Question - 1: Explain the terms GDP, GDP-P and PPP.

Bring in a correlation between the three through an

example?
Answer:
GDP (Gross Domestic Product) is the total market value of all final goods and services produced in a country in a
given period. Each country reports its data in its own currency. To compare the data, each country's statistics must
be converted into a common currency.
GDP-P or GDP per capita is a measure of a country's economic output that accounts for its number of people. It
divides the country's gross domestic product by its total population. That makes it a good measurement of a
country's standard of living. It tells you how prosperous a country feels to each of its citizens
PPP (Purchasing Power Parity) is a popular macroeconomic analysis metric to compare economic productivity and
standards of living between countries is purchasing power parity (PPP). PPP is an economic theory that compares
different countries currencies through a "basket of goods" approach.

Correlation: One of the classic examples for the correlation between the three can be the iPod Index that compares
an item's price in various locations. Since each iPod is produced in the same place and have identical performance
characteristics (within the same model). The price differences are therefore a function of transportation costs, taxes,
and the prices that may be realized in individual markets. An iPod will cost about twice as much in Argentina as in
the United States and may cost one half in India and so on.

Question - 2: What are the three key learning’s from the comparative case studies of Tata-Tanishq and Airtel Africa ?
Answer: Three key learning’s from Tata-Tanishq & Airtel Africa Case study are:
The average minutes of use per subscriber in Africa in a month was just 100 compared to 350-400 in India.
While as Airtel paid a hefty amount of $252 per person resulting in losses, as Tata-Tanishq was launched the
Tanishq range of designs were not appreciated initially as they were believed to be extremely Western, and
also they offered only 18 carat gold." Therefore the first step was to change the brand positioning from that
of an elitist and Westernized offering to a more mainstream, Indian one. The 18-carat jewellery range was
expanded to include 22 and 24 carat ornaments as well.
The low tariff strategy in Africa by Airtel Africa, similar to India did not translate to the level of success as
achieved in India with the same tariff strategy, as well in the case of Tata-Tanishq they were targeted upper
class whose income was above 1 lakh, and too the designs were too heavy & clunky.
The market dynamics and fundamentals are not exactly the same with the different continents (Airtel
Africa) as well different types of Customers in the same continent (Tata-Tanishq).

Question – 3: Name two countries each of High and Low Context Societies
Answer: a. India and b. United States of America respectively
High-context cultures are those that communicate in ways that are implicit and rely heavily on context. High-context
cultures are collectivist, value interpersonal relationships, and have members that form stable, close relationships
Low-context cultures are those that communicate information in direct, explicit, and precise ways.
High Context Low Context
High use of non-verbal methods in order to Words in verbal messages are direct, explicit, and
communicate important information throughout a meaningful Less use of intuition and body language to
conversation (hand gesture, facial expressions, tone of communicate a message
voice, etc.)
Activities and decisions based on rapport and High emphasis on logic and facts during decision-
personable relationships. High emphasis on making process. Building long term relationships are not
interpersonal relationships as important as accomplishing tasks and goals
Knowledge is confidential with closer relationships Knowledge is generally explicit, codified, and easily
accessible and transferable

Question -4: Name the five clusters of Hofstede culture model and explain any two key features?
Answer: Hofstede, a leading expert in cultural values classification, developed a model of five dimensions of natural
culture that help to explain basic value differences in culture. The model distinguishes cultures according to the
following five different dimensions:

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 Power distance
 Individualism/collectivism
 Masculinity/femininity
 Uncertainty avoidance
 Long-term orientation

Key Features:
1) The Power Distance Index (PDI) focuses on the degree of equality, or inequality, between people in the
country's society.
2) The Individualism (IDV) focuses on the degree the society reinforces individual or collective, achievement
and interpersonal relationships.
3) The Masculinity (MAS) focuses on the degree the society reinforces, or does not reinforce, the traditional
masculine work role model of male achievement, control, and power.
4) The Uncertainty Avoidance Index (UAI) focuses on the level of tolerance for uncertainty and ambiguity
within the society. These dimensions are measured on a scale from 0 to 100, include 75 countries or regions,
and scores are determined by “high” or “low” rankings within each category.

Question – 5: Explain the term “Pure Economy”. What is good about such an economy additionally name a few
pitfalls?
Answer: A pure market economy is an economy or economic system that relies exclusively on markets to allocate
resources and to be able to answer all the questions of allocations.
The good thing is that in this economy there is no government intervention which means that there is less
bureaucracy.
The pit falls are that this kind of market is not concerned about social benefit Increased consumer exploitation.

Explanation:
A pure market economy or a pure economy is an economy where the economic system heavily relies on the market.
They rely on the markets to be able to allocate resources and be able to answer all the questions that involve the
allocation of resources in the country. There is minimal to no government intervention in this kind of economic
market.
The good thing about this market is that there is no government intervention which means that there are less laws
and bureaucracy which is a motivating factor for investors because they do not have to satisfy the numerous
requirements that governments usually require of international companies or even companies before they start
operating in the country which makes it easy for companies to start their businesses.

The pitfall of this kind of market is that there is little to no social benefit. The businesses are usually heavily
concerned about their own success and they are concerned about controlling the market that the clients or the
consumers are not so meaningful to them. This means that they do not try to give the benefit back to the community
but they invest in their company again.
There is also increased consumer exploitation because the businesses want to increase their profits. The businesses
are usually concerned about increasing their profits over any other thing. They want to be able to make as much
money as possible which means that they might overcharge clients when it comes to goods that the clients buy from
them which is a form of consumer exploitation.

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Question – 6: Why should India open it borders and businesses for International trade. How does it help the
nation? What should India be mindful of as it opens to the World for trade?
Answer: It should open its borders and a business for international trade because it improves the GDP of the country
and also provides employment opportunities to the people which improve the living standards of the people in India
It helps the nation because it provides the government with an extra income for development. However it should be
mindful of the dangers that outside businesses pose to the local businesses

Explanation:
 India should open its borders and businesses for international trade. This is because it helps to improve the
GDP of the country. When outside businesses come into the country, what happens is that they are able to
raise more revenue and hire people in the country which increases the amount of investments in the country
which increases the GDP of the nation. The companies also provide employment opportunities to the local
people which improve their standards of living in the country.
 Opening borders and businesses for international trade provides the government with more income. The
government can be able to use this income to improve the lives and the welfare of the people in India. They
can build more roads, connect electricity and even get to reduce the level of taxes that they charge their
clients which is a positive for the people of India.
 As it opens its borders to the world for trade India should be mindful of fake products increasing in the
country and second hand products. These are some of the products that will come to the country especially
from western countries which look to dispose second hand cars and clothes to developing nations.
 They should also be mindful of the dangers that outside business pose to local businesses. The foreign
business can open up their businesses and sell products at a very cheap price which will create a situation
where the local business might be out of the business because they are unable to compete with the prices
and the products of the foreign firms.

Question – 7: Name typical three modes of entry in International Business. Explain any two.
Answer:
 Exporting
 Licensing and Franchising
 Strategic acquisitions

 Licensing and Franchising:

For businesses who want to establish a retail presence in a foreign market with minimal risk, the licensing and
franchising approach allows another person or business to assume the risk on behalf of the business. In Licensing
agreement and franchise, an overseas-based business will pay a royalty or commission to use Franchisor’s brand
name, manufacturing process, products, trademarks, and other intellectual properties. While the licensee or the
franchisee assumes the risks and bears all losses, it shares a proportion of their revenues and profits with the
franchisor.
Advantages of Licensing and Franchising
 Low cost of entry into a foreign market
 Licensing or Franchising partner has good knowledge about the local market which can be utilized by
Franchisor.
 Offers you a passive source of revenues.
 Moderates political risk as in most cases, the licensing or franchising partner is a local business unit.
 Allows business expansion in numerous regions with minimal investment
Disadvantages of Licensing and Franchising
 In some cases, Franchisor might not be able to exercise complete control on its licensing and franchising
partners in the foreign market.
 Licensees and franchisees can leverage the acquired knowledge and pose as future competition for the
franchisor.
 Due to incompetence of licensing and franchising partners, franchisor’s business risks tarnishing its brand
image and reputation in the overseas and other markets.

 Strategic acquisitions:

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Strategic acquisition implies that a company acquires a controlling interest in an existing company in the overseas
market. This acquired company can be directly or indirectly involved in offering similar products or services in the
foreign market. Acquiring Firm can retain the existing management of the newly acquired company to benefit from
their expertise, knowledge, and experience while having your team members positioned in the board of the
company as well.

Advantages of Strategic Acquisitions

 Buyer Company can use the existing infrastructure, manufacturing facilities, distribution channels, existing
market share and a consumer base of the acquired company as it does not need to start from scratch.
 Buyer Company can benefit from the expertise, knowledge, and experience of the existing management and
key personnel by retaining them.
 It is one of the fastest modes of entry into a foreign business on a large scale basis.

Disadvantages of Strategic Acquisitions

 Just like Joint Ventures, in Acquisitions as well, there is a possibility of cultural clashes within the organization
due to the difference in organization culture
 In merger and acquisitions, there mostly are problems with seamless integration of systems and processes.
Technological differences in processes are one of the most common issues in strategic acquisitions.

Question 8: Explain the importance of OLI in expanding business global?

Answer: “OLI” stands for Ownership, Location, and Internalization, three potential sources of advantage that may
underlie a firm’s decision to become a multinational.
Ownership Advantage: Companies must possess a valuable, rare, hard to imitate and embedded resources so as
to compete effectively in foreign markets. This will enable companies to overcome foreignness in a different
country.
Location Advantage: Host country must offer advantages that will attract the company to invest in their territory.
These advantages can be availability of affordable labour, presence of raw materials, security and government
incentives.
Internalization Advantage: A firm should always work to maintain control over its assets and activities. This can
be achieved through joint ventures and acquiring existing companies. This will ensure that sensitive dockets are
not left to outsiders.

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