INTERNATIONAL MARKETING

FROM
BHARATH S M
18MB0314
MBA 2nd year Marketing
(MM7) International Marketing
PBMMC

TO
Chandrashekar sir
PBMMC
MBA Deo

TOPIC
Question paper of May/ June 2016
 Section -- A

1.What are the various points that you would

consider before entering the export field ?

10 Things to consider when exporting :

1. Keep in mind your destination
2. Define your export strategy
3. Research, it’s essential!
4. Look for long-term
5. Plan the export business as a continuum
6. Keep in mind price variables
7. Plan export as a part of overall of objectives
8. Count with your suppliers
9. Do not rush
10. Soak and research the industry

1. Keep in mind your destination:

First thing you have to do is to adapt your product to the new
market. There are little changes you have to do in the packaging, in
the price, or even in the product itself.
Consider that may be, the competitor’s product have a similar colour
or look as you use, or maybe, in the new country your product is
more valuated and you can increase the price. Also adapt your
communication to the new market for better penetration and we not
only refer to the language. Take care and use the correct way to
communicate to your potential clients, most of time, translating it’s
not enough.
 2.Define your export strategy:
It must be clear what, where and why you export to that
destination. The strategy must consider how to take the most
from the data you previously researched from the country you
are about to export. This will help you to decide wisely about
your business and see the points where you have to attack. Be
conscious of the product you want to export, be realistic about
the market position you want to occupate, the place where
your product will be received and its needs. And never forget
about the reasons why you are exporting that product to that
country.

3. Research, it’s essential!

It is as easy as being informed about what’s going on in the new
country you are approaching, your product and your market. This will
allow you to make better decissions about your business, save time,
money and efforts that will not give you any results. Be wise and look
for unknown needs and habits in the new market. Finally, keep asking
yourself why things are different in the new market, it may help you in
other markets.

4. Look for long-term

Reduce initial expectations and gain confidence and markets. Be
consistent. It won’t mean a thing if you just strongly attack once, as
customers and collaborators won’t remember you. But they will
consider you in a more professional way if you gain their confidence
and prove the value of your company in a continuous way.

5. Plan the export business as a continuum

If you plan it as a continuum rather than as a point event, you will reach
reliability and a more consistent scheme for your company. Exporting is
a complicate process and if you do it once, take the chance to build a
new revenue over it.

6. Keep in mind price variables

Export price is a conglomeration of many variables. Keep them in mind
and make the opportune estimations before you quote your
customers. You need to keep in mind a bunch of factors (currency,
taxes, shipping, etc.).

7. Plan export as a part of overall objectives

With this simple key, your company will outperform.

8. Count with your suppliers

They are interested, because indirectly they export their products and
assure continuity. Make sure they know that you are doing to expand
your company so they may offer you facilities or put you in the head of
their important customers.

9. Do not rush
Make sure you have enough resources and do not miss the opportunity
when you see the time. Export is a very important step for your
business so you will have to think twice if you can’t handle it
economically.

10. Soak and research the industry

Look for how it works in other countries or for other business partners.
Try to know why your competitors have been taking certain decisions,
or why things work differently. Have good relations with your industry
partners and ask them everything you don’t know. They will be pleased
to share their knowledge and you will have a professional masterclass
from who really knows the market.
2.Discuss the impact of international trade on the
economic development of a country

1. Benefits for International Specialisation: International trade enables

a country to enjoy the advantages of international specialisation according to
comparative costs.

Every country specialises and exports those commodities which it can produce
cheaper in exchange for what others can provide at a lower cost.

2.Widening of Market and Raising Productivity:

It is argued that the productivity gains arising out of extension of market
is a consequence of foreign trade. Improvements in productivity result
from greater division of labour, a higher degree of mechanisation and
greater possibility of innovation.It is said that foreign trade, by widening
the extent of the market and the scope of the division of labour, permits
a greater use of machinery, stimulates innovations, overcomes technical
indivisibilities, raises the productivity of labour, and generally enables
the trading country to enjoy increasing returns and economic
development. J. S. Mill has categorised them as indirect dynamic
benefits arising out of foreign trade. Thus foreign trade, by extending the
size of the market, exercises a dynamic influence on the economy. In turn, it
helps to raise the production at higher trade. As a result, country enjoys the
benefits of external and internal economies of scale.

 3. Helpful for High Growth Potential:

Foreign trade can also help in the development of a country enabling it to
exchange domestic goods saving low growth potential for foreign goods with
high growth potential.

Prof. J.R. Hicks emphasising this growth promoting aspect of international

trade observes that trade offers an opportunity for the exchange of goods with
less growth potential for goods with more growth potential, thereby
quickening the progress that results from a given effort on the saving sides.

It provides an opportunity for importing capital goods and materials required

for development purposes. The import of machinery, transport equipment,
vehicles, power generation equipment, road building machinery, medicines,
chemicals and other goods with high growth potential provides greater
benefits to the developing countries.

4. Educative Effect of Trade:

It is maintained that international trade can serve as a vehicle for the
dissemination of technological knowledge. A deficiency of knowledge can be a
biggest handicap in the development of a country and this deficiency can be
effectively removed through contact with more advanced economies i.e. by
making possible through foreign trade.

5. Capital Formation:
It is said that foreign trade helps to increase capital formation. The capacity to
save increases as real income rises through the more efficient resource
allocation associated with international trade. Foreign trade also provides
stimulus for investment and thus it tends to raise the rate of capital formation.

This stimulus comes from the possibility of realising increasing returns in

wider markets that foreign trade provides. Moreover, by allowing economies
of large scale production, the access to foreign markets makes it profitable to
adopt more advanced techniques of production.

Thus international trade, by creating conditions for increased capital

formation in underdeveloped countries, can help in their economic
development.

 6. Basis of Import of Foreign Capital:

International trade also helps in promoting development by creating suitable
conditions for the import of foreign capital. Haberler argued that trade is a
vehicle for the international movement of capital from the developed to the
underdeveloped countries.

The amount of capital that an underdeveloped country can obtain from foreign
countries depends to a considerable extent on the volume of its trade. The
larger the volume of trade of a country, the greater will be the volume of
foreign capital that can be expected to become available to it.

It is an established fact that it is much easier to get foreign capital for export
industries because they have a built-in solution of the transfer problem.

3.Describe the role and function of World Bank

roles :

1. To provide long-run capital to member countries for economic

reconstruction and development.

2. To induce long-run capital investment for assuring Balance of

Payments (BoP) equilibrium and balanced development of
international trade.

3. To provide guarantee for loans granted to small and large units and
other projects of member countries.

4. To ensure the implementation of development projects so as to

bring about a smooth transference from a war-time to peace
economy.

5. To promote capital investment in member countries by the

following ways;

(a) To provide guarantee on private loans or capital investment.

 (b) If private capital is not available even after providing guarantee,
then IBRD provides loans for productive activities on considerate
conditions.

Functions:
World Bank is playing main role of providing loans for development
works to member countries, especially to underdeveloped countries.
The World Bank provides long-term loans for various development
projects of 5 to 20 years duration.

The main functions can be explained with the help of the

following points:

1. World Bank provides various technical services to the member

countries. For this purpose, the Bank has established “The Economic
Development Institute” and a Staff College in Washington.

2. Bank can grant loans to a member country up to 20% of its share in

the paid-up capital.

3. The quantities of loans, interest rate and terms and conditions are
determined by the Bank itself.

4. Generally, Bank grants loans for a particular project duly submitted

to the Bank by the member country.

5. The debtor nation has to repay either in reserve currencies or in

the currency in which the loan was sanctioned.

6. Bank also provides loan to private investors belonging to member

countries on its own guarantee, but for this loan private investors
have to seek prior permission from those counties where this amount
will be collected.

4.briefly explain the functions of IBRD

 The main functions of the Bank are:

1. To assist in reconstruction and development of the territories of its

member-governments by facilitating investment of capital for
productive purpose;
2. To promote foreign private investment by guarantees of or
through participation in loans and other investments of capital for
productive purposes;

3. where private capital is not available on reasonable terms, to make

loans for productive purposes out of its own resources or out of the
funds borrowed by it; and

4. To promote the long-range growth of international trade and

maintenance of equilibrium in the balance of payments of members
by encouraging international investment for the development of the
productive resource of members.

The Bank may make loans directly to member-countries or it may

guarantee loans granted to member countries. The Bank normally
makes loans ‘for productive purposes like agriculture and rural
development, power, industry, transport, etc. The total amount of
the loan granted by the Bank should not exceed 100% of its total
subscribed capital and surplus. The interest rate charged by the bank
is the estimated cost to the Bank of borrowing money for a
comparable term in the market and is uniform without distinction
being made among borrowers. In addition to interest, a commission
of 1% for the purpose of creating a special reserve against loss and
1/2% for administration expenses are charged.

5.What are the functions and basic principles of WTO ?

The important objectives of WTO are:

1. To improve the standard of living of people in the member countries.
 2. To ensure full employment and broad increase in effective demand.

3. To enlarge production and trade of goods.

4. To increase the trade of services.

5. To ensure optimum utilization of world resources.

6. To protect the environment.

7. To accept the concept of sustainable development.

Functions:

The main functions of WTO are discussed below:

1. To implement rules and provisions related to trade policy review mechanism.

2. To provide a platform to member countries to decide future strategies related to

trade and tariff.

3. To provide facilities for implementation, administration and operation of

multilateral and bilateral agreements of the world trade.

4. To administer the rules and processes related to dispute settlement.

5. To ensure the optimum use of world resources.

6. To assist international organizations such as, IMF and IBRD for establishing
coherence in Universal Economic Policy determination.

CASE
1. In this case the public sector Indian oil corporation {IOC}, the
major oil refining and marketing company which was also the
canalising agency for oil imports and the only company in the fortune
500 here the internal environment is very good the company plan to
make a for any into the foreign market by acquiring a substantial
stake in the balal oil field in inan of the premier oil. Where the
 company management of IOC was ambitious and enthusiastic to
expand the business globally

The Domestic environment in Indian market where there is no much

competition for oil business and fever companies acquired the entire
market global environment was very good as there was opportunity for
any company across the world to come and invest in Balal oil field in
Iran of the premier oil.

2. The Domestic environment is the one which hinders the globalisation of

Indian business the Government policies and regulation have become barrios
for expansion of any business Globally In this case it took two years from
central Government ministry and RBI to clear the file and give permission to
invest in Balal oil field in Iran in the mean time EIF of France had virtually took
away the deal from under IOC’s by acquiring the premier oil

3. even if EIF had not acquired premier oil because of the delay from the
central Government ministry and RBI the price of oil had raise from $ 31 per
barrel to $45 per barrel $0 the ICO had to invest more money into it and also
the delay in giving permission would have give a chance to other companies
across the world to invest and acquire it

4. It would have been very significant of the foreign acquisition to IOC the
Indian oil market would have reached boom stage the prices of other oil would
have been much affordable and if this project had been to Indian oil
corporation the project had been to Indian oil corporation the project was
estimated to have recoverable oil reserves of about 11 millions tonner and ICO
was suppose to get nearly four million tonnes which would have and cheaper
and also earn more revenue to Indian oil corporation

5. The lessons from this case are

 The loopholes in the Indian Foreign Investment polices
 The time duration taken by central Government and RBI slipped away
the project from ICO to EFI France
 The Indian Foreign investment system need to be update and
Government should encourage Globalizationssss