1

DeptofMBA,
M.I
.E.
T.Engi
neer
ingCol
l
ege,
Tri
chy
-7

I
nter
nat
ionalBusi
nessManagement

Uni
t–I

1.Whati
sInt
ernat
ionalBusi
ness?

Theexchangeofgoodsandser
vicesamongi
ndi
vi
dual
sandbusi
nessesi
n
mul
ti
plecount
ri
esi
sknownasi
nter
nat
ionalbusi
ness.I
tisaspeci
fi
cent
it
y,such
asamul
ti
nat
ional
cor
por
ati
onori
nter
nat
ionalbusi
nesscompanyt
hatengagesi
n
busi
nessamongmul
ti
plecount
ri
es.

2.Ment
iont
hef
act
orsaf
fect
ingi
nter
nat
ionalbusi
nessmanagement
.

 Pol
i
tical
env
ironment

 Legal
env
ironment

 Cul
tur
alenv
ironment

 Technol
ogi
cal
env
ironment

 Economi
cenv
ironment
.

3.Whatar
etheadv
ant
agesofI
nter
nat
ionalBusi
ness?

 Causest
hef
lowofi
deas,
ser
vices,
andcapi
tal
aroundt
hewor
ld

 Of
fer
sconsumer
snewchoi
cesandgr
eat
erv
ari
ety

 Al
l
owst
hemobi
l
ityofl
abor
,capi
tal
andt
echnol
ogy

 Pr
ovi
desempl
oymentoppor
tuni
ti
es
 2
DeptofMBA,
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 Real
l
ocat
esr
esour
cesandshi
ft
sact
ivi
ti
est
oagl
obal
lev
el

4.Whatar
ethest
agesi
nInt
ernat
ional
izat
ionofBusi
ness?

St
ages 1.
Domest
ic 2.I
nter
nat
ional 3.
Mul
ti
nat
ional 4.
Global

St
rat
egi
c Domest
ical
l
y Expor
tor
ient
ed,
Mul
ti
nat
ional Gl
obal
Or
ient
ati
on or
ient
ed mul
tidomest
ic

Expl
osi
on of
St
age of I
nit
ial f
orei
gn Compet
it
ive
i
nter
nat
ional Gl
obal
Dev
elopment i
nvest
ment posi
ti
oni
ng
oper
ati
ons

Cul
tur
al Of l
i
ttl
e Somewhat Cr
it
ical
l
y
Ver
yimpor
tant
Sensi
ti
vi
ty i
mpor
tance i
mpor
tant i
mpor
tant

Manager Many good The l

east cost Many good
Onebestway
Assumpt
ions way
s way way
s

5.Whati
scul
tur
all
ag?

“
A cul
tur
all
ag occur
s when one oft
wo par
ts ofcul
tur
e whi
ch ar
e
cor
rel
atedchangesbef
oreori
ngr
eat
erdegr
eet
hant
heot
herpar
tdoes,t
her
eby
causi
ngl
essadj
ust
mentbet
weent
het
wopar
tst
hatexi
stedpr
evi
ousl
y(Ogbur
n
1957)
.”
  

6.Whati
sTr
adesur
plus?

Aneconomi
cmeasur
eofaposi
ti
vebal
anceoft
rade,wher
eacount
ry'
s
expor
tsexceedsi
tsi
mpor
ts.At
radesur
plusr
epr
esent
saneti
nfl
owofdomest
ic
 3
DeptofMBA,
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.E.
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ege,
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chy
-7

cur
rencyf
rom f
orei
gnmar
ket
s,andi
stheopposi
teofat
radedef
ici
t,whi
chwoul
d
r
epr
esentanetout
fl
ow.
 

7.Compar
egl
obal
izat
ionofmar
ketwi
thgl
obal
izat
ionofpr
oduct
ion.

 Ov
ert
hepastt
wodecades,wehav
ewi
tnessedt
hegl
obal
i
zat
ionof
mar
ket
sandpr
oduct
ion.

 Thegl
obal
i
zat
ion ofmar
ket
simpl
i
est
hatnat
ionalmar
ket
sar
e
mer
gingi
ntoonehugemar
ket
place.

 The gl
obal
i
zat
ion ofpr
oduct
ion i
mpl
i
es t
hatf
ir
ms ar
e basi
ng
i
ndi
vi
dual
product
iveact
ivi
ti
esatt
heopt
imal
wor
ldl
ocat
ionsf
ort
he
par
ti
cul
aract
ivi
ti
es.

8. Whati
sinv
est
mentf
low?

Ani
tem ont
hecashf
lowst
atementt
hatr
epor
tst
heaggr
egat
echangei
na
company
'scashposi
ti
onr
esul
ti
ngf
rom anygai
ns(
orl
osses)f
rom i
nvest
ment
s
i
nthef
inanci
almar
ket
sandoper
ati
ngsubsi
diar
ies,andchangesr
esul
ti
ngf
rom
amount
sspentoni
nvest
ment
sincapi
tal
asset
ssuchaspl
antandequi
pment
.

9.Whati
spol
it
icalenv
ironment
?

I
tist
heGov
ernmentact
ionswhi
chaf
fect
stheoper
ati
onsofacompanyor
busi
ness.Theseact
ionsmaybeonl
ocal
,regi
onal
,nat
ionalori
nter
nat
ionall
evel
.
Busi
nessowner
sandmanager
spaycl
oseat
tent
iont
othepol
i
ticalenv
ironment
 4
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t
ogaugehowgov
ernmentact
ionswi
l
laf
fectt
hei
rcompany
.

10.
Whati
sgl
obal
izat
ion?

Gl
obal
i
zat
ioni
sawor
ldwi
demov
ementt
owar
deconomi
c,f
inanci
al,t
rade,
andcommuni
cat
ionsi
ntegr
ati
on.Gl
obal
i
zat
ioni
mpl
i
est
heopeni
ngofl
ocaland
nat
ional
i
sti
c per
spect
ives t
o a br
oaderout
look ofan i
nter
connect
ed and
i
nter
dependentwor
ldwi
thf
reet
ransf
erofcapi
tal
,goods,andser
vicesacr
oss
nat
ional
front
ier
s.

11.
Whati
scul
tur
aldi
ff
usi
on?

Cul
tur
aldi
ff
usi
oni
sthepr
ocesst
hroughwhi
cht
hei
dea(
s)ofapar
ti
cul
arcul
tur
al
ar
espr
ead(
dif
fused)t
hroughanar
eabey
ondt
hecul
tur
ewhocameupwi
tht
he
i
dea(
s).Forexampl
e,Buddhi
sm wasst
art
edi
nIndi
a,butspr
eadt
hroughoutAsi
a.

12.
Listoutt
hedi
sadv
ant
agesi
ngl
obal
izat
ion.

Di
sadv
ant
agesi
ngl
obal
i
zat
ion:

 Economi
c depr
essi
on i
n one count
ry can t
ri
ggeradv
erse r
eact
ion
acr
osst
hegl
obe.

 Manyl
ocalbr
andsandbusi
nessesi
npoor
erdev
elopi
ngcount
ri
esgo
bankr
uptandcan'
tsur
viv
etheeconomi
cmi
ghtoft
heser
ichcount
ri
es.

 Local
cul
tur
esandt
radi
ti
onschange.

 I
tal
so causes gr
eat
err
isk ofdi
seases bei
ng t
ransf
err
ed acr
oss
count
ri
es.
 5
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.E.
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l
ege,
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chy
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Uni
t–I
I

1.ExpandGATT,
WTO.

GATT-Gener
alAgr
eementonTar
ifandTr
ade

WTO-Wor
ldTr
adeOr
gani
sat
ion

2.Whati
sRegi
onalTr
adeBl
ock?

Regi
onalt
radebl
ocksar
eint
ergov
ernment
alassoci
ati
onst
hatmanage
andpr
omot
etr
adeact
ivi
ti
esf
orspeci
fi
cregi
onsoft
hewor
ld.

3.Whati
sanewt
radet
heor
y?

Newt
radet
heor
y (
NTT)i
sacol
l
ect
ionofeconomi
cmodel
sin 
i
nter
nat
ional
t
rade 
whi
ch f
ocuses on t
he r
ole ofi
ncr
easi
ng 
ret
urns t
o scal
e and 
net
wor
k
ef
fect
s,whi
chwer
edev
elopedi
nthel
ate1970sandear
ly1980s.

4.Whatar
ethet
ypesofWTOagr
eement
s?

TYPESOFAGREEMENTS

Thepar
ti
est
oanRTAcannot
if
ysev
eral
typesofRTAs:

 AFr
eeTr
adeAgr
eement(
FTA)
,

 ACust
omsUni
on(
CU)
,

 AnEconomi
cInt
egr
ati
onAgr
eement(
EIA)
,
 6
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.E.
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5.Li
stoutt
heobj
ect
ivesofWTO.

 Toi
mpl
ementt
henew wor
ldt
radesy
stem asv
isual
i
zedi
nthe
Agr
eement
;

 Topr
omot
eWor
ldTr
adei
namannert
hatbenef
it
sev
erycount
ry;

 Toensur
ethatdev
elopi
ngcount
ri
essecur
eabet
terbal
ancei
nthe
shar
ing of t
he adv
ant
ages r
esul
ti
ng f
rom t
he expansi
on of
i
nter
nat
ional
tradecor
respondi
ngt
othei
rdev
elopment
alneeds;

 Todemol
i
shal
lhur
dlest
oanopenwor
ldt
radi
ngsy
stem andusher
i
nint
ernat
ionaleconomi
crenai
ssancebecauset
hewor
ldt
radei
s
anef
fect
ivei
nst
rumentt
ofost
ereconomi
cgr
owt
h;

 Toenhancecompet
it
ivenessamongal
ltr
adi
ngpar
tner
ssoast
o
benef
itconsumer
sandhel
pingl
obal
int
egr
ati
on;

 Toi
ncr
easet
hel
evelofpr
oduct
ionandpr
oduct
ivi
tywi
thav
iewt
o
ensur
ingl
evel
ofempl
oymenti
nthewor
ld;

 Toexpandandut
il
izewor
ldr
esour
cest
othebest
;

 Toi
mpr
ovet
hel
evel
ofl
i
vingf
ort
hegl
obal
popul
ati
onandspeedup
economi
cdev
elopmentoft
hemembernat
ions.

6.Whatar
etheobj
ect
ivesofFEMA?

Themai
nobj
ect
soft
hef
orei
gnexchangemanagementactar
easf
oll
ows.

 Tor
egul
atei
mpor
tandexpor
tofcur
rency

 Tor
egul
ateacqui
sit
ion,
hol
dinget
c.,
ofi
mmov
abl
epr
oper
tyi
nindi
abynon
-
resi
dent
s
 7
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 Tor
egul
atehol
dingoi
mmov
abl
epr
oper
tyout
sidei
ndi
a

 Tor
egul
atedeal
i
ngsi
nfor
eignexchangeandsecur
it
ies.

 Tor
egul
atecer
tai
npay
ment
s

 Tor
egul
atef
orei
gncompani
es.

 Tor
egul
atet
het
ransact
ionsi
ndi
rect
lyof
fi
ciat
ingf
orei
gnexchange.

 Tor
egul
ateempl
oymentoff
orei
gnnat
ional
s

 Toconser
vet
hef
orei
gnexchanger
esour
cesoft
hecount
ryandt
out
il
ise
t
hesamei
nthei
nter
estoft
heeconomi
cdev
elopmentoft
hecount
ry’

7.Whati
s‘Fr
eeTr
ade’
regi
me?

A gr
oup ofcount
ri
es who agr
ee t
o el
i
minat
etr
ade bar
ri
ers bet
ween
member
s,whi
l
eret
aini
ngi
ndependentt
ari
ffsy
stemswi
thnon-
member
s.

◦ e.
g.NAFTA,
ASEAN

◦ Some sect
ors may r
emai
n exempt f
rom f
ree t
rade pr
ovi
sions
(
agr
icul
tur
e)

8.Def
inenegot
iat
ion.

Bar
gai
ning(
giv
eandt
ake)pr
ocessbet
weent
woormor
epar
ti
es(
eachwi
thi
ts
ownai
ms,needs,andv
iewpoi
nts)seeki
ngt
odi
scov
eracommongr
oundand
r
eachanagr
eementt
oset
tl
eamat
terofmut
ual
concer
norr
esol
veaconf
li
ct.
 8
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.E.
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l
ege,
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chy
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9.Whati
sTRI
MS?

TRI
MS(
TradeRel
atedI
nvest
mentMeasur
es)

 TRI
MS r
efer
sto cer
tai
n condi
ti
ons orr
est
ri
cti
ons i
mposed by a
gov
ernmenti
nrespectoff
orei
gni
nvest
menti
nthecount
ry.

 I
nthel
ate1980'
s,t
her
ewasasi
gni
fi
canti
ncr
easei
nfor
eigndi
rect
i
nvest
mentt
hroughoutt
hewor
ld.

 TRI
MSar
ewi
del
yempl
oyedbydev
elopi
ngcount
ri
es.TheAgr
eement
onTRI
Mspr
ovi
dest
hatnocont
ract
ingpar
tyshal
lappl
yanyTRI
M
whi
chi
sinconsi
stentwi
tht
heWTOar
ti
cles

10.
Howi
sFEMAdi
ff
erentf
rom FERA?

FERA FEMA

Exchanger
egul
ati
on Exchangemanagement

Requi
resRBI
’
sper
missi
on Except
ing on deal
i
ng i
n f
orei
gn
exchangesnoper
missi
oni
snecessar
y,
f
rom Rbi
.

Gi
ves wi
de power t
o enf
orcement Vi
olat
ion wi
l
lnotbr
ing any cr
imi
nal
di
rect
orat
etoar
restanyper
son,sei
ze pr
oceedi
ngs.I
tisaci
vi
lof
fence
anydocument

11.
Whati
sat
radebl
ock?
 9
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chy
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At
radebl
oci
sat
ypeofi
nter
gov
ernment
alagr
eement
,of
tenpar
tofa
r
egi
onali
nter
gov
ernment
alor
gani
zat
ion,wher
eregi
onalbar
ri
erst
otr
ade,ar
e
r
educedorel
i
minat
edamongt
hepar
ti
cipat
ingst
ates.

12.
Whati
sli
censi
ngagr
eement
?

I
tisawr
it
tenagr
eementent
eredi
nto byt
hecont
ract
ualownerofa
pr
oper
tyoract
ivi
tygi
vi
ngper
missi
ont
oanot
hert
ouset
hatpr
oper
tyorengagei
n
an act
ivi
tyi
nrel
ati
on t
othatpr
oper
ty.Thepr
oper
tyi
nvol
ved i
n al
i
censi
ng
agr
eementcanber
eal
,per
sonal
ori
ntel
l
ect
ual
.Al
mostal
way
s,t
her
ewi
l
lbesome
consi
der
ati
onexchangedbet
weent
hel
i
censorandt
hel
i
censee.

13.
Whatar
esof
tbudget
s?

Al
i
mitt
ospendi
ngbysomepubl
i
cbodywher
ethosesupposedt
obe
subj
ectt
oitbel
i
evet
hatt
heconsequencesofbr
eachi
ngi
twi
l
lnotbeser
ious.

Forexampl
e,t
hemanager
sofst
ate-
ownedf
ir
msmaybel
i
evet
hati
fthey
r
unatal
oss,
ormakesmal
l
erpr
ofi
tst
hant
heyhav
ebeeni
nst
ruct
edt
o,t
hest
ate
wi
l
lmeett
hef
ir
m'sl
osses,
andnotsackt
hem.

14.
Whatar
ethemembercount
ri
esi
nSAARC?

Est
abl
i
shedi
nAugust1983.

Member
s

◦ I
ndi
a,Bangl
adesh,
Bhut
an,
Paki
stan,
Sri
l
anka,
TheMal
div
es&Af
ghani
stan.
 10
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.E.
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ege,
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chy
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15.
Whati
sthemai
npur
poseofWor
ldTr
adeOr
gani
zat
ion?

 Admi
nist
eri
ngt
hemul
ti
lat
eralt
radeagr
eement
swhi
cht
oget
hermake
upt
heWTO

 Act
ingasaf
orum f
ormul
ti
lat
eral
tradenegot
iat
ions

 Seeki
ngt
oresol
vet
radedi
sput
es

 WTOi
snota“
Freet
rade”i
nst
it
uti
on.I
tper
mit
star
if
fsandot
herf
orms
ofpr
otect
ionbutonl
yinl
i
mit
edci
rcumst
ances.

Uni
t–I
II

1.Wr
it
eanot
eongl
obalent
ryst
rat
egy
.

Compani
est
hatwi
sht
omov
ebey
ondexpor
ti
ngandi
mpor
ti
ngcanav
ail
t
hemsel
ves ofa wi
de r
ange ofal
ter
nat
ive mar
ketent
ry st
rat
egi
es.Each
al
ter
nat
ivehasdi
sti
nctadv
ant
agesanddi
sadv
ant
agesassoci
atedwi
thi
t;t
he
al
ter
nat
ivescanber
ankedonacont
inuum r
epr
esent
ingi
ncr
easi
ngl
evel
sof
i
nvest
ment
,commi
tment
,andr
isk.

2.Ment
ionanyf
ourgl
obalsuppl
ychai
nissues.

 Demand

 Di
ver
sit
y

 Di
stance

 Document
ati
on
 11
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chy
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3.Whatar
ethet
ypesofi
nter
nat
ionalt
rade?

a)I
ntr
a-I
ndust
ryTr
ade,

b)I
nter
-I
ndust
ryTr
ade,

c)I
ntr
a-f
ir
m Tr
ade,

d)I
nter
-f
ir
m Tr
ade

4.Whati
sSt
andar
dizat
ion?

St
andar
dizat
ioni
saf
ramewor
kofagr
eement
stowhi
chal
lrel
evantpar
ti
es
i
n an i
ndust
ry oror
gani
zat
ion mustadher
eto ensur
ethatal
lpr
ocesses
associ
ated wi
tht
he cr
eat
ion ofa good orper
for
mance ofa ser
vice ar
e
per
for
medwi
thi
nsetgui
del
i
nes.

Thi
sisdonet
oensur
etheendpr
oducthasconsi
stentqual
i
ty,
andt
hatany
concl
usi
onsmadear
ecompar
abl
ewi
thal
lot
herequi
val
enti
temsi
nthesame
cl
ass.

5.Whati
sfor
eigndi
recti
nvest
ment
?

For
eigndi
recti
nvest
ment
 (
FDI
)isadi
recti
nvest
menti
ntopr
oduct
ionor
busi
nessi
nacount
rybyani
ndi
vi
dualorcompanyi
nanot
hercount
ry,ei
therby
buy
ingacompanyi
nthet
argetcount
ryorbyexpandi
ngoper
ati
onsofanex
ist
ing
busi
nessi
nthatcount
ry.For
eigndi
recti
nvest
menti
sincont
rastt
o por
tfol
i
o
i
nvest
ment
 whi
chi
sapassi
vei
nvest
menti
nthesecur
it
iesofanot
hercount
ry
suchas 
stocks 
and 
bonds.
 12
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.E.
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ingCol
l
ege,
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chy
-7

6.Whatar
ethechal
l
engesi
ngl
obal
izat
ion?

 Compet
ingandconf
li
cti
ngobj
ect
ives

 Ti
meconst
rai
nts

 Ambi
gui
ty

 Compl
exi
ty

7.Di
ff
erent
iat
eFDIandFI
I.

FDI FI
I

Ani
nvest
mentt
hatapar
entcompany Ani
nvest
mentmadebyani
nvest
ori
n
makesi
naf
orei
gncount
ry t
hemar
ket
sofaf
orei
gnnat
ion

Canent
ert
hest
ockmar
keteasi
l
yand Cannotent
erandexi
tthateasi
l
y
al
sowi
thdr
awf
rom i
teasi
l
y

Tar
get
saspeci
fi
cent
erpr
ise I
ncr
easescapi
tal
avai
l
abi
l
ityi
ngener
al

Consi
der
edt
obemor
est
abl
e Notmuchst
abl
e

8.Expl
ainatl
eastt
womer
it
sofdecent
ral
izedor
gani
zat
ionalst
ruct
uref
oran
i
nter
nat
ionalf
ir
m.

 Reducesbur
denoft
opexecut
ives.-Concent
rat
eonmor
eimpor
tant
f
unct
ions.-Ext
endl
eader
shi
p.

 Qui
ck and bet
terdeci
sions.-Maki
ng accur
ate deci
sions wi
thout
consul
ti
nghi
gherl
evel
s.
 13
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.E.
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l
ege,
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chy
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 Gr
owt
handdi
ver
sif
icat
ion.-Faci
l
itat
egr
owt
handdi
ver
sif
icat
ionof
pr
oduct
sandmar
ket
s.

 Bet
tercommuni
cat
ion.-I
mpr
ove or
gani
zat
ionalcommuni
cat
ion.-
Reducebur
eaucr
acy
.

 Dev
elopmentofexecut
ives.-Makef
orst
abi
l
ityandcont
inui
tyoft
he
company
.-Pr
omot
eaut
onomy
,ini
ti
ati
veandcr
eat
ivi
tyofsubor
dinat
es.

 I
mpr
ovementi
nmot
ivat
ionandmor
ale.-I
mpr
ovet
hej
obsat
isf
act
ion
andmor
aleofsubor
dinat
es.

 Ef
fect
ivesuper
visi
onandcont
rol
.-Resul
tinef
fect
ivesuper
visi
on.-
Pr
omot
eef
fect
ivecont
rol
.

 Democr
ati
cmanagement
.-Makef
lexi
bleoper
ati
on.

9.Whati
sant
i-
dumpi
ng?

Apenal
tyi
mposedonsuspi
ciousl
ylow-
pri
cedi
mpor
ts,t
oincr
easet
hei
r
pr
ice i
nthe i
mpor
ti
ng count
ry and so pr
otectl
ocali
ndust
ryf
rom unf
air
compet
it
ion.

10.
Whatdoy
oumeanbySt
rat
egi
cAl
li
ances?

St
rat
egi
c Al
l
iances i
s a busi
ness r
elat
ionshi
p est
abl
i
shed by t
wo or
compani
est
oco-
oper
ateoutofmut
ualneedandt
oshar
eri
ski
nachi
evi
nga
commonobj
ect
ive.

11.
Whati
sMNE?
 14
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.E.
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l
ege,
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chy
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Mul
ti
nat
ionalent
erpr
ise 
(MNE)
 i
sa 
cor
por
ati
on 
thati
sregi
ster
edi
nmor
e
t
hanonecount
ryort
hathasoper
ati
onsi
nmor
ethanonecount
ry.I
tisal
arge
cor
por
ati
onwhi
chbot
hpr
oducesandsel
l
sgoodsorser
vicesi
nvar
iouscount
ri
es.
I
tcanal
sober
efer
redt
oasan 
i
nter
nat
ional
cor
por
ati
on.

12.
Whati
sther
oleofi
nfor
mat
ionsy
stem?

Thet
hreev
ital
rol
esi
nfor
mat
ionsy
stemscanper
for
mforabusi
nessent
erpr
ise.

 Suppor
tfori
tsbusi
nesspr
ocessesandoper
ati
ons.

 Suppor
tfordeci
sionmaki
ngbyi
tsempl
oyeesandmanager
s.

 Suppor
tfori
tsst
rat
egi
esf
orcompet
it
iveadv
ant
age.

13.
Whati
sInt
ernat
ionalst
rat
egi
cpl
anni
ng?

I
nter
nat
ionalst
rat
egi
cpl
anni
ngi
sapr
ocessofev
aluat
ingt
hei
nter
naland
ext
ernalenv
ironmentbymul
ti
nat
ionalor
gani
zat
ions,
thr
oughwhi
cht
heysett
hei
r
l
ong-
ter
m andshor
t-
ter
m goal
sandt
hent
heyi
mpl
ementaspeci
fi
cpl
anofact
ion
i
nor
dert
oachi
evet
hoseobj
ect
ives.

14.
Dif
fer
ent
iat
eSt
andar
dizat
ionv
ersusDi
ff
erent
iat
ion

St
andar
dizat
ion Di
ff
erent
iat
ion

Economi
csofscal
e.I
nR&D,pr
oduct
ionand Local env
ironment
-i
nduced adapt
ati
on.
.,
mar
ket
ing. gov
ernmentandr
egul
ator
yinf
luences,l
egal
i
ssues.

Gl
obal
compet
it
ion Local
compet
it
ion

Conv
ergence of t
ast
es and consumer Var
iat
ion i
n consumer needs( consumer
needs(
consumer pr
efer
ences ar
e needsar
ehet
erogeneous)
 15
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.E.
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l
ege,
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chy
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homogeneous)

Cent
ral
i
zed management of i
nter
nat
ional Fr
agment
edanddecent
ral
i
zedmanagement
oper
ati
on. wi
thi
ndependentcount
rysubsi
dies

A st
andar
dized concept i
s used by Anadopt
edconcepti
susedbycompet
it
ors
compet
it
ors

15.
Def
ineExpor
ti
ng.

Expor
ti
ngi
sthemostt
radi
ti
onalmodeofent
eri
ngt
hef
orei
gnmar
ket
.
Expor
ti
ngi
sthatwhi
chal
l
owsmanuf
act
uri
ngoper
ati
onst
obeconcent
rat
edi
na
si
ngl
elocat
ion,
whi
chmayl
eadt
oscal
eeconomi
cs.

16.
Whati
sJoi
ntv
ent
ure?

I
toccur
swhenacompanydeci
dest
hatshar
edowner
shi
pofaspeci
all
y
setupnewcompanyf
ormar
ket
ingand/
ormanuf
act
uri
ngi
sthemostappr
opr
iat
e
met
hodofexpl
oit
ingabusi
nessoppor
tuni
ty.

17.
Def
ineMer
ger
.

I
tis a combi
nat
ion (
othert
erms ar
e amal
gamat
ion,consol
i
dat
ion or
i
ntegr
ati
on)oft
woormor
eor
gani
zat
ionsi
nwhi
choneacqui
rest
heasset
sand
l
i
abi
l
iti
esoft
heot
heri
nexchangef
orshar
esorcash.

18.
Whati
sAcqui
sit
ion?
 16
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.E.
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neer
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l
ege,
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chy
-7

I
tispr
ocessofacqui
ri
ngandpur
chasi
nganexi
sti
ngv
ent
ure.I
tisoneof
t
heeasymeansofexpandi
ng abusi
nessbyent
eri
ng new mar
ket
sornew
pr
oductar
eas.

Uni
t–I
V

1.Whatar
ethesour
cesoff
unds?

Despi
teal
lthedi
ff
erencesamongcompani
es,t
her
ear
eonl
yaf
ew sour
cesof
f
undsav
ail
abl
etoal
lfi
rms.

 Theymakepr
ofi
tbysel
l
ingapr
oductf
ormor
ethani
tcost
sto
pr
oduce.

 Li
kei
ndi
vi
dual
s,compani
escanbor
rowmoney
.

 Acompanycangener
atemoneybysel
l
ingpar
tofi
tsel
fint
hef
orm
ofshar
est
oinv
est
ors,
whi
chi
sknownasequi
tyf
undi
ng.

2.Whatar
ethemaj
orr
isksi
nfor
eignexchangedeal
ings?

Thef
ourmai
nty
pesofr
isksi
nvol
vedi
nfor
eignexchanget
radi
ngar
e

 ExchangeRat
eRi
sk
 17
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.E.
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l
ege,
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chy
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 I
nter
estRat
eRi
sk

 Cr
edi
tRi
sk

 Count
ryRi
sk

3.Whati
sgoi
ngr
ateappr
oachi
nint
ernat
ionalcompensat
ion?

 Basedonl
ocal
mar
ketr
ates

 Rel
i
esonsur
veycompar
isonsamong:

 Local
nat
ional
s(HCNs)

 Expat
ri
atesofsamenat
ional
i
ty

 Expat
ri
atesofal
lnat
ional
i
ties

 Compensat
ionbasedont
hesel
ect
edsur
veycompar
ison

 Basepayandbenef
it
smaybesuppl
ement
edby addi
ti
onalpay
ment
sfor
l
ow-
paycount
ri
es

4.Di
ff
erent
iat
etr
ansact
ionalcompani
esandmul
ti
nat
ionalcompani
es.

•Tr
ansnat
ional
cor
por
ati
onsar
eat
ypeofmul
ti
nat
ional
cor
por
ati
ons.

Mul
ti
nat
ionalcompani
es Tr
ansact
ionalcompani
es

Hav
eani
nter
nat
ionali
dent
it
yasbel
ongi
ng Ar
emor
eorl
essbor
der
lessi
nthi
sregar
d
t
oapar
ti
cul
arhomecount
rywher
ethey as t
hey do not consi
der a par
ti
cul
ar
 18
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.E.
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l
ege,
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chy
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ar
eheadquar
ter
ed. count
ryast
hei
rbase.

Hav
ebr
anchesi
not
hercount
ri
es Hav
esubsi
diar
ies.

5.Whati
sfor
eignexchange?

I
tist
heexchangeofonecur
rencyf
oranot
herort
heconv
ersi
onofone
cur
rencyi
ntoanot
hercur
rency
.For
eignexchangeal
sor
efer
stot
hegl
obal
mar
ket
wher
e cur
renci
es ar
etr
aded v
irt
ual
l
y ar
ound-
the-
clock.The t
erm f
orei
gn
exchangei
susual
l
yabbr
evi
atedas"
FOREX"andoccasi
onal
l
yas"
FX.
"

6.Whati
sspotr
ate?

Spotr
atei
sthepr
icet
hati
squot
ed f
ori
mmedi
ateset
tl
ementon a
commodi
ty,asecur
it
yoracur
rency
.Spotset
tl
ementi
snor
mal
l
yoneort
wo
busi
nessday
sfr
om t
radedat
e.

7. Whoar
eThi
rdCount
ryNat
ional
s?

Thi
rdCount
ryNat
ional
sar
eCi
ti
zensofcount
ri
esot
hert
hant
heonei
n
whi
cht
hemul
ti
nat
ionali
sheadquar
ter
edort
heonei
nwhi
cht
heyar
eassi
gnedt
o
wor
kbyt
hemul
ti
nat
ional
.

8.Whati
sexpor
tpr
omot
ion?

I
tisa 
str
ategy
 for
 economi
cdev
elopment
 t
hatst
ressesexpandi
ngex
por
ts,
of
tent
hrough 
pol
i
cies 
toassi
stt
hem suchasexpor
tsubsi
dies.
 19
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.E.
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l
ege,
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chy
-7

Ther
ati
onal
eist
oex
ploi
tacount
ry'
scompar
ati
veadv
ant
age,
especi
all
yin
t
he common ci
rcumst
ance wher
e an ov
er-
val
ued cur
rencywoul
d ot
her
wise
cr
eat
ebi
asagai
nstexpor
ts.Cont
rast
swi
thi
mpor
tsubst
it
uti
on.

9.Whatar
ethemai
npr
oduct
ioni
ssuesf
orf
ir
ms?

 Locat
ion

 Long-
ter
m st
rat
egi
crol
eoff
orei
gnpr
oduct
ionsi
tes

 To own f
orei
gn pr
oduct
ion act
ivi
ti
es orout
sour
ce t
hose act
ivi
ti
es t
o
i
ndependentv
endor
s

 Suppl
ychai
nmanagement

 Gl
obal
logi
sti
cs

10.
Wher
eshoul
dpr
oduct
ionbel
ocat
ed?

Fi
rmsshoul
dlocat
epr
oduct
ionsot
hat

Pr
oduct
ionandl
ogi
sti
cscanbel
ocal
l
yresponsi
ve

Pr
oduct
ion and l
ogi
sti
cs can r
espond qui
ckl
yto shi
ft
sin cust
omer
demand

11.
Whyar
epr
oductf
act
orsi
mpor
tantt
olocat
iondeci
sions?

 Thepr
oduct
'sv
alue-
to-
wei
ghtr
ati
o
 20
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.E.
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 Whet
hert
hepr
oductser
vesuni
ver
sal
needs

12.
Whatdoy
oumeanbymakeorbuydeci
sion?

Make-
or-
buydeci
sionsar
eimpor
tantt
ofi
rms'
manuf
act
uri
ngst
rat
egi
es.
it
i
saf
ir
msdeci
sionwhet
hert
omakeorbuyt
hecomponentpar
tst
ogoi
ntoi
ts
f
inal
product
.

13.
Listt
heFact
orsaf
fect
inggl
obalpor
tfol
ioi
nvest
ment
.

 Taxr
atesoni
nter
estordi
vi
dends

 I
nter
estr
ates

 Exchanger
ates

14.
Def
ineGl
obalsuppl
ychai
nmanagement
.

Accor
dingt
oJonesandRi
l
ey;“
Suppl
ychai
nmanagementdeal
swi
tht
he
t
otal
flowofmat
eri
alf
rom suppl
i
ert
hroughenduser
.

15.
Def
ineTQM.

Accor
dingt
oISO 8402,qual
i
tymanagementcanbedef
inedasf
oll
ows;
“al
lact
ivi
ti
esoft
heov
eral
lmanagementf
unct
iont
hatdet
ermi
net
hequal
i
ty
pol
i
cy,obj
ect
ivesandr
esponsi
bil
i
tiesandi
mpl
ementt
hem bymeanssuchas
qual
i
typl
anni
ng,qual
i
tycont
rol
,qual
i
tyassur
ance and qual
i
tyi
mpr
ovement
wi
thi
nthequal
i
tysy
stem.
 21
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.E.
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l
ege,
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chy
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16.
Whoi
sanExpat
ri
ate?

Accor
dingt
oAy
canandKar
tungo,“
Expat
ri
atescanbedef
inedast
he
empl
oyeesofbusi
nessandgov
ernmentor
gani
zat
ionswhoar
esentbyt
hei
r
or
gani
zat
iont
oar
elat
eduni
tinacount
rywhi
chi
sdi
ff
erentf
rom t
hei
rown,t
o
accompl
i
shaj
oboror
gani
zat
ion-r
elat
edgoalf
orapr
e-desi
gnat
edt
empor
ary
t
ime.

17.
Def
inePr
ici
ng.

I
tref
erst
othev
aluedet
ermi
nat
ionpr
ocessf
oragoodorser
viceand
encompassest
hedet
ermi
nat
ionofi
nter
estr
atesf
orl
oans,char
gesf
orr
ent
als,
f
eef
orser
vicesandpr
icesf
orgoods.

18.
Def
ineI
nter
nat
ionalhumanr
esour
cemanagement

Accor
dingt
o“I
vancev
ichandGl
ueck”HRM i
sconcer
nedwi
tht
hemost
ef
fect
iveuseofpeopl
eto achi
eveor
gani
zat
ionaland i
ndi
vi
dualgoal
s.I
tis
pr
ocessofsour
cing,al
l
ocat
ing,andef
fect
ivel
yut
il
izi
nghumanr
esour
cesi
na
mul
ti
nat
ional
organi
zat
ion.

19.
Whati
srepat
ri
ati
on?

I
tist
hepr
ocessofbr
ingi
ngt
heexpat
ri
atehomeaf
terheorshehas
 22
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.E.
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neer
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l
ege,
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chy
-7

compl
etedt
hei
nter
nat
ional
assi
gnment
.

20.
Listt
heI
mpor
tanceofI
HRM

I
nter
nat
ional
HumanResour
ceManagementi
simpor
tantbecauseof

 Gl
obal
i
zat
ion ofeconomy
,busi
ness i
s cr
ossi
ng count
ry bor
der
sto
becomei
nter
nat
ional
busi
ness,
whi
chi
sdy
nami
c.

 Al
argepr
opor
ti
onofwor
kfor
cei
slocat
edi
not
hercount
ri
esawayf
rom
t
hei
rhomesandhomecount
ri
es.

Uni
t–V

1.Ment
ionanyf
ourdi
sadv
ant
agesofi
nter
nat
ionalbusi
ness.

 For
eignoper
ati
onscoul
dbesei
zedbynat
ional
i
sti
cfact
ions.

 Weaknessesofcompet
it
orsi
nfor
eignl
andsar
eof
tenov
erest
imat
ed,and
st
rengt
hsar
eof
tenunder
est
imat
ed.

 Language,cul
tur
e,andv
aluesy
stemsdi
ff
eramongcount
ri
es,whi
chcan
cr
eat
ebar
ri
erst
ocommuni
cat
ionandpr
obl
emsmanagi
ngpeopl
e.

 Deal
i
ngwi
tht
woormor
emonet
arysy
stemscancompl
i
cat
eint
ernat
ional
busi
nessoper
ati
ons.

2.Whatar
ethesour
cesofconf
li
cti
nint
ernat
ionalbusi
ness?

 For
eignl
aborst
ri
kes

 Negot
iat
ewi
thov
erseasv
endor
s,cl
i
ent
s,&par
tner
s
 23
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.E.
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 Lobbygov
ernment
s

 Medi
ater
elat
ionswi
thout
sidepr
essur
egr
oups

 Managi
ngdi
ver
seempl
oyees

3.Def
inedi
ver
sif
icat
ion.

Ar
isk-
reduct
ionst
rat
egyt
hati
nvol
vesaddi
ngpr
oduct
,ser
vices,l
ocat
ion,
cust
omer
sandmar
ket
stoy
ourcompany
'spor
tfol
i
o.

4.Whati
sbal
anceoft
rade?

I
tist
hedi
ff
erencebet
weenacount
ry'
simpor
tsandi
tsexpor
ts.Bal
anceof
t
radei
sthel
argestcomponentofacount
ry'
sbal
anceofpay
ment
s.

Al
sor
efer
redas"
tr
adebal
ance"or"
int
ernat
ional
tradebal
ance.
"

5.Wr
it
eanyt
wor
olespl
ayedbyt
he‘
medi
ator
’inr
esol
vi
ngconf
li
cts?

1.Hel
ppar
ti
esi
dent
if
y

a.I
mpor
tanti
ssues

b.Expendabl
eissues

2.Assi
stpar
ti
esi
n

a.Rev
iewi
ngdi
sput
e

b.Resol
vi
ngi
ssues
 24
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M.I
.E.
T.Engi
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ege,
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chy
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c.Reachi
ngagr
eement

6.Whati
sconf
li
ct?

I
tisadi
sagr
eementt
hroughwhi
cht
hepar
ti
esi
nvol
vedper
cei
veatt
hreat
t
othei
rneeds,
int
erest
sorconcer
ns.

7. Whati
scul
tur
e?

“
Asy
stem ofv
aluesandnor
mst
hatar
eshar
edamongagr
oupofpeopl
eand
t
hatwhent
akent
oget
herconst
it
uteadesi
gnf
orl
i
ving.
”

8. Whati
sInt
ernat
ionalBusi
nessNegot
iat
ion?

Negot
iat
ioni
stheact
ionandt
hepr
ocessofr
eachi
nganagr
eementbymeans
ofexchangi
ng i
deas wi
tht
he i
ntent
ion ofdi
spel
l
ing conf
li
cts and enhanci
ng
r
elat
ionshi
ptosat
isf
yeachot
her
’sneeds.

9.Li
stsomeChar
act
eri
sti
csofnegot
iat
ion.

(
1)Ev
erynegot
iat
ioni
nvol
vest
woormor
epar
ti
es.

(
2)Theobj
ect
iveofanegot
iat
ionmustbedef
ini
te.

(
3)Negot
iat
ionmustbeconduct
edonanequal
basi
s.

(
4)Aconsensusmustbebui
l
tont
hebasi
sofmut
ual
concessi
on.

10.
Def
ineBusi
nessEt
hics
 25
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M.I
.E.
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l
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Tri
chy
-7

Busi
nesset
hicsi
saf
orm ofappl
i
edet
hicsorpr
ofessi
onalet
hicst
hat
exami
nes et
hicalpr
inci
ples and mor
aloret
hicalpr
obl
ems t
hatar
ise i
na
busi
nessenv
ironment
.Itappl
i
est
o al
laspect
sofbusi
nessconductand i
s
r
elev
antt
otheconductofi
ndi
vi
dual
sandent
ir
eor
gani
zat
ions.

11.
Listt
hedet
ermi
nant
sofEt
hicalBehav
iori
nint
ernat
ionalbusi
ness.

 Or
gani
zat
ioncul
tur
e

 Per
sonal
ethi
cs

 Deci
sionmaki
ngpr
ocesses

 Leader
shi
p

 Unr
eal
i
sti
c/r
eal
i
sti
cper
for
mancegoal
s.