Que 1 Write a short note on GATT & WTO, highlighting the difference between the two. Ans.

Que 2 Describe various entry strategies available to a firm when it wants to enter a foreign market. Ans.Strategies formulation is the second phase in the strategic management process. There are three aspects or levels of strategy formulation. Each aspect has a different focus that includes the requirement to be met within the formulation stage of strategic management. The three entry strategies available to a firm when it wants to enter a forein market are: (a) Corporate level strategy. (b) Business level strategy or Competitive strategy (C) Functional strategy Corporate level strategy: This aspect of strategy is concerned with broad decisions about the total oganisation's scope & direction. Basically, the changes which should be made in the growth objective & strategy for achieving the objective is considered, the lines of business at present, & how these lines of business go together. The three components of corporate level strategy are:

Directional or growth strategy: This designs the organisaion's growth objective. The objectives range from cutback through stability to altering levels of growth & how the organisation accomplishes them. Portfolio strategy: This strategic activity plans the organisation's portfolio in line with the business, which completely needs reconsidering how much concentration or diversification the organisation should have. parenting

Que 3 Wite a note on 'Globalization'. Ans.Globalization is the process of increasing connectivity & interdependence of the world's maket & businesses. It is a way of interacting among countries to develop global economy.

Que 4.What does FDI stand for? Why do MNCs opt for FDI to enter international market? Ans.Foreign direct investment (FDI) is an investment made with an intention of establishing a long term interest by a business enterprise in another country. It is also required that such an enterprise holds directly or indirectly, an ownership of 10% or more of voting rights in the target enterprise.

FDI policy, which is dictated by the government of the host country, plays a vital role in the economic growth of that country. Attracting FDI inflows with constructive policy is a challenge for any nation. Developing countries offer a lot of incentives for FDI, particularly in capital intensive sectors like power, infrastructure, transport, construction. Effective FDI policies help the host country to portray itself as an attractive investment destination.

Main objectives of FDI policy are to provide & facilitate investor friendly business environment, so that the foreign investors feel safe with the financial & legal framework of the country. The government of the host countries often formulate new or special regulatory framework to attract FDI. The host country often needs to invest in development of domestic infrastructure to make it investor friendly.

Following are the reasons why MNCs opt for FDI to enter international market:

Que.5 What is the need to understand cultural differences? Explain Hosfstede's cultural dimensions. Ans. Cultural differences affect the success or failure of multinational firms in many ways. The company must modify the product to meet the demand of the customers in a specific location & use different marketing strategy to advertise their product where there is demand or the message must be advertised by the company. The following are the factors which a company must consider while dealing with the international business: (a) The consumers across the world do not use the same products. This is due to varied preferences & tastes. Before manufacturing any product, the organisation has to be aware of the customer choice or preferences. (b) The organisation must manage & motivate people with broad different cultural values & attitudes. Hence the management style, practices, & systems must be modified (c) The organisation must identify candidates & train them to work in other countries as the cultural & corporate environment differs. The training may include language training, corporate training, training them on the technology & so on, which help the candidate to work in a foreign environment. (d) The organisation must consider the concept of international business & construct guidelines that help them to take business decisions, & perform activities as they are different in different nations. Hofstede's Cultural Dimensions:

Accoring to Dr. Geert Hofstede,'culture is more often a source of conflict than of synergy. Cultural differences are a trouble & always a disaster'. Professor Hofstede carried out a detailed study of how values in the workplace are influenced by culture. He worked as a psychologist in IBM from 1967 to 1973. At that time he gathered & analysed data from many people from several countries.The following are the five cultural dimensions: Power Distance Index (PDI): This focuses on the level of equality or inequality, between individuals in the nation's society. A country with high power distance ranking depicts that inequality of power & wealth has been allowed to grow within the society.These societies follow caste system that does not allow large upward mobility of its people. A country with low power distance ranking depicts the society & deemphasises the difference between its people's power & wealth. Individualism: This dimension focuses on the extent to which the society reinforces individual or collective achievement & interpersonal relationships. A high individualism ranking depicts that individuality & individual rights are dominant within the society. Individuals in these societies form a larger number of looser relationships. A low individualism ranking characterises societies of a more collective nature with close links between individuals. These cultures support extended families & collectives where everyone takes responsibility for fellow members of their group. Masculinity: This focuses on the extent to which the society supports or discourges the traditional masculine work role model of male achievement, power, & control. A country with high masculinity ranking shows the country experiences high level of gender differentiation. In these cultures, men dominate a major part of the society & power structure, men dominate a major part of the society & power structure, with women being controlled & dominated by men.In masculinity cultures, women are treated equal to men in all aspects of the society. Uncertainty Avoidance Index (UAI): This focuses on the degree of tolerance for uncertainty & ambiguity within the society that is unstructured situations. A country with uncertainty avoidance ranking shows that the country has low tolerance for uncertainty & ambiguity. A rule-oriented society that incorporates rules, regulations, laws, & controls is created to minimise the amount of uncertainty. A country with low uncertainty avoidance ranking shows that the country has less concern about ambiguity & uncertainty & has high tolerence for a variety of opinions. A society which is less rule-oriented, readily agrees to changes, & takes greater risks reflects a low uncertainty avoidance ranking. Long-Term Orientation(LTO): Describes the range at which a society illustrates a pragmatic future oriented perspective instead of a conventional history or short term point of view. The Asian countries are scoring high on this dimension. These countries have a long term orientation, believe in many truths, accept change easily, & have thrift for investment. Cultures recording little on this dimension, trust in absolute truth is conventional & traditional.Many western cultures score considerably low on this dimension.

Que 6.Write short notes on:

a) Ethnocentric approach b) Polycentric approach Ans.Ethnocentric approach: The key managers are from the parent country. The strategy is important during the early stages of the business because a part of the business that was successful in the home country needs to be transferred to the host country. Some of the reasons for this approach are as follows: The lack of qualified employees from the host country. The need for a united corporate culture. The maintenance of good communication, coordination, & control with headquarters.

The following are the disadvantages of the ethnocentric approach. Host country employees being deprived of promotion. The time taken by the home country managers to adapt to the host countries. The sensitivity of the expatriates to the needs & expectations of their host country subordinates.

Polycentric approach: This approach requires host country nationals to manage subsidiaries. The benefits of such a policy are that there are fewer possibilities of language issues, expensive training periods, & cultural adjustment issues. The disadvantage of this approach is that the local managers may find it hard to bridge the gap between the subsidiary & the parent company. There may also be language issues, loyalties to the host country that conflict with the needs of the multinational organisation, & cultural differences between the home country managers.