228 MBA Fourth Trimester (International Business) KTU

MODEL PAPER - I

INTERNATIONAL BUSINESS

MBA - FOURTH TRIMESTER EXAMINATION

Time: 3 Hours Max. Marks: 60

PART - A
Answer all questions. Each question carries 2 marks. (52=10)
1) Define international business.
2) What is international technology transfer?
3) List out the importance of having foreign sales agents.
4) How an exporter will obtain EXIM code number/IEC?
5) What is global sourcing?

PART - B
Answer any 3 questions. Each question carries 10 marks. (310=30)
6) An organisation may enter into the international market through various modes. Discuss these modes.
7) a) What do you mean by foreign technology acquisition? (03)
b) Illustrate advantages and disadvantages of foreign technology acquisition. (07)
8) Highlight the legal provisions in the international sale contract.
9) Explain in detail various types of payment terms with special reference to letter of credit.
10) Elucidate the factors causing risk in export and give mitigation method for such risks.

PART - C

Compulsory question, the question carries 20 marks

11) Case Study
From humble beginnings in small-town Amritsar to a global presence in the key markets of the U.S., the U.K., Europe,
South America and Africa, the pharmaceutical company has a goal of becoming a $5 billion company by 2012,
making it a true Indian multinational. Ranbaxy has ground presence in 34 countries, sells its products in 100 nations
with about 17 manufacturing units spread across seven countries of which eight in India, four in the U.S. and one each
in Ireland, Malaysia, Nigeria, Vietnam and China. It has two R&D centers in Gurgaon near Delhi. In 2003, the
company recorded net consolidated sales of $969 million, registering 22 per cent growth over the previous years $764
million. Net profits stood at $ 159 million, up 14 per cent last year.
Ranbaxy sees itself as being one of the top five generic drug players. And to translate these objectives and to optimize
value creation, the company has adopted a multi-pronged strategy which includes acquisition of generic brands
overseas, strong emphasis on brand marketing in the U.S. and Europe and entering new high-potential markets with
value-added product offerings. Analysts tracking the sector say that getting to the $5 billion mark in sales would mean
growing by 20 per cent each year for the next 10 years. And to reach there, Ranbaxy will have to battle the more
powerful generics players, take on big Pharma companies in the New Chemical Entity (NCE) game, sew-up profitable
alliances, make acquisitions work and alter mindsets within the company.
For many years, the companys international operations were restricted to Malaysia, Thailand and Nigeria, with more
than half the business coming from the domestic market. But, after zeroing in on the U.S. markets, Ranbaxy entered
this high-margins market. The full-fledged foray into the U.S. markets also seems to have been meticulously planned.
First, the companys Global Depository Receipts (GDR) were listed on a Luxembourg Stock Exchange in 1994; it
made its first acquisition in the U.S. market by buying out a generics company, Ohm Laboratories, in 1997, and
formally entered the U.S. market with its own brands in 1998 by 2001, the companys sales from the U.S. crossed
$100 million.
While currently over 70 per cent of the companys turnover comes from the international markets, Europe has emerged
as another important focus, its growth in the European markets was helped along by the acquisition of RPG Aventis in
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229 MBA Fourth Trimester (International Business) KTU

France, which contributed $17 million in the quarter. This has emerged as the largest market for the company in
Europe followed by the U.K. and Germany.

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Model Papers 230

While the company is expanding its operations aggressively internationally, the growth strategy also focuses on
enhancing market share in India. The domestic market accounts for 18% of its sales. The company is looking at
narrowing the gap with the No.1 Company, GlaxoSmithKline (GSK), and overtaking it. Research is another focus area
for the Delhi-based drugs major. The major research focus is in the areas of urology, anti-infective, respiratory, anti-
inflammatory and metabolic disorders segments.

However, there are some risk factors, including excessive competition among Indian players, failure of patent
challenge litigations and authorized generics. Speaking of competition, in the U.S., both Ranbaxy and Lupin have
competed for Ceftin or Cefuroxime axetil, an antibiotic. Ranbaxy enjoyed the generics monopoly in Ceftin for 18
months until July 2003. Several generics companies then launched the product and the price of the product crashed by
80-85 per cent. Sales of the antibiotic fell from $46 million in the January-March 2003 to $4 million this year. Patient
litigations also affect the operations of the company, as they could take longer than the expected time to resolve.
Another issue is that of authorized generics wherein the innovator company which owns the product authorizes a
generics company to launch a generics version. Also, with a presence in about 100 countries, the company is subject
to frequent policy changes in those countries. Currently the regulators and the health insurance companies in both the
U.S. and Europe are in favour of generics. But, the regulatory norms could change, an analyst added. Another
challenge that the company faces is managing the huge 8,000 strong workforce. Brars stepping down from the top
position after 25 years has led to some churn. The research head of Ranbaxy, Dr. Rashmi Bharbhaiya moved out; two
Vice-Presidents and four directors have also left the organization. Some other senior-level officials also parted ways
with the company. But, analysts say that all this is just part of the game.

Questions:
a) What are the risk factors Ranbaxy would be facing in its global alliances?
b) Discuss the market entry and product strategies of Ranbaxy.

MODEL PAPER - II

INTERNATIONAL BUSINESS

MBA - FOURTH TRIMESTER EXAMINATION

Time: 3 Hours Max. Marks: 60

PART - A

Answer all questions. Each question carries 2 marks. (52=10)

1) Give the full form of:
i) IMF
ii) UNCTAD
2) Differentiate between licencing and franchising.
3) Enlist the reasons for establishing a foreign subsidiary or branch.
4) Name any four Export Promotion Council (EPC) in India.
5) State significance of export finance to exporters.

PART - B

Answer any 3 questions. Each question carries 10 marks. (310=30)

6) Enumerate how political and legal environment influence international business environment.
7) a) Write a note on designing performance tools according to international business standards. (04)
b) Also discuss the determinants of performance. (06)
8) Explain the general terms and conditions for opening offices abroad. Also mention details which need to be provided
in the application for the same.
9) What do you mean by export contract? Enumerate the elements of export contract.
10) State the two major export promotion schemes in India. Discuss their common provisions.
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231 MBA Fourth Trimester (International Business) KTU

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Model Papers 232

PART - C

Compulsory question, the question carries 20 marks

11) Case Study
The Murphy Company Limited, located near Auckland, New Zealand, manufactured dishwashers and garbage
pulverizers for home use, and cooking equipment and commercial pulverizers for restaurants. A relatively young
company, its products were highly regarded by housing contractors and builders. The company had a reputation for
quality construction and for good and prompt after-installation service.

Although sales were still growing, the Managing Director of Murphy, Bryan Murphy, realised that the New Zealand
market was limited and would level off within a few years. There is a relatively small population and it is not growing
appreciably. Therefore, he proposed exploring the possibility of exporting as a way to maintain growth.

The Export Institute was holding a two-day seminar in Wellington, the national capital, on opportunities for export by
New Zealand companies. The Director of Marketing, Fred Murphy, alongwith his assistant Sam Murphy, decided to
attend this seminar to see what these opportunities were and what types of assistance would be available to a company
such as Murphy Company Limited, which had no export experience at all.

One of the presentations at the seminar was by Michelle Akory, an expert on export marketing and a university
lecturer. Among the items that Ms. Akory gave to the seminar participants was a listing of potential mistakes made by
new exporters.

This list is reproduced below:

1) Failure to obtain qualified export counselling and to develop a master international marketing plan before starting
an export business.
2) Insufficient commitment by top management to overcome the initial difficulties and financial requirements of
exporting.
3) Insufficient care in selecting overseas agents or distributors.
4) Chasing orders from around the world instead of establishing a basis for profitable operational and orderly
growth.
5) Neglecting export business when the domestic market booms.
6) Failure to treat international distributors on an equal basis with domestic counterparts.
7) Unwillingness to modify products to meet regulations or cultural preferences of other countries.
8) Failure to print services, sales, and warranty messages in locally understood languages.
9) Failure to consider use of an export management company or other marketing intermediary.

Questions:
a) Does a small company such as Murphy Company Limited have the capability of exporting? Explain. Would it be
better for the company to expand its product line for the New Zealand market?
b) Suggest the ways to correct the mistakes that new exporters make while exporting to different countries.

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