UNIVERSITY OF TURBAT

SUBMITTED TO SIR MALIK DAD

SUBMITTED BY ASGHAR ALI

DEARTMENT MANAGEMENT SCIENCES

SUBJECT INTERNATIONAL BUSINESS

SEMESTER 6th

PROGRAM BBA

SESSION 2018 to 2021

ASSIGNMENT (01)

DATE 10/01/2021
Q No#1 what factors have contributed to the growth of globalization in recent decades?

A variety of factors have contributed to the process of globalization. Some of the most important
globalization factors are followed.

 Trade to GDP ratios are increasing for most countries.

 Expansion of financial capital flows between countries.
 Foreign direct investment and cross Border.
 Rising number of global brands including from emerging countries.
 Deeper specialization of labour components come from many nation.
 Global supply chains and new trade and investment routes.
 Increasing levels of international labour migration and migration within countries.
 Increasing connectivity of people and business through mobile and Wi-Fi networks.

Q No#2 what are the criticisms of globalization?

In spite of the fact that globalization has guaranteed an improved way of life and financial turn of
events, it has been intensely censured for its creation of negative impacts. Globalization isn't just a
monetary venture, yet it additionally intensely impacts the nation earth, strategically, and socially too.
Analysis of globalization is wariness of the asserted advantages of globalization. A considerable lot of
these perspectives are held by the counter globalization development. Globalization has made a lot of
worldwide and inner agitation in numerous nations. While the elements of private enterprise is
changing and every nation is special in its political cosmetics, globalization is an unchangeable
"program" that is hard to actualize without political distress. Globalization can be mostly answerable for
the current worldwide financial emergency.

Q No#3 why companies engage in IB?

Organizations take part in worldwide for an assortment of reasons, yet the objective is commonly
organization development or extension. Regardless of whether an organization enlists global
representatives or looks for new business sectors abroad, a worldwide system can help broaden and
grow a business. The most importantly reason is that western multinationals might want to extend their
deals and obtain fresher business sectors so they can record amazing development rates.

Q No#4 what are the different entry modes if IB? Discuss advantages and disadvantages with
examples.

There are six entry modes of international business that are different to another in doing international
business. Because every modes are make different place and business to every country let’s elaborate
them.

Exporting: exporting is the direct sale of goods and / or services in another country. Exporting is the
marketing and direct sale of domestically produced goods in another country. Exporting is a traditional
and well-established method of reaching foreign markets it is a typically the easiest way to enter an
international business. Exporting is the good way something about a product or service into the other
country. International trade is a good or service produced in one country that is sold into another
country. Companies export products and services for a variety of reasons. Exports can increase sales and
profits if the goods create new markets or expand existing ones, and they may even present an
opportunity to capture significant global market share.

Advantages of exporting companies export products and services for a variety of reasons exports can
increase sales and profits of a companies. Exporting can utilize the direct exporting strategy to test their
products in international markets before making a bigger investment in the local market greater
production can lead to larger economies of scale and better margins. If the product of a manufacturer is
successful in international markets he builds up name, reputation and goodwill.

Disadvantages of exporting the administration costs may rise as you may have to deal with export
regulations when trading outside the country. The second disadvantage of exporting is that the country
lose local markets control that are used to at home. Direct exporting involves lot of risks related to
credit, financing, collection, rejected merchandise and after sale service. These risks are borne by the
manufacturer alone. The channel of distribution in direct exporting may be lengthy. It has to carefully
decide the most appropriate channel to link the domestic operations to the overseas channels. Presence
of middlemen in the channel is unavoidable.

Licensing: Licensing is a business arrangement in which one company gives another company permission
to manufacture its product for a specified payment. ... An international licensing agreement allows
foreign firms, either exclusively or non-exclusively, to manufacture a proprietor's product for a fixed
term in a specific market. International licensing is a cross border agreement that permits organizations
in the target country the rights to use the property of the licensor. Licensing does have its limitations but
it can reduce the potential profit of outright ownership, affect the image of the brand due to lack of
control over licensee, and nurture a potential future competitor.

Advantages of the licensing it can create an opportunities for passive income. If you are the owner of an
intellectual property, then licensing it is an opportunity to create an ongoing stream of passive revenues.

Licensing can create new business opportunities to take arrangement in business because it requires
less money from them to start a business opportunity and that take the new business benefits from the
reputation and consumer awareness of the information. And its create an easies entry into foreign
market.

When a licensing arrangement is in place, then the licensor is able to get their product into new markets
much easier than if they were doing the work on their own. It is much easier to enter foreign markets in
this manner, as the license allows for the intellectual property to jump border requirements.

Disadvantages of licensing that create dependency upon the licensor. They are dependent upon the
quality of the IP being used to make their own profits. When a licensing agreement is signed, then the
licensee is taking on all the risk in the arrangement. Many licensors have found that their licensees
eventually become competitors in their own marketplace. It include geographic barriers to protect
against a needlessly competitive marketplace. One more disadvantages is that there is no guarantee
that a licensing agreement will generate cash. You could agree to a specific royalty rate with a licensee.
One of the biggest issues that licensors face with licensing agreements is a refusal by the licensee to
validate royalty statements. For example: A license where one company, as licensor, allows another
company, as licensee, the limited right to use a trademark for a limited purpose. A license where a
technology company, as licensor, grants a license to an individual or company, as licensee, to use a
particular technology.

Turnkey projects: A turnkey projects is a type of project that is constructed so that it can be sold to any
buyer as a completed product. Turnkey project is a term typically used with reference to construction
projects for which the developer undertakes the whole responsibility from design to completion so that
the building is available to the buyer in a ready-to-use condition. It is as a real estate development
project characterized by the builder absorbing all risk until a specific point has been reached. The
activities include land purchases, plans, construction and permits. He then sells the completed structure
to the housing authority when a project is finished to the last detail and the owner just has to turn the
key in the door to begin using the facility. A lot of public housing projects owned by the government are
turnkey projects. For these projects, a private developer takes up responsibility for all activities required
to perform the projects. One of the special modes of carrying out international business is a turnkey
project. The turnkey projects meaning, a contract under which a firm agrees to fully design, construct
and equip a manufacturing, business, service facility and turn the project over to the purchaser when it
is ready for operation for remuneration.

Advantages of turnkey projects are a way of earning great economic returns from the know-how
required to assemble and run a technologically complex process. Turnkey projects can build a country
where the political and economic environment is such that a longer term investment might expose the
firm to unacceptable political and economic risk. Turnkey project Reduced total time during the
contractual process by having just one process instead of two separate ones.

Disadvantages of turkey projects is that the firm that enters into a turnkey deal will have no long-term
interest in the foreign country because the firm that enter into tuenkey project that can create more
competitors and higher cost is assumed due to the higher risk that comes with total responsibility and
therefore bidders assume more risks.

Example of turnkey projects Engineering Projects, large construction projects or Construction of

Airports, Ports, skyscrapers, Bridges, turn-key implementation of information systems.

Franchising:
Franchising is based on a marketing concept which can be adopted by an organization as a strategy for
business expansion. Where implemented, a franchisor licenses its know-how, procedures, intellectual
property, use of its business model, brand, and rights to sell its branded products and services to a
franchisee. Franchising is an arrangement where franchisor (one party) grants or licenses some rights
and authorities to franchisee another party. Franchising is a well-known marketing strategy for business
expansion. A contractual agreement takes place between Franchisor and Franchisee. Franchisor
authorizes franchisee to sell their products, goods, services and give rights to use their trademark and
brand name. And these franchisee acts like a dealer. Franchising is basically a right which manufacturers
or businesses give to others. This right allows the beneficiaries to sell the products or services of these
manufacturers or parent businesses. These rights could even be in terms of access to intellectual
property rights to another country to use there formula and strategy to gain more profits.

Advantages of franchising. Firstly, franchising is a great way to expand a business without incurring
additional costs on expansion. This is because all expenses of selling are borne by the franchise. This
further also helps in building a brand name, increasing goodwill and reaching more customers
Disadvantages of franchising.
A franchise can use franchising to start a business on a pre-established brand name of the franchisor. As a
result, the franchise can predict his success and reduce risks of failure.
The franchise also does not need to spend money on training and assistance because the franchisor
provides this.

 Examples of franchising.
 McDonald’s
 Dominos
 KFC
 Pizza Hut
 Subway
 Dunkin’ Donuts
 Taco Bell
 Baskin Robbins
 Burger King

Joint venture.
A joint venture is a business arrangement in which two or more parties agree to pool their resources for
the purpose of accomplishing a specific task. This task can be a new project or any other business
activity. In a joint venture each of the participants is responsible for profits, losses, and costs associated
with it. However, the venture is its own entity, separate from the participants' other business interests.
A joint venture can take advantage of the combined resources of both companies to achieve the goal of
the venture. One company might have a well established manufacturing process, while the other
company might have superior distribution channels. It can be a uniqueness of profit because two
companies forming a joint venture might each have unique backgrounds it can be benefit from the both
companies that can expertise and talent within their company. A joint venture is not a partnership. That
term is reserved for a single business entity that is formed by two or more people. Joint ventures join
two or more different entities into a new one, which may or may not be a partnership.

Advantages of a Joint Venture.

Starting a joint venture provides the opportunity to gain new insights and expertise. Think about it; the
market is now way easier for you to understand given the short-term partnership that you have forged.
A joint venture is only a temporary arrangement between your company and another. By definition, you
won’t be committing to it long term. In case the joint-group project fails, you are not alone when
bearing the costs of its failure. Because you two had volunteered to share the expenses, you both will
also support the losses.

Disadvantages of a Joint Venture.

The objectives of a joint venture are not 100 percent clear and rarely communicated clearly to all people
involved. There are times when flexibility is restricted in a joint venture. When that happens,
participants have to focus on the joint venture, and their individual businesses suffer in the process. An
equal pay may be possible, but it is extremely unlikely for all the companies working together to share
the same involvement and responsibilities for example, Company A is working on the production
process, whereas Company B is responsible for the production, and Company C is in charge of planning
and implementing market strategies.

Examples of joint ventures include:

1. Vodafone & Telefonica agreed to share their mobile network.

2. BMW and Toyota co-operate on research into hydrogen fuel cells, vehicle electrification and
ultra- lightweight materials.
3. Google and NASA developing Google Earth.
4. Hollywood studios combining to fight internet piracy.

Q No# 5 seven trade policy instruments.

The trade policies and instrument that governments adopt toward international trade, policies that
involve a number of different actions. These actions include taxes on some international transactions,
subsidies for other transactions, legal limits on the value or volume of particular imports, and many
other measures. The chapter thus provides a framework for understanding the effects of the most
important instruments of trade policy. Let’s discuss the seven trade policies and instrument one by one.
1. Tariff.
A tariff, the simplest of trade policies, is a tax levied when a good is imported. Specific tariffs are levied
as a fixed charge for each unit of goods. A Tariffs are the simplest and oldest form of trade policy
instrument. Traditionally, they were used as a source of government revenue but they are mostly used
today to protect particular home sectors from international competition by artificially increasing the
domestic price of the imported goods. A tariff raises the price of imports to home consumers, increases
government revenue, and tends to increase the price for domestic producers of the import-competing
commodity, thus providing an incentive for them to increase production and replace imports. Tariffs,
therefore, increase the income of producers and government at the expense of consumers, and tend to
make the domestic production of the good greater than it would have been in the absence of the
protective measure. Tariffs are the oldest form of trade policy and have traditionally been used as a
source of government income. Until the introduction of the income tax, for instance, every governments
raised most of its revenue from tariffs. The importance of tariffs has declined in innovative times
because modern governments usually prefer to protect domestic industries through a variety of
nontariff barriers, such as import quotas limitations on the quantity of imports and export restraints
(limitations on the quantity of exports—usually imposed by the exporting country at the importing
country’s request). Nonetheless, an understanding of the effects of a tariff remains vital for
understanding other trade policies.
2. Subsidy.
An export subsidy is a payment to a firm or individual that ships a good abroad. Like a tariff, an
export subsidy can be either specific a fixed sum per unit or ad valorem a proportion of the value
exported. Subsidies help them gain export markets. The main gains from subsidies accrue to
domestic producers, whose international competitiveness is increased as a result of them. An export
subsidy will unambiguously have costs that exceed the benefits. Losers from an export subsidy at
home: consumers and government winners from an export subsidy at home producers. An export
subsidy worsens terms of trade by lowering the exports price in the foreign market.
3. Import quotas and voluntary export.
An import quota is a type of trade restriction that sets a physical limit on the quantity of a good that
can be imported into a country in a given period of time. Quotas, like other trade restrictions, are
typically used to benefit the producers of a good in that economy. Import quotas are government-
imposed limits on the quantity of a certain good that can be imported into a country. Generally
speaking, such quotas are put in place to protect domestic industries and vulnerable producers.
Quotas prevent a country’s domestic market from becoming flooded with foreign goods, which are
often cheaper due to lower production costs overseas. Voluntary export restraints (VERs) are
voluntary quotas that nations place on their exports to partner nations. When two nations share a
trade agreement, the imposition of trade quotas will likely be seen as a protectionist or hostile
move, which may dampen trade relations. Certain foreign manufacturers may purposely try to drive
domestic producers out of business by selling large quantities of a product at below cost, thus
capturing the entire domestic market and crippling local vendors and governments are responsible
for putting quotas into place in order to protect domestic interests.
Local content requirements.
A local content requirement is a regulation that requires some specified fraction of a final good to
be produced domestically. In some cases this fraction is specified in physical units. A local content
requirement does not produce either government revenue or quota rents. Local content regulations
has been to allow firms to satisfy their local content requirement by exporting instead of using parts
domestically. The difference between the prices of imports and domestic goods in effect gets
averaged in the final price and is passed on to consumers. The fastest growing of these measures
are local content requirements (LCRs), which are policies imposed by governments that require
firms to use domestically-manufactured goods or domestically-supplied services in order to operate
in an economy.
4. Administrative policies.
Clear and concise administrative policies can greatly influence a business's success. Administrative
policies inform employees of the office's rules, the business's expectations and values, and HR-
related issues such as paid time off and health insurance eligibility. Administrative policies must
cover a wide array of needs within the business and serve as a guide for how it operates.
Administrative policies promote a positive, safe and productive work environment. Every company
is different, so every company's specific policies will differ. That said, many organizations share
similar needs when it comes to HR regulations. Establishing administrative policies is a big task and
must be done thoroughly and appropriately. When such policies can evolve with the business, the
business can remain easily organized as it grows.
5. Antidumping policies.
An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign
imports that it believes are priced below fair market value. While the intention of anti-dumping
duties is to save domestic jobs, these tariffs can also lead to higher prices for domestic consumers.
An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign
imports that it believes are priced below fair market value. Dumping is a process wherein a company
exports a product at a price that is significantly lower than the price it normally charges in its home
or its domestic market. Antidumping policy has become one of the most important instruments for
protection in the international trade system.
Q no 6 write down notes on the following international organization.
IMF.
The International Monetary Fund (IMF) is an organization of 190 countries, working to foster global
monetary cooperation, secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the world. Created in
1945, the IMF is governed by and accountable to the 190 countries that make up its near-global
membership. The IMF's primary purpose is to ensure the stability of the international monetary
system the system of exchange rates and international payments that enables countries (and their
citizens to transact with each other. The Fund's mandate was updated in 2012 to include all
macroeconomic and financial sector issues that bear on global stability. International Monetary
Fund (IMF), United Nations (UN) specialized agency, founded at the Bretton Woods Conference in
1944 to secure international monetary cooperation, to stabilize currency exchange rates, and to
expand international liquidity access to hard currencies. The International Monetary Fund aims to
reducing global poverty, encouraging international trade, and promoting financial stability and
economic growth. The IMF has three main functions: overseeing economic development, lending,
and capacity development. IMF is to maintain exchange stability and thereby to discourage any
fluctuations in the rate of exchange. IMF enforces the system of determination of par values of the
currencies of the member’s countries. The current government took office with a strong mandate to
implement ambitious economic reforms to stabilize the economy and put Pakistan on the path to
growth and prosperity. The International Monetary Fund (IMF) is an international organization that
promotes global economic growth and financial stability, encourages international trade, and
reduces poverty. Quotas of member countries are a key determinant of the voting power in IMF
decisions.

General Agreement on Tariffs and Trade.

The General Agreement on Tariffs and Trade (GATT) was signed by 23 countries in October 1947,
after World War II, and became law on Jan. 1, 1948. The GATT's purpose was to make international
trade easier. The first meeting was in Geneva, Switzerland, and included 23 countries. The focus in
this opening conference was on tariffs. The GATT was created to form rules to end or restrict the
most costly and undesirable features of the prewar protectionist period, namely quantitative trade
barriers such as trade controls and quotas. One of the most achievements of the GATT was that of
trade without discrimination. The GATT process was to negotiate an agreement to reduce barriers to
trade, sign that agreement, pause for a while, and then start negotiating the next agreement.
General Agreement on Tariffs and Trade (GATT), set of multilateral trade agreements aimed at the
abolition of quotas and the reduction of tariff duties among the contracting nations. GATT’s normal
business involved negotiations on specific trade problems affecting particular commodities or
trading nations, but major multilateral trade conferences were held periodically to work out tariff
reductions and other issues. The GATT reduced tariffs, which boosted trade between countries. As
countries traded more freely with each other, more countries saw the benefits of free trade and
wanted to join the agreement.
World Bank
The World Bank is an international financial institution that provides loans and grants to the
governments of low- and middle-income countries for the purpose of pursuing growth projects. The
World Bank was created at the 1944 Bretton Woods Conference, along with the International
Monetary Fund (IMF). The president of the World Bank is traditionally an American. The World Bank
and the IMF are both based in Washington, D.C., and work closely with each other. The World Bank
is an international organization that helps emerging market countries to reduce poverty. Its first goal
is to end extreme poverty. It wants no more than 3% of people to live on $1.90 a day or less by
2030. Its second goal is to promote shared prosperity. It wants to improve the incomes of the
bottom 40% of the population in each country. The World Bank Group works in every major area of
development. We provide a wide array of financial products and technical assistance, and we help
countries. The World Bank Group has two ambitious goals: End extreme poverty within a generation
and boost shared prosperity. The World Bank Group has two ambitious goals: End extreme poverty
within a generation and boost shared prosperity. The World Bank is internationally recognized and
supported that provides technical and financial assistance to many developing countries in the
world. Also, it aids their advancement, in an economy with a primary goal of reducing poverty.
World Bank has the largest knowledge of developing countries. Also, they are the largest source
when it comes to funding. Today, the World Bank functions as an international organization that
fights poverty by offering developmental assistance to middle-income and low-income countries. By
giving loans and offering advice and training in both the private and public sectors, the World Bank
aims to eliminate poverty by helping people help themselves. Under the World Bank Group (WBG),
there are complementary institutions that aid in its goals to provide assistance.
World trade organization (WTO)
The World Trade Organization (WTO) is the only global international organization dealing with the
rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the
bulk of the world's trading nations and ratified in their parliaments. The World Trade Organization
(WTO) is an intergovernmental organization that is concerned with the regulation of international
trade between nations. The World Trade Organization (WTO) is an international organization
established to supervise and liberalize world trade. The WTO is based on agreements signed by the
majority of the world’s trading nations. The main function of the organization is to help producers of
goods and services, exporters, and importers protect and manage their businesses. The World Trade
Organization (WTO) is the only global international organization dealing with the rules of trade
between nations. The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers. The WTO agreements are lengthy and complex because
they are legal texts covering a wide range of activities.