IB01

International Business
Assignment I

Assignment Code: 2011IB01A1 Last Date of Submission: 31st March 2011

Maximum Marks: 100

Attempt all the questions. All questions are compulsory and carry equal marks.

Section A

1. (a) Can you think some reasons why a government might undertake protectionist measures, even
when there appears to be little economic justification for such measures? Give examples?
(b) Distinguish between international, multi-domestic, global and transnational organizations
with example of each.

2. (a) Explain Balance of Payment Categories and what constitutes Current Account?
(b) Explain Hofstede’s four dimensions of cross-culture. Give appropriate examples of
countries which typically depict these cross-cultural characteristics.

3. Explain why some industries are concentrated in some countries with the help of Porter’s Diagram.

4. How cross-cultural differences influence management and functioning of multinational

enterprises?

Section –B
5. CASE STUDY

When Mikhail Gorbachev began changing the economic policies of USSR in late 1980’s, many
foreign business people viewed this as the beginning of new opportunities in what was then the
Soviet Union. By the time Gorbachev resigned in late 1991 no one seemed to know how profitable
will be business alliances with any of the former soviet republics and other east European
countries. When the Russia began to implement western style economic concepts, the prices of
many goods were deregulated and people soon found paying 5 to 10 times as much for some
products. The value of the ruble quickly sank to around 1% and the government owned foreign
exchange bank denied many requests for withdrawals. However, no one wanted to close the bank
because this would have meant defaulting on nearly $ 85 billion of foreign debt. GNP during
1990’s fell by 10%.
In an effort to help the newly formed Russian republic, a number of prominent business people
and politicians have called for aid in the form of grants, technological assistance and direct

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investments. The Bush administration urged that the country be admitted to full membership in the
IMF and World Bank. After months of discussion, Russia and 12 former Soviet republics were
admitted in 1992.
At the same time there were diverse opinions regarding the benefits of investing in Russia. Many
western diplomats were arguing that new investments should be minimal until stability returned.
However this did not stop many companies going forward. Tetrapack and McDonald were looking
forward to making additional investments and locking their positions before other competitors had
a chance to do so. In short, many many business people were upbeat about opportunities of doing
business with Russia.
Today Russia is a part of emerging markets, BRIC economies with growing GNP and is ready to
join WTO.

Questions
1 Would Russia be benefited by joining WTO? And what changes are required in its economic
policies to succeed as member of WTO ?

2 How useful will be a Free Trade Agreement between Russia, India, and China? Which country
is likely to be benefited most from current perspective and why?

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 IB01
International Business

Assignment II

Assignment Code: 2011IB01A2 Last Date of Submission: 15th May 2011

Maximum Marks: 100

Attempt all the questions. All questions are compulsory and carry equal marks

Section A

1(a) Distinguish between Ethnocentric, Polycentric, Regiocentric and Geocentric approach in

managing international business.
(b) Explain different types of “ intellectual property rights “. What can an MNC do when such
rights are violated in other countries?

2 (a) Write short notes on any two of following modes of entry with their merits and demerits or
when these modes will be most appropriate.
i. Franchising
ii. Licensing
iii. Exporting
(b) Distinguish between all, with examples of each ;
i. FTA
ii. Customs Union
iii. Common market
iv. Economic Union

3. An electronic firm is considering how best to supply the world market for microprocessors used in
consumer and industrial electronic products. A manufacturing plant costs about $ 500 million to
construct and requires a highly skilled workforce. The total value of the world market for this
product over the next 10 years is estimated to be between $ 10 billion and $ 15 billion. The
Tariffs prevailing in this industry are currently low. Should the firm adopt a concentrated or
decentralized manufacturing strategy? What kind of locations should the firm favor for its
plants? The products are patented ones.

4. You are the marketing manager of a food product company that is considering entering the
South Korean market. The retail system in S. Korea tends to be very fragmented. Also retailers
and whole sellers tend to have long term ties with South Korean companies, which make access

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 to distribution channel difficult. What distribution strategy would you advice the company to
pursue? Why?
Section B
5. CASE STUDY
During the 1980s the value of the US dollar dropped substantially against that of most European
currencies . As a result, US goods in Europe became cheaper and exports to Europe started to rise.
In 1985 the United States has a $ 30 billion deficit with Europe. In 1988 this was down to $ 15
billion, and by 1990 there was a $4 billion surplus.

Us export to Europe have been increasing at a faster rate than those to any other area of the world,
and this has many European business people concerned. Even more important, price differentials
with US goods were so great that many European manufacturers are finding themselves unable to
compete. Part of the reason is found in the retooling that US firms have undertaken in recent years.
Their new equipment is both economical and technologically flexible, thus allowing the United
State to produce and export state-of-the-art products at discount prices For example, US personal
computer manufacturers are now able to produce and sell computers, monitors, and printers at a 20
per cent profit margin and still offer significantly lower prices than the European competitors. In
fact, US prices are so attractive that both US affiliates and European companies are beginning to
shift their supplier network to take advantage of cheaper US made goods.
What is particularly interesting to many observers is the fact that the bulk of the recent export
volume is not from newcomers but from traditional exporters: IBM (mainframes), caterpillar
(bulldozers), Boeing (jets) . At the same time, however, hundreds of small and midsize firms are
beginning to carve out market niches where there is little competition. Examples range from
transdermal skin patches to specially teas. High-tech companies are also doing well, thanks to
Europe’s growing appetite for efficiency and data management. For example, Symbol
Technologies Inc. (Bohemia, New York) has a bar-graph code system that stores 3000 characters
of text in 2 square inches of space and allows for rapid, inexpensive inventory control. The
company currently is racking up over $ 70 million annually in European sales.

US auto manufactures are also doing well, Chrysler, for example is now selling over 60,000 cars
annually and has signed 800 dealers in 11 countries. General Motors is selling close to 20,000 cars
annually in Western Europe and has plans to sell 240,000 units by the mid 2010’s.Such exports
have added life to the slow growth of the US economy. As a result, the future is likely to see
increased emphasis on exports by US firms.

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Questions
a) What steps might European countries take to reverse this trend ? Identify
and describe two.

b) If the United States were to once again begin running a trade deficit with
Europe, what steps could it take to reverse the situation?

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