PROGRAM - MBA
SUBJECT CODE & NAME - IB0010 & INTERNATIONAL
FINANCIAL MANAGEMENT
1.
Discuss the
goals of international financial management
Goals of international financial
management
Effective
financial management is not limited to the application of the latest business
techniques or functioning more efficiently but includes maximization of wealth
meaning that it aims to offer profit to the shareholder, the owners of the
businesses and to ensure that they gain benefits from the business decisions
that have been made. So, the goal of international financial management is to
increase the wealth of shareholders just like in domestic financial management.
The goals are not
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2. The key component of the
financial system is the money market that acts as a fulcrum of monetary operations. Write down the
important points under each category mentioned below.
a) Functions performed by money
market
b) International interest rates
c) Standardized Global Market
regulations.
a) Functions performed by money
market
One of the key
components of the financial system is the money market that acts as a fulcrum
of monetary operationsthat are carried out by the Central bank while pursuing
the objectives of monetary policy. The maturity of such markets range from
overnight to a year and involves financial instruments that are considered as
close substitute of money. There are three broad functions that are performed
by the money market.
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b) International interest rates
Money
market rates are interest rates used by banks for operations among themselves.
Money market enables the banks to trade their surpluses and deficits. This rate
is also commonly known as inter-bank rate. The rates for various countries vary
substantially. The reason for this substantial difference in rates is due to
the interaction of supply or availability of short term funds (bank deposits)
in a particular country versus the demand by borrowers for short term funds in
that country. If the supply is more than
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c) Standardized Global Market
regulations.
Regulations
contribute to the development of international money markets because these
impose restrictions on local markets. Local investors and borrowers try to
circumvent the restrictions in local markets. Difference in regulations among
countries puts banks in some countries to advantageous position compared to
banks in other countries. Over a period of time, international banking
regulations
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3. Thousands of years back the
concept of bartering between parties was prevalent, w.hen the concept of money had not evolved.
Explain on counter trade with examples
Countertrade
Thousands of years ago,
the concept of bartering between parties was prevalent, when the concept of
money had not evolved. A person could give say 100 bags of wheat and get wood
or coal, a certain quantity for cooking. These bartering contracts were between
individuals or small kingdoms. Bartering exists today also but at different
level. For example, Iran may give 100 million barrels of oil to France and get
5000 guns of certain type in exchange. We can say that bartering is exchange of
goods between parties as per agreed terms without the use of money.
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4. There are different techniques of exposure management. One is the
Managing Transaction Exposure and the other one is the managing operating
exposure So you have to explain on both Managing Transaction Exposure and
Managing Operating Exposure.
Techniques of Exposure Management
Managing Transaction Exposure
Transaction
exposure calculates gains or losses which occur after the current financial
compulsions according to terms of reference are resolved. Taken that the deal
would lead to a future inflow or outflow of foreign currency cash, any unprecedented
alterations in rate of exchange amid the period in which transaction is entered
and the time taken for it to settle in cash would guide to a change in worth of
net flow of cash in terms of the home currency. For example a transaction
exposure of an Indian company will be the account receivable which is
associated with a sale denominated in US dollars or the
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5. Every firm is going on concern,
whether domestic or MNC. Explain the
techniques of capital budgeting and the steps to determine cash flows.
Techniques of Capital Budgeting
There are
many techniques which can be used to analyze the projects. These techniques can
be broadly classified into discounted cash flow techniques, which include net
present value (NPV), internal rate of return (IRR), profitability index (PI)
and discounted payback methods, and non-discounted cash flow techniques which
include payback and accounting rate of return (ARR) methods. The most commonly
and most widely accepted technique is NPV method. We now describe some of these
techniques in brief
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6. Write short note on:
a. American Depository
Receipts(ADR)
b. Portfolio
American Depository Receipt (ADR)
It represents ownership
in the shares of a non-US company and trades in the American stock markets.
ADRs enable American investors to buy shares in foreign company without any
issue of cross-border and cross-currency transactions.
ADRs carry price in
American dollar, pay dividend in the same currency and can be traded like any other
share of US-based companies. Each ADR is issued by a US depository bank and can
represent one share. The owner of ADR has the right to obtain the foreign stock
it represents, but US investors are more interested in owning ADR as they can
diversify their investments across the globe. ADR falls within the regulatory
framework of the US and requires registration of the ADRs and the underlying
shares with the SEC.
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Concept of Portfolio
MNC makes two types of
investment decisions that are as follows:
•Portfolio investment
decisions
•Foreign direct
investment decisions
Portfolio is the
combination of assets so as to reduce the risk by diversification.
There are two major
types of risks that are as follows:
1.
Systematic risk: It is also known as market risk. It is the risk common to all
securities and all companies. These risks cannot be diversified away and some
examples are interest rates, recessions and wars. Technically speaking, it is
that part of the total variability of return caused by external variables such
as factors arising out of market, nature of industry and the state of economy.
These are the
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PROGRAM - MBA
SUBJECT
CODE & NAME - IB0011–
International Marketing
1. The orientation of
a company’s top
management, its beliefs
and assumptions significantly impact
its approach to
international marketing. Discuss
the concept of EPRG framework.
Management
orientations and its effect on international marketing
Management Orientation:
EPRG Framework
The
orientation of a
company’s top management,
its beliefs and assumptions significantly
impact its approach
to international marketing. The concept
consisting of Ethnocentric,
Polycentric, Regiocentric and Geocentric is widely known as EPRG
framework, and it is discussed below.
1. Ethnocentric
A company with ethnocentric approach
deals with the whole world, based
on the
home-country perspectives. Marketing
strategies used in the
domestic market are extended to the foreign markets. Thus, ethnocentrism is
based on one’s firm belief in the superiority of one’s
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2. How do international economic
institutions affect international marketing strategy of MNCs? Explain the role
of any two of them.
Effect
The international marketing
environment is greatly influenced by a number of multilateral economic
institutions at the global level, which also influences the marketing decisions. A basic understanding of these institutions
is quite important from the
viewpoint of international
marketing. These institutions primarily affect the international marketing strategies
of the MNEs operating in foreign markets
through their roles
in the international
trade and policy landscape. In
this unit, you
will study the
background, organisational
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3. Define the concept and scope of
international marketing research.
Concept of
International Marketing Research
International marketing
research deals with
the analysis of
the market, information regarding
the nature, size, organisation,
profitability of different markets, changes in the market and various
factors – economic, social and political –
affecting those changes. International markets are characterised by rapid technology change and
knowledge obsolescence. Due to this, the
processes of production
and the products
become obsolete
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4. Differentiate between
national and international
products, global and
standardised products with examples.
National vs.
international products
A
national product is
offered to a
single market. Sometimes
national products appear when
a global company
caters to the
needs and preferences of
particular country markets.
For example, Coca-Cola developed a
non-carbonated, ginseng-flavoured beverage
for sale only
in Japan and a
yellow, carbonated flavoured
drink called “Pasturina”
to compete with Peru’s favourite soft drink, “Inca Cola.”
Such examples show the reasons why
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5. Write short notes on:
a) Containerization
b) 4 PL operators
a) Containerization
Containerisation has revolutionised maritime business
throughout the world. Cargo-carrying
containers are an
integral part of
the transport industry. Containers
facilitate both the
unitisation and carriage
of cargo through different modes of transportation.
Containerisation has ultimately provided an ideal unit load,
which meets all the logistical requirements.
It not only
eliminates conventional timeconsuming
methods of cargo
handling, but also
benefits ship owners, shippers and port authorities. The added
advantage
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b) 4 PL operators
Fourth Party Logistics operators
Third Party
Logistics (3PL) operators had limited
success so far, and this is attributed
to their priority to manage only the logistics rather than the supply
chains for their
clients (this is
mostly with regard
to shipping companies). 3PL companies co-ordinate with various components of the logistics
chain
such
as transport operators,
shipping lines, warehouse
operators, freight forwarders and
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6. Choose a product and explain how you will prepare seven steps in a
global e-marketing plan?
If suppose we need to launch online portal for selling
readymade clothes then following steps can be prepared.
The steps to create of a global e-marketing plan are as
follows:
1. SWOT
analysis - A
company must do a SWOT analysis to determine the strengths
and weaknesses and
also the external
environment’s opportunities and threats. This is also called situation
analysis.
In
case of global
e-marketing, the company
undertakes an external environment analysis
of the host
and home country.
The culture, government regulations,
economic
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PROGRAM - MBADS
(SEM 3/SEM 5)
SUBJECT CODE & NAME - IB0012 – Management of
Multinational Corporations
1. ‘The eclectic theory is an
analytic approach towards understanding foreign direct investment as well as
the organizational issues of MNCs pertaining to international production.’
Critically examine this statement.
The
eclectic theory was propounded by John Dunning in his book, Trade, Location of
Economic Activity, and the MNE: A Search for an Eclectic Approach. It is
an analytic approach towards understanding foreign direct investment as well as
the organizational issues of MNCs pertaining to international production.
This theory provides a clear understanding of the various factors that help
MNCs progress towards global operations. These factors include foreign
directinvestment, location, mode of entry and
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2. What do you understand by global
sourcing? What are the different forms of global sourcing? Elucidate.
Meaning of global sourcing
Globalization
and technological advancements have driven all sectors of the economy towards
dynamic changes and challenged the international division of labour. Several
researchers have different perspectives regarding the concept of outsourcing.
In an unambiguous way, outsourcing is defined as ‘providing either products or
services from an external supplier in contrast to in-house provision.’
Corporations opt for international outsourcing on the basis of makeor-buy
decisions, aiming to enhance
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3. Why is a good organizational
structure needed? Also discuss the benefits of a good organizational structure.
Need of good organization structure
A good organizational
structure is needed so that:
(a) Each individual in
the organization is assigned a role, responsibility and necessary authority.
Each person who is assigned to an activity must know his position, his role and
his relationship with others. He is further responsible for efficient execution
of his role and his duties and is given the authority to do so.
(b) The activities of
all individuals are coordinated and integrated into a common pattern in order
to achieve the organizational objectives. Organization is needed for the
purpose of integration of diverse activities in a cohesive manner.
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4. How is the performance of employees assessed and appraised in
multinational corporations? Explain in brief.
International
assignments vary in terms of duration and scope of physicalrelocation. While
attempting to manage the performance of staff working inmultinationals, it is
essential to consider all variables in relation to the nature of international assignments.
The evaluation of
expatriate performance is linked with the performance of the subsidiaries they
are sent to manage. While attempting to determine expatriate performance, it is
important to consider the impact of the following variables and their
interrelationship:
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5. What are the main reasons pertaining to the inadequate attention
towards issues relating to labour relations in MNCs?
Industrial
relation issues as well as HR issues have been gaining attention over
the past few years. Nowadays, MNCs are beginning to understand the significance
of maintaining amicable labour relations. The growing number of companies in
the international scenario makes it imperative to have a clear and systematic
approach towards labour relations. As the number of MNCs has increased, the
number of employees from different cultures and occupational habits working for
the same organization has
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6. Write short notes on:
a. Indian MNCs
b. FDI and MNC
a. Role and growth of Indian
MNCs with examples
In the changing
economic scenario, choosing the path of liberalization, privatization and
globalization became imperative for Indian government, particularly due to the
deficit in the foreign reserves. In 1991, the Late Shri P.V. Narsimha Rao, the
then Prime minister of India, opened the Indian market for
foreign multinationals.
This has led to making the country one of the most attractive destinations for
setting up MNCs.
Before
opening up the doors for MNCs, the system of License Raj prevailed in the
country, benefitting most of the Indian companies. Therefore, Indian companies
feared the tough competition they may
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b. Relation between FDI and
MNCs
FDI is a major source
of external finance, which means that countries with limited amounts of capital
can receive finance from wealthier nations. Foreign investments provide a great
impetus for growth to the Indian economy. The continuous upsurge in foreign
direct investments (FDI), allowed across various
industries
and sectors, has proven that foreign investors have faith in the resilience of
Indian markets. A
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PROGRAM - MBA
SUBJECT CODE & NAME - IB0013 –Export Import
management
1. What do you mean by export? How
many types of exports are there? Discuss.
Meaning of Export
Traditionally,
export is the process by which goods, services or knowledge are traded across
national and international boundaries. Exporting is merely trading with the
only difference that the customer lives in another country. There are visible
and invisible exports. The exports of goods are called ‘visible’ because they
are easily seen. The ‘invisible’ exports are mainly services like tourism,
shipping, and royalties that foreign companies pay to extract your minerals,
the servicing of foreign ships and planes in
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2. What are the major terms and
conditions of an export order?
Terms and Conditions of an Export Order
The terms and
conditions of an export order would vary from order to order depending on the
nature of product, parties involved and so on. The following are the standard
clauses of an export order:
Offer and Acceptance
An
international sales contract comes into being when one party – the exporter –
makes an offer and the other – the importer – accept it. The offer and
acceptance have to match before the agreement can
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3. Discuss the role played by Export Promotion Councils and Commodity
boards in supporting Indian exporters. Give examples.
Export Promotion Councils
In India
there are 19 Export Promotion Councils managing the following products:
Apparels; Basic Chemicals; Pharmaceuticals and Cosmetics Chemicals and Allied
Products; Carpet; Cashew; Cotton Textiles; Electronics and Computer Software;
Engineering; Gems and Jewellery; Handicrafts; Handlooms; Leather; Overseas
Construction; Plastics and Linoleums; Shellac; Silk; Synthetic and Rayon
Textiles;
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4. Write short notes on:
(a) Transport risk
(b) Credit risk
(a) Transport risk
Meaning and effect of transport risk
This risk
occurs where the goods are stolen, pilfered or damaged while in transit.
Commercial marine insurance policies will insure the goods against transport
risks. These protect the producer/exporter from losses from warehouse to
warehouse as well as general loss or damage. Additionally, insurance helps to
reduce the level of damage that a producer/ exporter may possibly have to incur
during the
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(b) Credit risk
Credit
risk: Sometimes because of large distances, it becomes difficult for an
exporter to verify the creditworthiness and reputation of an importer or buyer.
A false buyer/importer has heightened risk of non-payment, late payment or even
outright fraud. So, it is necessary for an exporter to determine the
creditworthiness of the foreign buyer/importer. An exporter can seek the help
of commercial firms.
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5. What is the significance of
bill of lading for exporter and importer? Explain any 2 types.
Bill of Lading
A bill of
lading (B/L) is a document used for the transportation of goods. It serves its
purpose in international as well as the domestic market. This is issued by the
carrier, containing the details of a shipment of merchandise and requires the
carrier to deliver the merchandise to the mentioned party. Merchants needed a
way of knowing what had been loaded onto ships, and began to issue signed
receipts to certify the loading of goods on to vessels and to verify the
condition of those goods at the time of loading. The current regulations on
bills of lading were codified by the Hague Rules in 1924. It
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6. What are the different types of
custom duties levied on imported goods?
Types of custom duties
•Basic custom duty:
Duty which is imposed on the value of goods at a specific rate is known as
basic custom duty. It is fixed at a specified rate on ad-valorem basis. Ad
Valorem duties are based on value and expressed as a percentage of the total
value (assessable value = cost + insurance + freight + 1% landing charges). In
case of import from some other countries, the rate specified is preferential
rate and in general cases it is standard rate.
•Additional
duty of customs or countervailing duty: This duty is the additional duty levied
upon the import of goods into India and this duty is equivalent to basic excise
duty. The base of this additional
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