UNIVERAITY OF TURBAT

SUBMITTED TO: SIR MALIK DAD

SUBMITTED BY: IMRAN KHAN
DEPARTMENT: MANAGEMENT SCIENCE
PROGRAM: BBA
SUBJECT: INTERNATIONAL BUSINESS
TOPIC TITLE: Q & ANS
SEMESTER: 6th
DATE: 10/01/2021
SESSION: 2018-2021
ASSIGNMENT: COVID-19
Factors that contributed to growth globalization in recent decade
Containerization

The price of blue shipping has decreased due to containerization bulk shipping, and other
efficiencies. The less unit cost of shipping products around the world economy system helps to
bring prices in the country of manufacture closer to these in export markets, or it makes
markets more contestable globally.

Technological change

Rapid then sustained technological change has decreased the charges of transmitting and
communicating information – occasionally namely as “the death of distance” – a key factor
behind trade in knowledge products using internet technology.

Economies of scale

Many economists trust that there is an increase in the minimum efficient scale (MES)
associated with some industries. If the MES is rising, a local market may additionally regard as
too small to satisfy the selling needs of these industries. Many emerging countries have their
own transnational corporations

Differences in tax systems

The desire about corporation in accordance with benefit beyond decrease unit labor costs and
other favorable manufacturing factors abroad has motivated countries to adjust their tax
systems to attract foreign direct investment (FDI). Many nations have become engaged in tax
competition with each other in a bid to win lucrative overseas investment projects .

Criticisms of Globalization
Threats to national sovereignty
The globalization is threats to national sovereignty that amount the proliferation of about
global agreements, in particularly those so much undermine domestic regulation on how
goods are produced and sold, will diminish a nation’s sovereignty. It criticizes that the citizens
of a country will lose their freedom to act locally.

Environmental Stress
The argument is that the growth in both production and international travel consumes
nonrenewable natural resources and increases environmental damages through toxic runoff of
rivers and oceans, air pollution from manufacturing and vehicle emissions, and deforestation
up to expectation that can affect climate.

Growing Income Inequality and Personal Stress

Critics claim to that globalization has affected this disparity by helping to develop a global
superstar system, creating access to increase supply of low-cost labor, and developing
competition that leads to winners and losers. The personal stress includes people’s stress from
real and strong loss of relative economic and social positions.

Why companies engage in International Business?

a.To Expand Sales: Companies may increase the dynamic want for their sales by pursuing
global consumer and industrial markets.

b.To Acquire Resources: the company may acquire Foreign-sourced product, services, capital,
technology and labor at lower cost, these can make a firm more competitive both at home and
abroad.

c.Diversify Sources of Sales and Supplies: By operating in difference countries, firms assist and
depend themselves from financial downturns in any single country. In the same way, having
suppliers in different countries assist and protect the firm from shortages due to economic,
social, or political disruptions in any single country.

d. Minimize Competitive Risks: Firms may pursue foreign markets in order to decrease cyclical
effects on sales and profits; they may also want to counter the potential benefits that
competitors might gain by serving in overseas market opportunities.

1. Exporting
Exporting is the marketing and direct sale of locally produced goods in another country.
Exporting is a ordinary well-set method on achieving foreign markets. Since it does not longer
require that the goods be produced in the target country, no investment in foreign production
facilities is required. Most of the costs relating with exporting take the form of marketing
expenses.

Example: General Motor Corporation (car and truck) exported 228 billion dolors to different
countries.

Advantages of Exporting
 You my pick out your foreign representatives in the overseas market.

 You execute utilize the exporting method to test your products in international markets
before making large investment in the overseas market.

Disadvantages of Exporting
 Exporting from the firm's local base may not be better if less-cost locations for
manufacturing the product can be found abroad.

 High transport expense and trade barriers problems with domestic market agent.

2. Licensing
Licensing is when a firm, referred to the licensor, leases the right to use its intellectual property,
technology, action methods, patents, copyrights, company names, and trademarks to according
any other firm, known as the licensee, among join for a fee. The law licensed may include:
Patents, Trademarks, Copyrights, Technology, Technical knowledge and other Specific business
skills.

Example: In May 2018, Nestle and Starbucks entered into 7.15 billion dolor coffee licensing
deal.

Advantages of licensing
 Low financial risks.

 Low-cost pathway to check market potential.

 Licensee present capabilities concerning local markets.

Disadvantages of licensing
 Limited market opportunities/profits.

 Dependence concerning licensee.

Potential conflicts with licensee.

3. Franchising
Under franchising, an independent corporation referred to the franchisee operates the business
under the honor over other company known as the franchiser. In certain an arrangement the
franchisee pays a price to the franchiser. Franchising is a structure regarding Licensing but the
Franchiser can exercise more control over the Franchisee as compared to the Licensing.

Example: McDonald’s, KFC, Pizza Hut, Burger King.

Advantages of franchising
 Low economic risks .

 Low-cost to assess market potential .

 Franchisee gave knowledge of local market.

Disadvantages of franchising
 The market opportunities are limited.

 Dependence on franchisee.

 Potential conflicts including franchisee.

4. Joint Ventures

A joint venture is an entity made between two or more parties to undertake financial activity
together. The parties agree to create a new entity by both contributing equity, and afterward
they share between the revenues, expenses, and control of the company.

Example: Sony-Ericsson is a joint venture by the Japanese consumer electronics enterprise

Sony Corporation and the Swedish telecommunications company Ericsson to make mobile
phones.

Advantages of joint venture

 Benefit from domestic partners knowledge.

 The risks shared between partners.

 Reduced political risk.

Disadvantages of joint venture

 Risk giving control of technology with partner.

 it not realize experience curve or location the economies.

 Shared ownership with partner that can lead to conflict.

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

Example: In 2003, Yahoo acquired Inktomi Corporation, John and Johnson acquired Scios.

Advantages of Acquisition Strategy

 Obtains rule over the acquired company such as factories and company name.

 Integrate the administration of the company into its overall worldwide strategy.

Disadvantages of Acquisition Strategy

 Assumes all the liabilities such as economic and managerial.

 Technological process differences are the most common problem within strategic
acquisitions.

6. Foreign Direct Investment

Foreign Direct Investment involves a corporation coming an foreign market by making a
substantial investment in the country. Some regarding of the entry into global business using
the foreign direct investment strategy includes mergers or acquisitions, agreement ventures
and Greenfield investments.

Example: In 2017, Apple announced 507.1 million dolor investments to increase its research
and development work in China.

Advantages of Foreign Direct Investment

 You can get your control over the operations and other factors of your business.

 Low-cost labor, cheaper material etc. to reduce merchandising cost.

 Can retain for subsidies, agitation breaks and other concessions from the local
governments because building an investment in their country.

Disadvantages of Foreign Direct Investment

 High levels of political risk and government policies.

 It involves massive investment to be made for entering an global market.

7. Management Contract
A management contract is an agreement among two corporation whereby one company
offered managerial assistance, technical expertise and specialized services to the second
company because absolute for a certain duration for monetary compensation.

Example: Heatheow Airport Holding Limited operates the Indianapolis Airport under a 10 year
management contract and provides retails management at the Air Mall in the Pittsburgh
Airport.

Advantages of management contract

 Focus firm’s resources on its different of contracts.

 Minimal monetary exposure.

Disadvantages of management contract

 Potential gain limited by contract expertise.

 May unintentionally transfer proprietary knowledge and techniques to contractee.

8.Turnkey Project
A turnkey project is a contract under which a company assure to fully design, assemble and
equip a merchandising business, service facility and turn the project over to the purchaser
when its ready for operation, for a remuneration.

Example: Congentrix an United State of American power company has built electric power
generation plants in different countries.
Advantages of turnkey project
 Contractual relationships along one person.

 The contractors has a fixed price.

 Eliminates the more expenses.

Disadvantages of turnkey project

 It will have no long term interest in the foreign country.

 It is on occasion challenge to find specialist for specific project.

1. Tariffs
Tariff is a obligation tax imposed by the administration of concerning country upon the traded
commodity as it crosses the country. Tariff execute be levied both on exports and imports. The
tariff imposed upon the goods originating in the home country and scheduled for overseas are
called as like the export duties. Countries, interested among maximizing their exports normally
keep away the utilizing on export duties.

2. Subsidies
A subsidy is government reward that support financially to a business or individual to extended
economic activity. generally its purpose to promote economic and social policy.Term subsidy
can anticipate to someone of the any type of support that include: direct subsidy (cash grants,
interest-free loans) then indirect subsidy (tax breaks, insurance, low-interest loans).

3. Voluntary Export Restraint

Voluntary export restriction is a administration imposed limit on the quantity of some kinds of
good that an exported in conformity with specified country in specified duration of the time
that is allowed in accordance with export according to some other country.Typically, VERs is a
end of result of requests taken through the importing country imitation of grant a excuse
regarding protection because its domestic corporation as organize that produce competing
goods, though this agreements may reached at the industry level, as well.

4. Import Quotas
Import quotas are government-imposed limits concerning the extent over a definitive the
quantity of a certain good that may be imported within a country. Generally speaking, certain
quotas are put among place in accordance with depend to local industries and inclined
producers. Quotas forestall a country’s domestic market from becoming flooded along
overseas product, as are repeatedly more cost effective due to lower production costs
overseas.

5. local Content Requirements

Local content requirements are rules that a business enterprise must derive a certain amount
over the final value of product beyond domestic firms, either via buying from domestic
companies and by manufacturing or developing the good or service locally. Governments utilize
provincial content material requirements between to protect and improve domestic industries.

6.Administrative Trade Policies

Administration trade policies are bureaucratic polices that are almost continually deliberately
designed according to restrict regard a particular import in the country. The administrative
trade policies advantage for producers and hurt to consumers, any are denied get enter to in
accordance possibly superior foreign products.

7.Antidumping Law
Anti-dumping law or duty is a protectionist tariff up to expectation a domestic government
imposes over foreign imports that as such believes are priced below pure market value.In order
to protect their respective economy, many nations allow duties over products they believe are
being dumped in their national market; this is done with the rationale that these products have
the potential to undercut native corporation then the local economy.

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an worldwide organization, headquartered into
Washington, D.C., that has 190 countries working in conformity with encourage global
monetary cooperation, secure economical stability, facilitate global trade, develop high
employment and sustainable financial growth, and decrease poverty around the worldwide.
Formed in 1944 at the Bretton Woods Conference especially via the ideas of Harry Dexter
White and John Maynard Keynes, it came into formal existence in 1945 with 29 member
international location or the purpose about reconstructing the worldwide payment system.
Countries contribute funds in accordance with percentage regulation through a quota system
from which countries experiencing balance over payments problems that can borrow money.

Purpose
Promote global monetary co-operation, facilitate international trade, assist sustainable
economic growth, reduce poverty around the world, make resources reachable after members
experiencing balance over payments difficulties, excerpt and assist with recovery from
international monetary crises.

International Monetary Fund

Formation: July 1944

Type: International financial organization

Headquarters: Washington, D.C., U.S.

Region served: Worldwide

Membership: 190 countries

Official language: English

Managing Director: Kristalina Georgieva

Parent organization: United Nations

Staff: 2,400

General Agreement on Tariffs and Trade (GATT

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between different
countries, whose universal reason was once according to promote international trade by
decrease or eliminating trade obstacles such as tariffs or quotas. According to its preamble, its
once reason was the substantial discount about tariffs and other trade barriers and the removal
on preferences, concerning a reciprocal and jointly positive basis.

The GATT was first discussed at some stage in the United Nations Conference on Trade and
Employment and was the outcome of the failing about of negotiating governments in according
with effect the to International Trade Organization (ITO). It was signed by 23 nations in Geneva
on 30 October 1947, and was applied of a green basis 1 January 1948. It remained between
impact in the 1 January 1995, when the World Trade Organization (WTO) was to be established
afterword agreement by 123 nations into Marrakesh about 15 April 1994 so the part of the
Uruguay Round Agreements.

General Agreement on Tariffs and Trade

Type: Multilateral Treaty

Signed: 30 October 1947

Location: Geneva, Switzerland

Provisional application: 1 January 1948

Languages: English then French

World Bank
World Bank is an international organization that committed to providing financing, advice, and
research conformity to developing country to useful resource their economic advancement.
The bank predominantly acts namely an organization that attempts to combat scarcity by way
of offering developmental assistance to middle- and low-income nations.

World Bank was form in 1944 out of the Bretton Woods Agreement, who use to be secured
under the support of the United Nations between instant days of World War II. The Bretton
Woods Agreement included several components: a corporate international economic system,
the form regarding the World Bank, then the creation about the International Monetary Fund
(IMF).

Currently, the World Bank has two stated goals that desire to be achieve through 2030. The first
is that to end extreme poverty to reducing the number of humans living on less than $1.90 a
day to under the 3% of the world population. The second is to increase overall prosperity by
increasing income growth in the bottom 40% of every nations in the world.

World Bank
Formation: July 1944

Type: Monetary international financial organization

Headquarters: Washington, D.C

Membership: 190 countries

Parent Organization: World Bank Group

Official language: English

World Trade Organization (WTO)

The World Trade Organization (WTO) is an in organization that is concerned with the dictation
or regulation of international trade between countries. The WTO officially commenced over 1
January 1995 under the Marrakesh Agreement, signed by 123 countries on 15 April 1994,
replacing the General Agreement concerning Tariffs and Trade (GATT), who commenced among
1948. It is the biggest international economic organization in the world.

The WTO offers with regulation of trade in goods, services and intellectual property between
participating countries by u providing a method for negotiating trade agreements and a dispute
resolution process that purpose to enforcing participants trust in imitation to WTO agreements,
which are signed via representatives about member governments and ratified by using their
parliaments. The WTO prohibits discrimination into trading partners, but provides exceptions
for environmental protection, country wide security, then mean important goals. Trade-related
disputes are resolved through impartial judges at the WTO via a dispute resolution process.

World Trade Organization

Formation:1 January 1995; 25 years ago

Type:International trade organization

Purpose:Reduction of tariffs and other barriers to trade

Headquarters:Centre William Rappard, Geneva, Switzerland

Region served:Worldwide

Membership:164 member states

Official languages:English, French, Spanish

Director-General: Roberto Azevêdo

Budget: 209 million US$, in 2018.

Staff: 640