Muslim

Qambrani
Semester = 6th

Session 2018-2021
Q no 01. What factors have contributed to the growth of globalization in recent decades?

Globalization is the procedure of communication and combination among individuals,

organizations, and governments around the world. As a mind boggling and multifaceted marvel,
globalization is considered by some as a type of industrialist development which involves the
reconciliation of nearby and national economies into a worldwide, unregulated market economy.

1) Containerization:
The expenses of sea dispatching have descended, because of containerization, mass
transportation, and different efficiencies. The lower unit cost of transportation items around
the worldwide economy assists with acquiring costs the nation of assembling nearer to
those in trade markets, and it makes showcases more contestable comprehensively
2) Innovative change:

Quick and continued mechanical change has diminished the expense of sending and
imparting data – once in a while known as "the passing of separation" – a key factor behind
exchange information items utilizing web innovation
3) Economies of scale:

Numerous financial analysts accept that there has been an expansion in the base effective
scale (MES) related with certain businesses. On the off chance that the MES is rising, a
household market might be viewed as too little to even think about satisfying the selling
needs of these businesses.
4) Contrasts in charge frameworks:

The longing of organizations to profit by lower unit work costs and other great creation
factors abroad has urged nations to change their assessment frameworks to draw in
unfamiliar direct venture (FDI). Numerous nations have gotten occupied with charge
rivalry between one another in an offer to win worthwhile unfamiliar speculation ventures.
5) Growth Strategies of Transnational and Multinational Companies:

In their quest for income and benefit growth, progressively worldwide organizations and
brands have put fundamentally in extending globally. This is especially the situation for
organizations claiming brands that have demonstrated they can possibly be effectively all
inclusive, especially in more quickly developing economies fueled by developing
quantities of white-collar class customers.
Q no 02. What are the criticisms of globalization?

Criticisms of globalization:

A criticism of globalization is doubt of the guaranteed advantages of globalization. A considerable

lot of these perspectives are held by the counter globalization development. Globalization has
made much worldwide and inside agitation in numerous nations. While the elements of private
enterprise are changing and every nation is remarkable in its political cosmetics, globalization is
an unavoidable reality "program" that is hard to actualize without political turmoil. Globalization
can be somewhat in charge of the current worldwide financial emergency. Contextual analyses of
Thailand and the Arab countries' perspective of globalization demonstrate that globalization is a
risk to culture and religion, and it hurts indigenous society while multinational enterprises benefit
from it. In spite of the fact that globalization has guaranteed an enhanced way of life and monetary
improvement, it has been intensely reprimanded for its creation of negative impacts. Globalization
isn't just a financial undertaking; however, it likewise intensely impacts the nation ecologically,
politically, and socially also.

1. Weaker nations free their way loses their culture.

2. Districts turn out to be more subject to each other. That is the reason monetary crisis’s move
from one nation to different nations quick.

3. Poor nations end up noticeably poorer.

4. All the more effective nations direct their "principles of amusement" for others.

5. Development of worldwide wrongdoing.

6. Nations are not ready to control monetary streams and movement.

7. Organizations from created nations move their business to creating nations with less pay rates.
It causes development of unemployment in created nations.

One of the greatest criticisms of globalization is the damage it can cause to economies at a
beginning time of improvement. Unhindered commerce powers all nations to contend utilizing a
notwithstanding playing field, which commentators assert puts littler, less created nations behind
their more created partners.
Q no 03. Why companies engage in IB?

For a number of purposes, businesses participate in foreign trading, but the aim is usually to
develop or extend the organization. An international strategy may help diversify and broaden a
business, whether a company hires international workers or looks for new markets abroad.

1. To expand Sales:

Businesses are based on the preference of customers in goods and services and the desire and
capability of the customer to purchase them.

With their quality of living having growing over the years, the number of customers is increasing,
which has contributed to increased buying power and demands in a specific region. It opens up an
exciting world when compared to the customers and demand of the entire world of possibilities.
This suggests increased revenue and higher profitability due to economies of scale that with high
volumes can be obtained.

2. To acquire Resources:

In order to cut prices, suppliers and dealers search for international money, technologies and
knowledge that they can use at home. Companies often work overseas to procure something that
is not easily available at home in order to increase the cost and consistency of the commodity. It
is also possible that it is cheaper to set up the industry in another country than to transport the raw
material from another country to home.

3. Minimize Risk:

Companies seek to minimize swings in sales and profits resulting from the business cycle
in foreign markets, i.e. recession and expansion that occur differently in different countries.
For example, in one country where sales are growing very slowly, there would be a
recession; on the other hand, there would be a developing country where, due to its
expanding markets, there is high demand for its products.
4. Lower Cost of Production:

In order to find alternate sources of labor, businesses go foreign. As compared to developed

economies, labor prices in emerging countries are much lower, labor costs have a
significant effect on the cost of output that effects the corporations' bottom line. In order to
retain a strategic edge, some businesses turn to foreign countries for lower-cost production,
technology assistance and other resources.

5. Broaden Workforce:

In order to expand their workforce and acquire new innovations, businesses go international. To
help a business grow, a workforce consisting of diverse cultures and cultural distinctions will
introduce new ideas and concepts. IBM, for instance, aggressively hires candidates from different
backgrounds because it recognizes that it is a strategic advantage that promotes creativity and
rewards customers.

In most cases, companies that are proactive in international business are better positioned than
businesses that simply react. If you just react, you might make a mistake and not do it properly
because you're worried about time, resources, or workforce.

Q no 04. What are the different entry modes of IB? Elaborate your answers discussing the
advantages and disadvantages alongside the relevant examples.

Joint venture:
For companies that do not mind sharing their name, experience, and skills, a joint venture is one
of the favored modes of entry into international business.
Companies wishing to expand into overseas markets may form joint ventures with local companies
in overseas locations, in which the benefits and risks associated with the company are shared by
both joint venture partners.
The investment, expenses, gains and losses are shared by all business organizations at a fixed
proportion.
This style of entry into international business is necessary in countries where, in some sectors,
governments do not approve one hundred percent foreign investment.

Advantages of Joint Venture:

 • To evolve and develop within a chosen region, both partners may exploit their respective
skills.
• Thanks to the local partner's presence, having experience of the local economy and the
economic climate, the political risks involved in the joint venture are smaller.

• Enables transition between the partnering companies in technologies, intellectual property

and properties, experience of the overseas sector, etc.

Disadvantages of Joint Venture:

• Owing to the disparity in corporate culture of both member organizations, joint projects
will face the risk of cultural clashes within the organization.
• The termination of a joint partnership is subject to a long and complex judicial procedure
in the case of a disagreement.

Foreign Direct Investment:

By making a major investment in the region, Foreign Direct Investment entails a business entering
an overseas market. Mergers and acquisitions, joint partnerships and Greenfield projects form
some of the modes of penetration into overseas industry using the foreign direct investment
approach.
This approach is possible if the demand or the scale of the industry or the market's growth capacity
is substantially high in order to warrant the investment.

Advantages of Foreign Direct Investment:

• You will maintain power over the activities and other facets of your business.
• Using low-cost labor, inexpensive products, etc. to lower production prices to achieve a
sustainable edge over rivals.
• Many foreign firms may use local governments' incentives, tax cuts and other concessions
to make an investment in their region.

Disadvantages of Foreign Direct Investment:

• In particular, if the government chooses to implement defensive measures to defend and

encourage local industry against multinational firms, the corporation is subjected to high
levels of political danger.
• This methodology allows considerable investment to be made to reach a foreign market.
Licensing and Franchising:

The licensing and franchising approach allows another individual or business to bear the risk on
behalf of the company if they plan to develop a retail presence in an overseas market with reduced
risk.
A foreign corporation will pay you a royalty or commission for the use of your brand name,
development process, products, logos and other intellectual property in the License Arrangement
and franchise.
If the licensee or franchisee takes the risks and absorbs all losses, you share a fraction of their sales
and gains.

Advantages of Licensing and Franchising:

• Small entry costs in the foreign market

• The authorizing or franchising partner has local business expertise.
• Offers a passive stream of revenue to you
• Reduces government risk, since a municipal business agency is the authorizing or
franchising partner in most situations.
• Enables expansion with limited investment in multiple regions
Disadvantages of Licensing and Franchising:

• In certain circumstances, you might not be able to exert absolute control of your foreign
business licenses and franchising partners.
• Licensees and franchisees will exploit the expertise gained and act as a potential
competition for your company
• Because of the incompetence of their licensing and franchising agents, your organization
avoids tarnishing the brand name and prestige in international and other markets.

Direct Exporting:

Direct export allows you to export your goods and materials directly to another overseas market.
It is the quickest form of entry into foreign market for certain firms.
Direct exports may also be understood, in this situation, to be direct sales. This suggests that you
go out, to say, the Middle East with your own sales team to reach out to the consumers as a product
owner in India.
If you anticipate a possible demand for your goods and products in an overseas market, instead of
creating your own retail footprint in the overseas market, you can choose to sell your goods to an
importer.
And if you are with a business focused on an internet product, the value chain does not have an
importer.

Advantages of Direct Exporting:

• In the overseas market, you will pick your international delegates.

• Before making a bigger investment in the overseas market, you should use the direct export
approach to test your goods in foreign markets.
• You will protect the patents, goodwill, trademarks and other intangible properties by
following this technique.

Disadvantages of Direct Exporting:

• This technique will turn out to be a very high-cost method for offline goods. All has to be
set up from scratch by the agency.
• Although this is potentially the quickest growth strategy for online products, there is a fair
amount of lead time for offline products that goes into market research, scoping and
recruiting of representatives in that region.

Q no 05. Discuss the seven main instruments of Trade policy.

Tariffs:

A tariff is a tax duty which imposed on imports due to which costs rise on imported products

relative to domestic products. There are two categories of tariffs specific tariffs and Ad valorem
tariff.

Specific tariffs are duties as a fixed charge for each unit of a good imported.

Ad valorem tariffs are duties as a proportion of the value of the imported goods.

Subsidies:
It is a payment by a government to the domestic producers. Government gives the subsidies into
many forms, like cash grants, low-interest loans, tax breaks, and government equity participation
in domestic firms. Consumers typically absorb the cost of subsidies. Subsidies help the local
producers in many ways,

● like compete against the low-cost international imports.

● subsidies help to gain export markets.

Import quotas:

The restriction on the quantity of some goods directly, which may be imported into a country.

Tariff rate quotas are a hybrid of quota and a tariff where a lower tariff is applied to imports within
the quota than those over the quota.

Voluntary export restraints:

Voluntary export restraints are quotas on trade asses s by the exporting country, typically at the
request of the importing country’s government. Producer make the extra profit from a quota rent
when supply is counterfeit limited by an import quota.

Local content requirements:

A local content requirement demands that some specific fraction of a good be produced
domestically. The requirement can be in physical terms or in value terms. Local requirement
benefits domestic producers and jobs, but consumers face higher prices.

Administrative policies:

The rules which are designed by the bureaucratic to make it difficult for imports to enter a country
are called administrative policies. These policies make difficulties for a consumer by refuting the
access to possibly famous international products.

Anti-dumping policies:

Dumping means to selling the exceed goods below the price in a foreign market. It can be a
method unload the excess amount of production in international markets. Some of the producer
use the dumping for the to gain the international market by selling the goods below the
production costs later they raise the price and earn substantial profits.

Antidumping policies are made to punished the international companies that are engage in
dumping. The aim is to protect local producers from the unfair foreign competition. Companies
that believe an international firm is dumping can file a case with the government. If the case has
merit, then the plenty of antidumping policies may be imposed to that firm.

Q no 06. Write down notes on the following international organizations:

▪ IMF
The International Monetary Fund (IMF) is an international organization with the objective of promoting
global economic growth and financial stability, promoting international trade and reducing poverty. The
International Monetary Fund (IMF) is headquartered in Washington, D.C., and currently consists of 189
member countries, each of which has representation in relation to its financial value on the IMF's
executive board, such that the most important countries in the global economy have the most voting
power.
▪ GATT
GATT- The General Tariff and Trade Agreement (GATT) is a legal agreement between
several countries whose ultimate goal was to facilitate foreign trade by reducing or
removing barriers to trade such as tariffs or quotas. The General Agreement on Tariffs and
Trade (GATT), signed by 23 countries on October 30, 1947, was a legal agreement that
reduced barriers to foreign trade through the removal or reduction of quotas, tariffs and
subsidies while maintaining essential laws. The GATT was intended to support post-World
War II economic growth by restoring and liberalizing global commerce.
▪ World Bank
The World Bank is an international agency committed to providing developed nations with
support, guidance, and research to assist their economic development. The bank primarily
functions as an agency that aims to counter poverty by providing middle- and low-income
countries development assistance. The World Bank currently has two stated objectives
which it aims to achieve by 2030. The first is to end extreme poverty by raising the number
of people living on less than $1.90 a day to less than 3 percent of the world's population.
The second is to improve economic wealth by growing income growth in every country in
the world at the bottom of 40 percent.

▪ World Trade Organization (WTO)

The World Trade Organization (WTO) was established in 1995 and is an international
institution overseeing the rules of global trade between nations. It superseded the 1947
General Tariff and Trade Agreement (GATT) created in the aftermath of the Second World
War. The WTO is built on agreements signed by most trading nations around the world.
The organization 's principal role is to help goods and services manufacturers, exporters,
and importers secure and control their companies. The WTO has 164 member countries as
of 2019, the most recent members being Liberia and Afghanistan, having joined in July
2016, and 23 "observer" nations.