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Post-Graduate Diploma in Business Management

Syllabus

INTERNATIONAL TRADE AND FINANCE


Credit 3

Course owner
Dr Ratna Vadra
rvadra@imt.edu

Course Focus
Whatever be the pros and cons of globalization, it is the order of the day. Keeping that reality in mind, this
course is designed to equip the students to understand trends in international trade, investment and finance in
global context with special focus on India. Many IMT pass outs will engage directly or indirectly in commerce
and finance across national borders. Increasingly, economic events abroad shape the opportunities and
constraints faced by managers in the majority of industries across the globe. This course focuses on these issues.
Course Objectives
This course is about the trade and finance of the global economy. The purpose is to delve deep into the question
about how firms prosper in international environment with use of knowledge regarding international trade and
finance. Understanding international trade and finance in the days of fully regulated Indian economy was
considered of secondary importance. It is now, for managers of all levels, simply a necessity. Doing business
across borders is not the same as doing it at home. Rather, it entails a whole new set of managerial challenges:
understanding basic economic theories of international trade, measuring the impact of government rules and
regulations on international trade and investment, reassessing competitive advantage, evaluating the role of
international financial institutions, considering the impact of currency fluctuations and trading regimes and
understanding the complication of interlinked global financial market. The purpose of ITF course is to build a
framework of analysis that enables managers to understand the challenges of international trade and finance and
to capitalize on the opportunities they represent.
Pedagogy:
The pedagogy will be a combination of class lectures (theory and discussion of real life issues), interaction, case
studies, caselet discussion and projects/assignments. The theories will be discussed with graphical and
mathematical analysis and will be supplemented by numerical examples. Students are also expected to read and
identify the problems in the cases and caselets, which will be analysed in the classes with participatory
discussion.
Course requirement

1.

Students must read the cases and the caselets. If they are negligent in this task, they may subject
themselves to penal action.

2.

Reading newspaper and keeping oneself abreast of latest happening in the Indian global economy is a
must for gaining mastery over understanding global economic issues. If you face any difficulty in
understanding economic concepts while studying business newspapers and listening to business news
channels, get it explained by the teacher at his/ her appropriate time.

3.

Class participation is very much useful for better understanding of the concept. This will be appreciated
and rewarded if you add value to the class through your questions, statement, and comments.

4.

Any assignments/projects assigned to you either individually or in group should be completed within
the stipulated time.

Evaluation
Components of evaluation are very crucial pertaining to the overall learning of the course by a student. Keeping
in mind students heterogeneous background and strategies specified above, the following components of
evaluation have been designed to assess their subject knowledge and performance in the course.
Components of Evaluation
Class
Participation/Assignment
Quiz(AOL assessment)

Weightage of Marks
(in percentage)

Date
To be monitored for all
sessions/ to be intimated
by course faculty
Please refer to Academic
Calendar

Projects write-up
Presentation and
Submission (in group)

19th and 20th Session

End-Term Test

Please refer to Academic


Calendar

10
10
30 [Presentation 10
Report Evaluation 20)
50

Total
100
N.B.: If you miss any component of evaluation, you will get zero since repeat of test will not be
entertained
Assessment methods

Goal 2
GROUP
Major projects(20)
Project
Presentation(10)
INDIVIDUAL
Quizzes(10)
Class
participation/Class
Test (10)
End term (50)

Sub goal
1.2

Sub goal
2.2

Sub goal
3.1

* Aol mapping will be done through quiz of 10 marks after 10 lectures.


The marks distribution among different components of evaluation is subject to change at the discretion of the
faculty
Project
The group project will be one of the most important learning tools of the course. This is a highly interactive real
life project, which requires a high degree of analysis and tangible recommendations. The faculty will assign the
project topic to each group.
Project Proposal Format
Your proposal should include following:

Introduction/Background of the project

Rationale for taking the project

Objective of the study

Scope of the study

Methodology

Expected outcome

Project schedule

Final Report Format


The final report has to be prepared and submitted in the format encompassing the areas mentioned here under
the heading of Contents.
Executive Summary
Acknowledgements
List of Abbreviations
List of Tables
List of Figures
Main body
1.

Introduction/Background of the study

2.

Objective of the study

3.

Scope of the study

4.

Methodology

5.

Project findings

6.

Recommendations
7.
8.

References
Appendix

Group Project Report Presentation

The presentation should cover both the analysis, policy conclusions, if any and overall findings.

Each presentation will be of 15/20 minutes followed by 5 minutes for open discussion, subject to
change at the discretion of the faculty.

Textbook and reference books

1.
2.
3.
4.
5.
6.
7.

Hill Global Business Today, 3rd Edition,Tata Mcgraw Hill.( Text book)
Caves and Jones; World trade & payments, 10th Edition, Pearson.
Salvatore D.: International Economics, 9th Edition, Wiley.
Levy M.D.: International Finance, 5th Edition, Routledge.
T. J. OBrien - International Finance, 2nd Edition, Oxford University Press.
Justin Paul & Aserkar A: Export Import Management, 1st Edition,Oxford University Press.
Barua and Stern(ed.) The WTO and India, : Issues and Negotiating Strategies, 1st Edition,Orient
Blakswan Private Ltd.
8. International Business, Rakesh Mohan Joshi, Chapter13, pp.546-565, Oxford Publication, 2009.
9. Cases from Harvard Business Review and other sources
10. Web sites of IMF, WTO, World Bank and Ministry of Commerce, Government of India.

Module -1
Introduction
Lecture 1and 2
Introduction, International trade Distinction from national trade, Rationale for studying international trade
and finance, International trade and finance in the era of globalization
Sessions 1 & 2 (150 minutes)
20 minutes
International
trade

Distinction
from
national
trade

20 minutes

10 minutes

30 minutes

Rationale
for studying
international
trade
and
finance

Current
trends
in
international
trade

Defining
globalization
International
trade
and
finance
in
the era of
globalization

20 minutes

20 minutes

30 minutes

Globalization
of markets

Globalization
of products

Pro and cons


of
globalization

Readings:
International Economics, Salvatore D, Chapter 1, 9th Edition, Wiley.
International Economics: Theory and policy, Paul .R. Krugman, Chapter 1, pp.1-9, Pearson
Global business Today Charles, Hill, Sixth edition, Chapter 1, pp.5-35, Tata, Mc Graw Hill
MODULE 2 : Theories of international trade
Lecture 3 amd 4

Classical Theories and neo classical Trade in the context of the countries : Economic theories of
international trade Mercantilism, Absolute advantage theory of Adam Smith, Comparative advantage theory of
David Ricardo, Heckscher Ohlin theory of pattern of international trade. Neo classical theories of international
trade trade between similar nations, intra industry trade (rudimentary ideas.)

Sessions 3& 4 (150 minutes)


20 minutes

20 minutes

10 minutes

30 minutes

Why study
trade
theories?

Mercantilism

Absolute
advantage
theory
of
Adam Smith

Heckscher
Ohlin theory
of pattern of
international
trade.

20 minutes

40 minutes

10 minutes

Comparative
advantage
theory
of
David
Ricardo

Neo classical
theories of
international
trade

Relevance
of
trade
theories?

Readings:
Global business Today Charles, Hill, Sixth edition, Chapter 5, pp.180-192, Tata, Mc Graw Hill.
International Economics: Theory and policy, Paul .R. Krugman, Chapter 2, pp.27-53, Pearson

Lecture 5
Managerial theories of international trade Porters competitive advantage theory, Product life cycle theory.
Sessions 5 (75 minutes)
15 minutes

20 minutes

10 minutes

Managerial
theories of
international
trade:
Porter,
product life
cyucle

Porters
competitive
advantage
theory

Product
theory.

30 minutes
life

cycle

Caselet

Readings:
Global business Today Charles, Hill, Sixth edition, Chapter 5, pp.159-177, Tata, Mc Graw Hill.
International Economics: Theory and policy, Paul .R. Krugman, Chapter 2, pp.27-53, Pearson

Module 3
Government and international trade
Lecture 6
Trade restrictions tariff, quota and subsidy. Debate over optimality of free trade concept of small and large
country. Effective rate of protection.
Session 6(75 minutes)
15 minutes
Trade
restrictions
tariff, quota
and subsidy

20 minutes
Debate over
optimality of
free trade

10 minutes
concept
of
small
and
large country

30 minutes
Effective rate
of protection.

Readings:
Global business Today Charles, Hill, Sixth edition, Chapter 6, pp.200-217, Tata, Mc Graw Hill.
Lecture 7
International institutions IMF, World Bank
Session 7( 75minutes)
15 minutes
Impotance of
International
institutions

30 minutes

30 minutes

IMF

World bank

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 10, pp.339-436, Tata, Mc Graw Hill.

Lecture 8
WTO, Dispute management by WTO.
Session 8( 75minutes)
15 minutes
GATT

why

20 minutes
WTO,Functions

30 minutes
Major issues

10 minutes
India and

GATT was
abolished?

of WTO,
Dispute
settlement in
WTO

in
WTO:
Dumping
sunsidies

WTO

Website : www.wto.org

Lecture 9
Regionalism and idea of customs union.
Lecture 9(75minutes)
15 minutes

30 minutes

20 minutes

10 minutes

Regional
Economic
Intergation
importance,
benfits
of
REIs

Types of
trade blocs

Continued

continued

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 8, pp.276-303, Tata, Mc Graw Hill.
Module 3
Trade in the context of firm.

Lecture 10
Emergence of multinational corporations. MNC as intermediary.
Lecture 10 (75 minutes)
20 minutes
Emergence
of
multinational
corporations

20 minutes
MNC
as
intermediary.

30 minutes
Case
study
:Multinational
as
Global
Intermediarie
s

10 minutes
Discussion

Case Study : Multinational as Global Intermediaries,2003, Tarun Khanna and Krishna Pepepu (HBR)

Readings:
International Business, Rakesh Mohan Joshi, Chapter13, pp.546-565, Oxford Publication, 2009.

Lecture 11
Foreign investment, Eclectic theory of foreign investment.
Lecture 11(75minutes)
15 minutes

30 minutes

30 minutes

FDI
FIIs

Theories of
FDI

Advantages and disadvantages of FDI,


current trends

and

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 7, pp.236-270, Tata, Mc Graw Hill.

Lecture 12
Choice among export, licensing, franchising, joint venture, wholly owned subsidiary
Case Study: Wal-Mart in Argentina (Global business Today, Charles, Hill, Sixth edition)
Lecture 12
15 minutes
Types
Mode
Entry

20 minutes
of
of

Export,
licensing ,
franchsing ,
joint venture

10 minutes
Wholly
owned
Subsidiary

30 minutes
Case Study:
Wal-Mart in
Argentina

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 12, pp.419-427, Tata, Mc Graw Hill.

Module 4
International finance
Lecture 13
Introduction to foreign exchange. Risk in foreign exchange. Spot and forward exchange rate. Forward, future,
options and currency swap.
Lecture 13
15 minutes
Introduction
to
foreign
exchange

30 minutes

30 minutes

Risk
in
foreign
exchange.
Spot
and
forward
exchange
rate.
Forward,
future,
options and
currency
swap.

Numericals

Readings:
Global business Today, Charles,Hill, Sixth edition, Chapter 9, pp.306-314, Tata, Mc Graw Hill.

Lecture 14
Foreign exchange and interest rate. Covered and uncovered interest parity. Debt and foreign exchange exposure.
Foreign exchange and interest rate.
15 minutes

20 minutes

10 minutes

30 minutes

Foreign
exchange
and interest
rate.

Foreign
exchange
and interest
rate.

Debt
and
foreign
exchange
exposure.

Numericals

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 9, pp.315-335, Tata, Mc Graw Hill.
Lecture 15 and 16 :Crisis in international financial market. East Asian Crisis of late 1990s, Global melt down,
2008 and Eurocrisis a broad overview.
Sessions 1 5 & 16 (150 minutes)
20 minutes

30 minutes

30 minutes

30 minutes

20

minutes
Crisis
in
international
financial
market

East Asian
Crisis
of
late 1990s

Global melt
down,

Eurocrisis

Impact
on
economies

Readings:
Global business Today, Charles, Hill, Sixth edition, Chapter 10, pp.356-371, Tata, Mc Graw Hill.

Module -5
Focus on India
Lecture 17: Basic framework and institutions of export import business in India.
35 minutes
Export import in India :
Current trends

30minutes

10 minutes

Basic
framework
and
institutions
of
export
import business in India.

Discussion

EXIM Bank

Readings :
Website of Ministry of Commerce, Government of India.. www.eximbank.com
Lecture 18, 19, 20: Project presentations