Brac University Student Honor Code

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04/01/2021
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 BRAC BUSINESS SCHOOL Name:
BRAC University ID: 18104207
Course: BUS 301 (INTERNATIONAL BUSINESS)
Final Examination, Fall’2020
Total Marks 30

Instructions:
 Maintain the sequence while answering any set of questions.
 Zero Tolerance for Plagiarism
 Any kind of violation of Student Honor Code will cancel your script
 Save the file ID_Name

Answer the following Question. 

1. Why do local companies decide to expand globally despite the potential risk and cost involved?
Which mode of entry is most suitable for countries that lack technical know-how of establishment
and why? “In a world of zero transportation costs, no trade barriers, and nontrivial differences
between nations with regard to factor conditions, firms must expand internationally if they are to
survive.”- Discuss.  (5+5+5)

Ans. There are many benefits of expanding business globally, namely, grabbing new market,
diversification, competitive advantage, foreign investment opportunities.

 New market: Most the products have demand world-wide. And all countries are not
specialized in manufacturing all products. So, expanding business to foreign market can
help a company to grab more customers. For example, China is good at manufacturing
electronic gadgets which have demand in Bangladesh but Bangladesh is good at
something else. Therefore, China can expand the business to our country and will get
more customers.

 Diversification: Numerous organizations extend globally to enhance their

resources, an activity that can secure an organization's primary concern against
unexpected occasions. For example, organizations with global tasks can
counterbalance negative development in one market by working effectively in
another. Organizations additionally can use global business sectors to present
exceptional items and administrations, which can help keep a positive income
stream.
  Competitive advantage: Organizations additionally pick worldwide development to pick
up a competitive edge over their adversaries. For instance, organizations that extend in
business sectors where their rivals don't work regularly have a first-mover advantage,
which takes into account them to assemble solid brand Organizations additionally pick
global development to pick up a competitive edge over their adversaries. For instance,
organizations that grow in business sectors where their rivals don't work regularly have a
first-mover advantage, which considers them to construct solid brand mindfulness with
purchasers before their rivals. Global extension can likewise assist organizations with
getting admittance to new innovations and industry biological systems, which may
essentially improve their operations. Awareness with purchasers before their rivals.
Global extension can likewise assist organizations with securing admittance to new
advancements and industry biological systems, which may fundamentally improve their
tasks.

 Foreign investment opportunity: At last, organizations considering global extension

shouldn't disregard the extra venture open doors that unfamiliar business sectors can
offer. For example, numerous organizations can grow new assets and manufacture
significant associations by working in worldwide business sectors. Organizations with
worldwide activities can likewise profit by rewarding venture openings that may not exist
in their nation of origin. For instance, numerous administrations around the globe offer
motivators for organizations hoping to put resources into their locale.

I think the country lack of technical know-how should go Turnkey contacts. Before explain why
I’m suggesting this, I would like define Turnkey project.

Turnkey project is contract a home and a host company in which a firm from host country agrees
to set up an operating plant for a foreign client. So, as the definition says, in Turnkey project most
of the activities related to technical know-how are done by other organization.

Now, the skill needed to collect and run a technically intricate cycle, for example, manufacturing
or designing a product, is a significant resource. Turnkey projects are a method of procuring
incredible monetary gets back from that resource. The technique is especially helpful where
unfamiliar direct venture (FDI) is restricted by have government guidelines. Thus Turnkey
project can help the country with less knowledge about technical things to expand business in
foreign country.
2. To what extent culture influences global business decisions? Out of the eight cultural
determinants, which are the most essential in marketing fashion or health or education brands?
Draw a connection between culture in international business and Greenfield FDI in terms of host
country. (3+5+7)

Ans. Cultural practices of a country or territory may have major influence in business decisions.
Firstly, how a company will reach to its customers have to be decided based on the culture
followed in the given region. Many activities related to business like communication,
manufacturing or marketing of products, hiring local employees all can vary due the cultural
practice like language, religious believe, social structure etc. For example, while communicating
with customers language can be an issue. Moreover, a product that is legal in on country can be
illegible or forbidden in another due to religious beliefs. For example, to expand business in
India, McDonald’s had to change one of their key ingredients, beef. To these extents culture can
influence international business.

Out of eight cultural determinants, education, economic philosophy, and social structure will be
most essential in marketing fashion or health or education brands.

 Education: How much educative a nation is may have impact on fashion wear and health
consciousness. It’s an interesting fact that choice of cloths of a person can express their
educational level. People with more formal education will prefer wear formal cloths over
casual. Also, those people will be more health conscious or aware about minor change in
body, as they have more general knowledge.
 Religion: Religion may not have close relation with business of health; it’s relevant in
terms of business of fashion wear. Choice of cloths in Christianity country will be very
much deferent from that of Islamic country. Moreover, educational practices also can
vary.
 Economic philosophy: Fashion, health and education is a bit luxury thing. So, the people
with economical unstability will less bother about those than economically stable nation.

Greenfield investment refers to starting new endeavor in abroad by building new factories,
starting from the earliest stage. That means lunch a totally new business in foreign country. Here,
culture can effect in the business. One of the main activities in launching new business is
attracting the customers. So, if accompany can offer product that relevant to the cultural practice
of a nation, customers will definitely be attracted. It’s more applicable in food business. Here, the
entrepreneur has to target the real cuisine of the host country people. However, the entrepreneur
is from well-developed nation like western country, then the cultural practices of a developing or
under-developed host country will get influenced by the business. There are many examples
where the global business is causing cultural mix in host countries. For example, clothing cultures
in Bangladesh is now-a-days highly influenced by the western culture. Thus, sometimes
Greenfield FDI where foreigners come up with their own idea can be affected by cultural practice
of host country or even change the cultural practice of host country.