees.

Better decision-making Decisions made by an ethical management are in the best interest of the organization, its employees, and the public. Ethical decisions take into account various social, economic and ethical factors.

Profit maximization Companies that emphasis on ethical conduct are successful in the long run, even though they lose money in the short run. Hence, a business that is inspired by ethics is a profitable business. Costs of audit and investigation are lower in an ethical company.

Protection of society In the absence of proper enforcement, organizations are responsible to practice ethics and ensure mechanisms to prevent unlawful events. Thus, by propagating ethical values, a business organization can save the resources of the government and protect the society from exploitation.