2 a)

Globalization is the connection of two different countries with its people,

government and companies with the help of technology (“What is”, 2020).

In today’s world there is no barriers, the world has become on big market for the
companies. Firms make one product for the world; they make little or no change
for particular countries. Example: Iphone are made for the whole world, it does not
change its features for other countries.

Facets: Countries outsource their work where it is cheaper to make products.

Countries from around the world compete to give the best products to grab
customers. In today’s world the business is not limited to only export-import firms
take the advantage of the franchise system. Technology is not limited to one
country now, it moves faster and countries adapt to new technologies so
organizations must innovate. Borrowing money have become easier for firms now,
in some countries government give SME loans and banks have become lenient to
new business, so it had also helped firms to globalize.

b)

Absolute advantage is when a country produces more products using fewer inputs
than any other country (“Absolute advantage”, 2020). Comparative advantage is
when a country has the ability to produce goods at lower opportunity cost compare
to other county (Hayes, 2020).

In international business firms can decide which products they are efficient and
which product is produced at lower opportunity cost. Countries can take decision,
which country will be better for export-import. Example: Absolute advantage-

Bangladesh produces 500 RMG products using 20 labor hours, where as India
produces 300 RMG products using 16 labor hours. Here Bangladesh has absolute
advantage as they produce more goods per labor.

Comparative advantage- Bangladesh produces 400 units of cotton using 50 labor

hours and India produces 200 units using 20 labor hours. If efficiency is calculated
then we can see that:

BD RMG/Ind RMG=500/300=1.66
BD cotton/Ind cotton=400/200=2

BD has comparative advantage in RMG and Ind in cotton.

c)

Given: Bangladesh has total 70 labor hours, if they produces 875 RMG units at 35
labor hours and 280 units of cotton at 35 labor hours. If it is shown in graph:

RMG units

875

Cotton units

280

Given: India has total 36 labor hours, if they produces 144 RMG units at 18 labor
hours and 337.5 units of cotton at 18 labor hours. If it is shown in graph:

RMG unit

144

Cotton units

337.5
 Bangladesh
Without trade With trade Gains from trade
RMG 875
Cotton 280
India
Without trade With trade Gains from trade
RMG 144
Cotton 337.5

3a)

Power distance means how much people in society/institutions accept unequal

power (Alper, 2019).

High power distance: Here power is distributed unequally and it is accepted by the
public without any question. In this the culture, traditions are more valued by the
society. Collectivism is more emphasized here because they strictly follow the
hierarchy (Grimsley, n.d.). Example: Bangladesh is high power distance, only 2
parties have been ruling the country for long time and no other political party could
rule for long time.

Low power distance: Power is distributed equally. People reject any leader who
wants to rule them like autocratic style. Everyone’s opinion is valued here
regardless of what back ground they posses (Sweetman, 2012). Example: New
Zealand has low power distance, the government listens to the public, and their
opinions are valued more.

b)

In Uppsala model it shows steps how a company enters in international market

from the beginning.

The steps are:

 Sporadic export(occasional export)

  Export via independent representative (appoint someone)
 Establish foreign sales
 Manufacturing in foreign

In the Uppsala model we can say that the managements of the firms ignored the
other ways of entering into the market. To enter into a foreign market a company
must follow the steps so no one can overlap, the model did not explain why the
steps should be followed.

When the companies follow the steps to enter the market, they will be able to
understand the market and the customers very well. They can calculate all the risks
and their business of how much investment is needed in foreign. The company can
understand the taste and preference, and they can say whether any changes are
needed or not.

In modern time the rapid change in technology had made many things easier for
firms as they can respond to customers faster than before.

c)

Economic risk is the investment risk in foreign country due to the change in
macroeconomic conditions (Tracy, 2020). When entering a foreign market, firms
calculate the economic risks but situations can change anytime. In contrast political
risk is the risk of doing business due to changes in the political conditions inside a
country (Chen, 2020). Political stability is very important for a foreign company
because even if there is a business opportunity firms will not risk their investments.

Economic risks are interest rates, minimum wage, market price, tax and duty
rates. Example: Tariff or duty rates in Bangladesh are the highest among the South
Asian companies, so foreign companies which have business operations they face
problems as their costs increase because of high rates (Raihan, 2018).

Political risks are nationalization, currency inconvertible, fuel supply agreements,

terrorism and kidnapping and government policy changes. Example: 3 foreign
workers were kidnapped in Nigeria (Ekeinde, 2007). When foreign companies
observe such incidents inside a country frequently they do not want to do business
inside that particular country risking their own life.