COURSE CODE COURSE TITLE ASSIGNMENT CODE COVERAGE SOLVED ASSIGNMENT Assignment Solution Guide (2021-2022) ‘TUTOR MARKED ASSIGNMENT 180-01 International Business Environment 1BO-01/TMA/2021-2022 ALL BLOCKS Attempt all the questions: 1. (a) How can the stdy af the Intemational Rusiness Environment he useful for (10410) Managers? Give your arguments. (b) Briefly explain dhe Bou Business, je wud Financial Environment of Inteinativual 2. (a) How does disequilibrium occur in the balance of payments? Describe the (10+10) ‘methods of correcting the disequilibrium with examples, (b) Illustrate the advantages and disadvantages of FDI. Discuss the role of FDI in the economic development ofthe host country. ish between the following: (axs) (a) Micro and Macro Business Environment, (b) Flexible and Fixed Exchange Rate (©) GATT and WTO. (@) Export Sales Contract and Domestic Sales Contract. (xs) (a) Indian foreign trade policy does not facilitate the import of technology. (b) ICC has no role in arbitration and conciliation. (©) All contracts are agreements but all agreements are not contracts. (@) World Trade is not concentrated in a few countries and products, 5, Write notes on the following. (4x5) {a) Political Risks, (b) Alternative Dispute Resolution (ADR). (©) Wagering Agreement. (@) Code of Ethics for International Marketing Advertisement To get IGNOU Bases Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MS.W. M.T.M. www.neerajbooks.com B.Sc. BTS BJMC CTE DNHE Bis etc. ViStudy x" SOLVED ASSIGNMENT Badshah Assignment Solution Guide (2021-2022) I.B.O.-1 International Business Environment Disclaimer/Special Note: These ae just the sample of the Answers/Solutions to some of the Questions given in the Assignments. These Sample Answers/Solutions are prepared by Private Teacher/Tutors/Authors for the help and guidance of the student to he Questions given the Assignments. We do not claim 100% accuracy of tl knowledge and capability of Private Teahes/Tuor Sample answers may As these sol denied. Any O' bi t en taken while preparing these Sample Answers Solutions. Please consult your own Teacher/Tutor before you prepare a Partigular-Answer and for up-fo-date and exact information, data and solution. Student should must ead and refer the official study material provided bythe university ay itera a get oghiaaarer A ggeerarpomenis hat a r rent Tar te fag team on dit ‘constraints of de resources ete. International business environment provides numerous opportunities also co bee hanging edo cenemes and marks chological progresses Ono ee ee iiss asian dst nvesimen in India is not picking up like China SERNA reasons One at the ceampls of an opportunity is that the growing demand for at-condioners hs atvatted many new comers, domestic being GE-Codte) and fre rc ee oe OO nee eee rion usiness organisation in many direttions, t Gan also create opportunities for expansion ind gro veugh opens mrs eget vanes pth tan tional cin cho coor EMAC STERIC arent ‘oem an aa business has to be extremely careful in identifying the various environmental forces operating atthe home country, host country and global levels and should examine their influence on production, personnel, financial and marketing operations of the firm, International business comprises all comerical transactions (private and government, sales, investments, logistics and. transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Usually private companies undertake such transactions For profit, governments undertake them for profit as well as political reasons, 'AS trade barriers recede and businesses in developed economies increasingly pursue market upport unities abroad, competency and effectiveness in international management are paramount skill at many companies. The issues involved in international management span the whole gamut of those concerning management in general but there are several areas of special interest, including. ‘@ International finance and currency matter, @ Cross Cultural communication and understanding, Advertisement To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.CA. M.C.A. M.R.D. M.S.W. M.T.M. B.Sc. BTS BJMC CTE DNHE B.Lis etc. Visit : www.neerajbooks.comSOLVED ASSIGNMENT Assignment Solution Guide (2021-2022) ‘e- Forcign legal requirements and accounting practices. © Global strategy. Intemational competition, ‘To ignore such issues in an international business isto open door to risk lke in appropriate marketing approaches, poor labour management relations, adverse currency fluctuation and other problems. ‘Contemporary international managers will need to demonstrate a higher-level of skill than those exhibited by the traditional ‘managers in the past. They must be multilingual sensitive to cultural differences and knowledge about current gobal management theory, philosophy, psychology and their practical application. ‘Equally important is the manager's ability to choose the right strategy and organisation applicable to individual companies ‘operating in the international managment. They include globalization, rationalization national responsivness and the multifocal 's upon a counties size and the number of countries in which ess and political environments endemic to the lly or in combination, that best suit their needs. () Econom sd by economicjenvironment. It is the economic environment of Gi) Gross (ii) Expendit i 3 il = consists of the following iv) Infrastructure (Economic Development=The d nebo iotregf cena dtp ity seve onan aes age ted el aFs See ar PaE EEGs ay ect oan tute infrastructure and.gore developed marketing ystems, Hence, is more feasible to sin such naions. On the other hands ene dvdpen lambada ketal ats oh peas bod Biod ena Hid of products and poor inffastructure. Hence, it may be concluded that a business a ric ciara wane Mare oi imine AR ANA SEO CVHads Hah cont Gi) Gross National Product and its Distribui oss national product and its distribution have lot of implications for foreign market decisions. It has significant bearing on the nature and size of demand, government policies affecting business tc. Countries with high gross national product have more demand for industrial goods and capital equipments because they are characterised by widespread use of modern and sophisticated technology, continuous innovations, low share of primary sector, ‘market friend by economic policies and democratic rights. The demand for consumer products depend on per capital income. Sectoral distribution ofthe gross national product determines the kind of goods in demand in a foreign country. It the majority ‘of a country’s gross national product comes from primary sector (mainly agriculture, it implies that it shall have a great market potential for agricultural inputs such as fertilizer, pesticides, agricultural tools and machinery, seeds etc. A country having a predominant secondary sector (manufacturing sector) shall have a good market for raw materials, plant and machinery and also for consumer goods. Distribution of National Income (GNP) is also an important factor of economic environment influencing foreign market decision. Low-income countries are also suffering from uneven distribution of national income. Due to uneven distribution of national income. Only a small portion of the population accounts for about 70% of the gross national product ofthe country and. Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.comStudy x" SOLVED ASSIGNMENT Badshah Assignment Solution Guide a (2021-2022) ‘majority of population is poor. In such an economy, the market for high priced products and non-essential products would be limited while there will be tremendous market potential for low priced products and essential products. In an economy having. ‘more or less even distribution of national income, demand for high priced products will be more. (iy Expenditure Pattern—The market potential of a product depends on expenditure pattern of the people of a country. Expenditure pattern of a country determines haw the disposable income is being spent on different products. Some products are given more weightage than other products. Expenditure pattern of a country has non-economic jc., cultural dimension als. Soft drinks, beer, wine are consumed much more in America and European countries rather than in India though people can afford it in India. People believe in ‘simple living’, and like to spend on traditional items. Data on expenditure patterns are useful in judging as to how the money is spent on different items and which products receive more weightage. (Gv) Infrastructure-Literally infrastructure means structure below ic, foundation. With reference to business, infrastructure ‘means the supporting services. Economic infrastructure includes transportation, telecommunications, advertising, marketing credit and banking facilities, Infrastructure not only helps the agriculture industry and other 5.0 facilitates tho dist to market s ns casts and reduce idous b cS onomy has a developed and better infrastructure Companies find it difficult to coordinate and control ther business in the counties, which’have poor transportation and -conomy, there isabsence of adequate infrastructure al enyiron luencing the foreign market decisions: F central bank of the country (say Reserve Bank of India in m 4 jonetary palicy are as under. India) to regulate (Bank (6) Open market operations (Cash reserve ratio. . Feil (@) Margin requirements Private Limited Monetary policy controls the availability of credit and money and its cost. Monetary policy affects the savings, investments poor ar areRS sAchga Mer abel GOL TL MEPS LAAUAL wef lo ede Ele PROS R rc sahy does not mean absence of any in prices. An inflatic of 3-4 percent creates a good environment for business. acon CAPO WY. CE adshatccorne (Gi) iscal Poliey-Fiscal policy refers tothe pé the government regarding its revenue, expenditure and borrowings. ‘Thus, fiscal policy relates to financial activities ofthe government. Fiscal policy of a country influences the nature and direction of various economic activities in the country. Under fiscal policy, following measures are taken: (@) Pablic expenditure (6) Taxation () Public borrowings. ‘The fiscal situation of most ofthe developing economies is unsatisfactory due to increasing non-developmental expenditure Asa result, fiscal deficit is very high. Since fiscal deficit has to be financed by public borrowing which has a tendency to push up interest rates, credit is not cheap. The high cost of finance, thus, puts home country's business at a great disadvantage in international markets vis-d-vis other countries where interest rates are relatively low. High rates of interest also attract foreign portfolio investment which, in turn, gives us an overbalanced exchange rate. This undermines the competitiveness of exports ‘The government often use tax incentives or disincentives to encourage or discourage foreign business operations. Advertisement To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.CA. M.C.A. M.R.D. M.S.W. M.T.M. B.Sc. BTS BJMC CTE DNHE B.Lis etc. Visit : www.neerajbooks.comSOLVED ASSIGNMENT Assignment Solution Guide www studybadshahcom (2021-2022) Gil) Commercial or Trade Policy ~Commercial or trade policy means the government’s policy with regards to its trade with other countries. There may be two types of trade policies— inward oriented trade policy and outward oriented trade policy. An inward oriented trade policy is biased in favour of domestic market, Protection is the principal instrument of inward- oriented trade policy, An outward oriented trade policy does not discriminate between production for domestic market and exports Itis also non-discriminatory between purchase of domestic goods and foreign goods. In this environment, firms have the freedom to decide whether they wish to produce for exports or for domestic markets. As a part of global liberalisation almost all the countries have substantially liberalised imports. Domestic firms now face increasing competition from imports AA firm should study in detail what tariff and non-tariff barriers the host country uses to protect its domestic industry from foreign competition, iv) Forel ent Policy-Forcign investment p countries, Foreign investment poli Suan policy. Now-a¥ fi is role of public sector investment prio sl Each county bas Hx awn foreign fvestnent Pocy which Ws be ug other countries, ble in ascertaining the dey y is related to government's policy towards investment other government may havea liberal or controlled foreign investment ul, industrial licensing has been abolished and capital and technology. In India, in case of high ‘As a result, foreign direct investment is inereasing, ‘in detail ascertain the openness to investment with public aid tran ‘countries, The 3s in respect of foreign investment. Pans 2 ecord of al gnome tamctons ts-Current in, te gifts and investment and other short-term and Tong-te ‘lows. a country a Aer SE caren and capil acount ransacins shows a sup itive preserves when the netshomsa efit Afi intending td inertial business should carefully ascertain the bdlaioe ET ritt tgigs because it will give the inform cae igre tT eT EE a gaeals mae rns hone gn ha. pare pal Sn is sategy accordingly. 1 iy HovERed CLsmneabet Shc Md Li bade SLA Hae TH al oe ahd EF USjecenns ne disequilibrium with examples. ‘ns. Anat is imports som tr xp AMAA etuidy Rais abet sc tithe surplus or deficit inthe balance of payment. There a numberof factors that cause isequlrium inthe balance of payments These factors may be oad by extegorzed a under @ Beononic factors (ii) Political factors. Gi) Social factors {i Eeonomie Fuctors-Diseqilivium occu in the balance of payment du to following economic factors: (1) Large scale development expenditure that may cause large import. (2) Cyclical fection in general busines activity such es reesion or depression (3) Large imports as a result of high domestic prices. (@) New sourees of supply, new andbewer substuteso existing products and changesin cost as aresltoftechnologicel changes (ii) Political Factors — Political instability may cause large capital outflows and less inflow of foreign capital, account and capit The c 04 Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.comSOLVED ASSIGNMEN Assignment Solution Guide (2021-2022) Gil) Social factors — Changes in tastes, preference and fashions may affect balance of payments, Methods of Correcting the Disequilibrium Following are the methods of correcting the disequilibrium in balance of payment: (2) Use of past reserves Q) Borrowings from International Monetary Fund G) Monetary Policy (4) Fiscal Policy (5) Exchange rate Adjustment (1) Use of past reserves-Most of the countries particularly the members of international monetary fund maintain reserves consisting of gold, foreign currencies and fund related assets Ze. reserve position with the international monetary fund and holdings of Speci ps Bigs (SDR. Ifsuch series ggavalblee country may wesuc scree fuse the eit (@) Borr sm Interna national monstary fd may boro nds rom IMF to finance th fit, IMF its members: 9 Stan i (ii) Extent Gif) Structure ajusmen, facilities = Gv) Enlan Hausen fais (9) Comps fom (0) Syst rnalen 3) Monet -y supply 10 influence BOP (i) Change in interest rates. (ii) Change in credit policy by che ant gash resetye ratio, liquidity rati Gid Open market operations TURAL Mal ao 1 eens iv) Changing the margin requirements ican onshore dP or pli Lh yas sere AD Veh ects at cont (4) Fiscal Policy—Fiscal policy means the expenditure policy and taxation policy of the government, The fiscal policy is (5)Exchange rate Adjustments—Exchange rate adjustment is used to correct the disequilibrium if the deficit in BOP Pldtoortisoment To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.TM. BSc. BTS BIMC CTE DNHE B.lis etc. Visit : www.neerajbooks.comSOLVED ASSIGNMENT Assignment Solution Guide www studybadshahcom (2021-2022) (i) The competitors may revise their pricing strategies in reaction to devaluation Gi) Other currencies may be depreciated neutralizing the impact of domestic currency devaluation, (ii) Allthe trade transactions are pre-arranged, therefore the import of goods may be immediately reduced. Gv) There may not be substtues for the goods imported, Therefore the goods are required tobe imported whatever be the circumstances. () Ifthe nature of goods imported is necessities, there may not be significant decline in imports as devaluation because their price elasticity is low. Therefore, the balance of payments may actually worsen rather than importing. (H) Mustrate the advantages and disadvantages of FDI. Discuss the role of FDI in the economic development of the host country. ‘Ans. Follow advantages of FDI (1) Supplier of Capital-Developing countries suffer ftom shortage of capital required for economic dévelopment. FDL sf the host co st diect investment results in capital formation and helps in Pushing up the rate 36 0 { a Q) Forel se Most of 1ce adverse balance of payment position because thir imports : cir development needs, FDEheipsthe host countries exceed their exports. Developing countries need foreign exchange to to increase their foreign exchange reserves by bringing their resources in foreign exchange. FDI reduces the dependence of economy on the i ‘materials; technology ete, Further, FDI helps to increase the exports of the developing countries. AAs a result balance of nities bette xter wing borrowings create a fixed li row yment larly FDI does not require payment o r (8) Vehicle lo -Developi technologic -veloping countries do not have sucientesomees fo cry on esearch anf development FDI brings modem fecnology and efiient management methods FDI promote iventone ad plane poopie gies of advanced technology developing couric ped ipa pormroteonod dates LTT tee (i) Promoter of Exports-¥Dl act as a promoter of export of host developing coun. Foreign enterprises enoy 2 sume of mark Ebro te pnd Frbvea entire ray Ted Boks exo roeh eg uo date market information system. They enjoy global network of marketing. (6) Provider of Employment-Developing counges facg a serious pgoblenyof unemployment. When FDI comes to an underdovloned ALE ysa chs te ee QF omen operas TONER ee cA ote ee OER EEE SRE aren them in their operations. Foreign enterprises offer excellent pay seales and eareer opportunites to their employees. (© Higher Wages-FDI results in higher wages of employees particularly of skilled employees. FDI promotes modem management techniques and trained managers. Foreign enterprises help to professionalise management in host countries Relatively higher skilled jobs receive higher wages. (1) Competitive Eavironment-FD! facilitates entry of forcign enterprises in domestic market. Tis creates a competitive environment, Thus, FDI ineeases competition and thereby break domestic monopolies. Foreign enterprises compel the domestic firms to improve their efficiency or withdraw from the market. Competitive environment is beneficial to consumers. Consumers will have a wider choice of products at lower prices. Disadvantages or limitations of FDI Following are the disadvantages or limitations of FDL: (1) Dependence on Domestic Capital-tt has been observed that foreign enterprises do not bring much capital. In spite of bringing capital, they raise capital through borrowings from domestic capital markets and banks. Thus, there is not much Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MS.W. M.T.M. BSc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.comStudy x" SOLVED ASSIGNMENT Badshah Assignment Solution Guide a (2021-2022) increase in the capital resources of the host countries, Foreign enterprises compete effectively with the domestic enterprises for scarce capital available in the domestic capital markets. Thus, national firms are deprived of needed financial resources. (@) Balance of Payments Constraint in the long-run-FDI provides inflow of forcign exchanges resource and removes the constraints on balance of payment in the initial stages. But a large sum of money flows out of the country in terms of payment of dividends, profits, royalties, technical fees land interest to the forcign investors further, many foreign enterprises take recourse to loan finance rather than equity Finance Loan finance is a fixed liability and involves payment of interest regularly and repayment of principal amount, This puts a constraint on the balance of payments in long run, Further there is a heavy strain on forcign exchange reserves when foreign enterprises decide to move their capital out of the country. (3) Absence of Effective Transfer of Teshnology Foreign enterprises often transfer outdated technology to Ui ceitng west aumpagotal i ayes, eri entice domo cagnge tn Rn Dgsvies win eet cote. Their Rand D tig o be centralized in the BM cour on other industialae county. (any cues the technology tra if i oo developing economy which is generally labour surplus economy. 2 insistenc uch gy can have serious consequences for he economy suitbie foros = (@) Nota Provider of Additional Employment-Its wrong Say that FD creates dol employment opportunites. In fact, FDI is particularly Whgh FD substitutes national avestment When FDL cciaaage! or ii Aneto nae noted hat Foreign ener nt Woo fo eee enterprises pret i (8) special i hall 1 Bic concessions evo ein ch ae Mea ep a ih he iti suppress the demand for imports, but thgrbded Witkear pebdudbipiabdet eles. (6) Ells Orientation of Production-Foregninvestmet is more inlerestd in quick profit yielding consumer goods ceonomieresourees tothe production of no esential tems (7) Bad Scie (or Pyean business chic ude ol SM ia CORNET piece things done, Further, frcign enterprises have gained nfeesery strenght influence the decision making processes inthe enterprises in thet ntral alas. Thus, autonomy and sovereignty ofthe host counties isn danger Role of FDI inthe economic developmen of the hest country Ifwesee consider th advantages and disadvantages of FDL, we can conclude that FDI has nimportant rot play inthe tne edition to investible resources inthe host county. The most imporant contribution of FDI ts te spread of modern technology and efiiet management mcthods. Further foreign investment induces more domestic investmeat inthe form of ancillary domestic units. FDI encourages the growth of lls FI resus ina pater of grow favourable best cout since hassle inthe ital tages of development of host county. Excessive dependence on FI sharin terms evonomie Cost and poltiea interference, One has be selective in seeking FDL. Furth te povernment ofthe os county should have Plivorticoment Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.LM. BSc. BTS BMC CTE DNHE B.lis etc. Visit : of the host cot have failed to develop local skills and technology coxmetin ote eBAGA HA AT EAU ee Rede SLAM Reel crak CURIE ot suee To get IGNOU Based - www.neerajbooks.com(Study 2 SOLVED ASSIGNMENT Badshah Assignment Solution Guide Teeenieiatiees (2021-2022) sufficient regulations to monitor the activities of foreign enterprises. FDI is like @ medicine and should be used when required. ‘There are a number of countries which have developed without FDI. These countries include Japan and South Korea. On the other hand, there are a number of countries which are developing as a result of FDI. To sum up, FDI brings four “E"s— efficiency, equity, experience and expertise. In return there is fifth “E"-Expatriation of profits. between the following: ‘Macro Business Environment. ‘Ans, International business environment refers to totality of all the factors viz, geographic, economic, financial, socio- cultural, political, legal, technological and ecological which are external to and beyond the control of individual business enterprises. International business environment is more complex than the business environment because international business environment conse af fein dela ctor, wich ag exe] dere eovonment A fi general fiir he goal evel ut fm haflfbe avae of various ators patna cp af mading Ta tc foreign and global environments. A firm has to g0 a ai ent = (Gi) Macro-environment i yt-Micro-environment refersto such factors inthe firm’s immediate environment whose decisions ig on an enterprise. Sit Ss broadly has two ia viz, p i and selling, the Le (iii) Customers (iv) Market intermediaries Gopaie Private Limited Badshat -Learning ~ah.com ‘Workars and thot ‘unions Pldvertisement: To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLis etc. Visit : www.neerajbooks.coSOLVED ASSIGNMENT Assignment Solution Guide (2021-2022) Generally the player nment do not affect all the companies in an industry in the same way. Their decisions and actions vis-a-vis individual enterprise often differ in accordance with the size, capability and strategies of each enterprise. ‘Sometimes micro-environment of the various enterprises operating in an industry is almost the same. But responses of these enterprises to their micro-environment will differ as each enterprise will attempt to achieve a higher success level (i) Macro-environment-Macro-environment on the other hand, consists of larger societal and physical forces which affect the company and also the players in the company’s micro-environment, Macro-environment of a company refers to all, those factors which exercise their influence on the business activity in general, The role of macro-environment may be positive and negative. Macro-environment of business can be broadly classified into economic and non-economic environment. Economic environment (including financial environment) includes the following: @ Boon lopment i Gi) Yocome and expen Be F Gi) Noa dad 5 (iv) Monetary ici om () Bala : [Non-economic environment includes the following: (Politi Gi) Geogs (it) Soci ronment Gv) Legal () Beoloj Badshist www Non-economic Environment Pldtoortisoment To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.TM. BSc. BTS BIMC CTE DNHE B.lis etc. Visit :(Saudy ar SOLVED ASSIGNMENT Badshah Assignment Solution Guide tom studybadahah.com (2021-2022) ‘Now it may be concluded that micro-environmental factors are more intimately linked with the business firm than the ‘macro-environmental factors Further, ronment factors need not affect all the firms in a particular industry in the same way bul macro environment factots affect all the firms in the same way. Besides, macro-environmental forces are more uncontrollable than the micro-environmental factors. (6) Flexible and Fixed Exchange Rate. Ans, Flexible Exchange Rate-Flexible exchange rate means an exchange rate which is determined by demand for and supply of foreign exchange. Thus, there is no intervention by Central Bank and value of currency i allowed to adjust freely. The foreign exchange market is busy at all times by changes in the exchange rates Following, vantages of flexible exchange rate (@ Flexible exchange r 1! ternational reserves. Gi) Flexi Faes are helpful and capital movements, (iii) Flexi erate enhances the effi achieving optimum resources allocation, (iv) Flexibl ange rat ‘stabil vhich limits the size of exchange Tate fluctuations. (W) Flexible exchange rates facilitate domestic economic autonomy by removing external cOfstraint on balance of payment equilib Following an erate: @) The t clical exehan ty smit price instability scourage trade and, hence, r je the demand and supply o hange, the eater will be cache a oly. (2 ese pein yas ny ait pee i (i) Th ces tlc poy ORF AMER a EY FUL ere sori pots ini puppies According Parahsing poebapesif ucory blends Miblersdtyngoraty hid, de weecaehieEwEEney ofhome country will depreciate, will be equal tothe difference between the home country's inflation rate and the inflation rate in the rest crerpoubieo EEA, SEAL EL aqeaheene’” Fixed Exchange Rate-Fixed exchange rate means an exchange rate which is officially declared end fixed. (However, cnly a very nominal deviation from this fixed value is possible). Under the fixed exchange rate system, a deficit inthe balance cof payment is adjusted by a fll in the national income ifthe resources are not flly employed. The adjustment of a deficit in the balance of payment requires official intervention inthe markets Following are the advantages of fixed exchange rate system: (@) Fixed exchange rate provides a measure of exchange rat stability and therefor eliminates a further source of uncertainty and price instability. (Gi) Fixed exchange rate contributes to the co-ordination of macro policis of countves in a world economy. (ii) Fixed exchange rates are more conducive to expansion of world trade as they prevent risk and uncertainty in transactions, iv) Poorer nations would get foreign exchange for development purpases at low costs. Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLis etc. Visi www.neerajbooks.com uSOLVED ASSIGNMENT Assignment Solution Guide (2021-2022) Following are the disadvantages of fixed exchange rate system: (@) The system does not respond to the changes in the economy which may result into persistent balance of payments deficits and surpluses. ii) The system requires regular vigorous control and monitoring by the monetary authorities, ii) The system is not self-equilibrating and therefore over valuation and under valuation are rampant ‘Under the fixed exchange rate system a deficit inthe balance of payment is adjusted by money supply changes and the consequent changes in the price level. Under the fixed exchange rate system a deficit in the balance of payment is adjusted by a fall in the national income, ifthe resources are not fully employed, (OGATT and WTO, Ans, Fol he tii between arr ‘ Struetut iT » § J = = Basis of woe Distinct (Nature ATT, 0: al W ere : (2) Memb io ts WTO has bers, Its si ide tr ()Domestic | GATT allowed existing domestic | WTO does not permit any domestic legislation ee SP ate ete a (A) Powerg 4 SRT AT UT tele a. is Cee than LC and, Ope a ea ay TAASARICESH (6) Framework ve allowed for the ay’ ofa | WTO provides a unified package of number of important side agreements | agreements to which all members are negotiated and concluded in various | eommited GATT rounds, (Role Its role was confined to oversee | WTO has expanded the role of GATT by international trade in goods including Trade in services and intellectual property rights within the multilateral trading system, It includes environment as one of the major item, Pldtoortisoment To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.TM. BSc. BTS BIMC CTE DNHE B.lis etc. Visit : www.neerajbooks.com(Saudy ar SOLVED ASSIGNME Badshah Assignment Solution Guide Teeenieiatiees (2021-2022) Structure of the WTO—The structure of WTO may be shown as under: TRENT) gal Caelioat ana ‘rns Poy eviow sgetonan enerat Coun a Nesatcier| Boy ‘Counei for ‘Council for Trade | Trade-Related Aspects ‘of intellectual pees Property Rights committees on dein Franca Srvcon oman Dspute Settlement pancls Committees on Market Access. ‘Anti-Durping Practices Plurtatorals ‘Customs Valuatior ‘Commies on Trae in Civil | as Litt Eb gcc ie Study and Bebra risng on SMES coe logotating Group on Warket Teor evelopment Specal Session Counc (ora Subsitary) Reporting to Dispute Setter Body == Plutaterlconnies nlm te Gong Gourel othe avis altough hse oreements are not signee oy al Wi Pldvertisement: To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLis etc. Visit : www.neerajbooks.co 2BStudy x” Badshah SOLVED ASSIGNMEN Assignment Solution Guide (2021-2022) ‘The apex WTO body responsible for decision-making is the Ministerial Conference. It is expected to meet every two years, The first WTO Ministerial conference is scheduled to be held, in Singapore before the end of 1996. During the two years between meetings, the functions of the Conference are perfomed by the General General Coun ‘The General Council meets as a Dispute Settlement Body when it considers complaints and takes necessary steps-to= settle disputes between member countries. It is also responsible for carrying out reviews ofthe trade policies individual countries on the basis of the reports prepared by the WTO secretariat ‘The General Council is assisted in its work by the: + Council for Trade in Goods, which oversees the implementation and operation of GATT 1994 and its associate agreements; + Council for Trade in Services, which oversees the implementation and operation of GATS; and + Council for TRIPs which oversees the operation of the agreement on TRIPS. It also indicates the various committees established by the WTO Agreement itself and the other committees that have led work atthe operational level under the various associate agreements. rovides thatitshould perform the following for functions: jon and operation ofthe Uruguay Round legal instruments and fut ber counts n mates soveedy the agreements as well as on new issues falling within its mandate () Third, pe responsible for the setlement of differences Aisputes among if member countries, (4) Four the trade policies ofits members countries (aexport Ans, Expo Tr (buyer) fora prise. An 1) Two p (a) Transier or agreement to tansfer he goods (iti) Goods. - . (iv) Prive Private Limited (¥) All other essentials of a valid contract ¢.g., competence of the parties to make contract, free consent ete. VA WIG San iii Cis G8 Gola oo Currency Domestic sales contract mentions only one curreney /e,, home currency. Goods are transferred with in the geographical Timits of the country. Domestic sales contract is subject tothe law of the land where it is signed. Domestic sales contract is not governed by foreign exchange Jaws and regulations, Various legal and procedural formalities are required in domestic sales contract. 3. Movement of goods Applicable Law 5. Formalities Foreign sales contract states the price in foreign currency. Goods are exported outside the geographical limits of the country. Foreign sales contract may not be subject to exporter country’s law ESC is concluded subject to various laws such as foreign exchange regulations ete. ESC is subjected to various legal and procedural formalities. Advertisement: To get IGNOU Based Chapterwise Reference Books Including Many Solved for Vari 4 Sample Question Papers us Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.R.D. M.S.W. M.T.M. B.Sc. BTS BJMC CTE DNHE B.Lis etc. Visit : www.neerajbooks.comSOLVED ASSIGNMENT Assignment Solution Guide www studybadshahcom (2021-2022) 4. Comment on the following statements: G) Indian foreign trade policy does not facilitate the import of technology. Ans. The flow of technology to India has been comparatively limited because of the type of industrial development strategy. Upto July 1991, India was following a very restrictive policy towards foreign technology. Import of technology was considered ‘on merits if substantial exports were guaranteed over a period of 5 to 10 years and if there were reasonable proposals for such exports, Technical collaborations were to be considered on the basis of annual royally payments which were linked with the value of actual production. The percentage of royalty was dependent on the nature of technology. Whenever possible the payment of fixed amount of royalty per unit of production was preferred. Royalty payments were limited toa period of 5 years. In the ‘eighties’, India entered into a large number of technology collaboration agreements, It was considered thatthe government On 24" Jul c rolig suppliers was unnecessary. ag viewed 7 ‘the government, in the fast. .ing world of technology’the rel: transfer with thei ts gto th sters. This is more in Research and Development (R&D) due to greater competitive ce The Nw Inds Polo has loa pe acolo wah aasntcapgyval-Techology agreements ot eed pie sproval allowing asthe eres ing TR agreenent (1) Automatic permission will be given for foreign technology agreements in high priority industries upto a lump-sum aymeFeRel br foreaht rexdliv lS robin tess tre ned (or expprecbuBiectbo gated pay yap 8% of sales over a 10 years period from date of agreement or 7 years from cdmmencement of production. The prestribed royalty (yr Us LESTER AD ORR oti as above ifno free LAA ‘exchange is required¥or any payments, G) All other proposals will need specific approval under the general procedures in Force, (@) No permission will be necessary for hiring of foreign technicians, foreign testing of indigenously developed technologies, Payment may be made from blanket permits or free foreign exchange according to RBI guidelines. As a result of liberalized policy the number of technology agreements inereased from 661 in the year 1991 to 982 in the year 1995. The number further decreased to 595 in 1998, The largest number of technology agreements was made with USA in the year 1998 followed by Germany, Japan and U.K. Following are the main limitations in transfer of technology to Indian firms: (1) Indian firms do not make necessary homework before entering into the negoti purchase of technology can be done only when a buyer prepares sufficiently. (2) Indian firms do not build a team of experts to enable the management to negotiate an effective transfer of technology agreements, They do not take recourse to design conference. Thus, there is lack of teamwork, jons for transfer of technology, Effective Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.com 15SOLVED ASSIGNMEN Assignment Solution Guide (2021-2022) (G) There isa tendency to accept restrictive business clauses. Restrictive business clauses ensure imposition by the seller ‘on the buyer to adhere to certain practices which are obstructive in effective functioning of buyers. Restrictive business ‘clauses include ban on exports areawise restrictions for exports, buying machinery and equipment from the sources specified by the seller of technology ete (4) There is no research and development effort by the Indian firms. As a result the seller of technology is not willing to provide research and development facility to the buyer. There have been a number of cases of repetitive import of technology. () Very often there are many loopholes in the technology call abortion agreements such as lack of performance guarantee, lack of differentiation of technology from the changes of brand name and trade mark. (@)ICC has no role in arbitration and conciliation. ent of trade disputes and therefore, it has feeame a popular ind organizations operating at national, regional rade. There is International Chamber of Commerce take place anywhere in the world and there are no restrictions onthe type of business dis : arbitration or cneiliationcICC haga clear framework the exit of ICC has fllowi to 1CC has peralen eetariat WHER perv ise eee end Coeeictee oy a Remrcbente tof rules for guiding the procedure — ‘The Court of Arbitration sheaded by a cfg aie vidk Clini) Semel General and one or several Technical Sets Te ex ar ECF TEESE SU TA award is made atthe place of arbitration, The arbitral yvbads! skcam” oi. WWW. studybadshah.com to Section 2(e) of Indian Contract Act an agreement is a promise or set of promises forming consideration For each other, According to Section 2/b)a promise is an accepted proposal. A person is said to be making a proposal (offer) when he signifies his willingness to another person to do or abstain from doing something witha view to obtaining his assent t0 the act or abstinence, When the assent is given by another person, he is said to have accepted the proposal (offer). Thus, Agreement = Proposal + Acceptance According to Section 2(h), a contract is an agreement enforceable by law, Thus, Contract = Agreement + Enforceability at law “Enforceability at law” requires following elements: (1) Both the parties to the agreement should have an intention to ereate legal relations (2) Both the parties to the agreement should be competent or capable of contract. Aldvertisement To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.TM. BSc. BTS BIMC CTE DNHE B.lis etc. Visit : www.neerajbooks.com 16SOLVED ASSIGNMENT Assignment Solution Guide Son sashenaetceon (2021-2022) (6) The terms of agreement should be capable of performance, (7) The terms of agreement should be certain and not vague or uncertain. oe tans ae he a sora sae soe: CoE i sein Ce en ne ee cee re eo eanet (aWorld ones ina i \ Sc crear a= i eorere O cone bc ada int ir 12 Stu idly dy and eek (earnir ig fea ‘ahucvi sucky. ate Oe. (iv) Domestication (v) Blocking of funds Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.com a7Study x" SOLVED ASSIGNMEN Badshah Assignment Solution Guide a (2021-2022) (i) Expropriation-Expropriation refers to a situation under which a government takes over a foreign investment by paying some compensation. This compensation may not be equal to market value of foreign investment. It implies that a compensation is paid for taking over the foreign investment. (Gil) Nationalization-Nationalization refers to a situation under which a government takes over the ownership of the entire industry. It means that nationalization affects the entire industry rather than a single company. Nationalization involves transfer of ownership of business toa government agency. The process of nationalization may or may not have any compensation to be paid to previous owners of the business. It means that a compensation may be paid or may not be paid to the previous Gv) Domestication-Domestication refers to a situation under which a government restricts gradually the freedom of ‘operations of a foreign business firm. The purpose of domestication is to bring the activities of a foreign business firm in line with national i plies that domestication is a mild form of intervention of a government. Domestication is a gradual er firm initiated, government initiated or pre- encroachment of the freedom of. busine determined. The ited domesticato i ato (o) locking of Funds-Blocking of funds hich a government doesnot allow a foreign firm to remit the funds te be temporaryor permanent-Inthis case, there is no danger to ownership and property rights of the funds but a foreign firm is not allowed To Fepatriate its Cariings and investment. Blocking of fun 10n problem faced by Indians during Idi Amin’s rule in Uganda when it wasalmost impossible for ‘the Indian firms their earnings in any forn () Alternat Je Res ~ F , the 1 methods of set incemational trade disputes. forresolution| i temative dispute resolution Ans. Lita a s Altemative dsp fo involves face-to-face negotiations, Alternative dispute resolution includes the following: (Q) Conciliation . _ (2) Mediation Private Limited ) Mutual negotiations, cra DA ra imine ber chy EES MT eerste Tht Conciliation—Conciliation means the process of seeking agreement between the parties, without recourse to arbitral or judicial proceeding. Thus conciliation being consensual, isan independent procedure to resolve disputes between the partis. A conciliation proceeding can be initiated by a party inviting the other party to conciliate once the opposite party expresses its consent to the lation, the conciliation proceedings will start. It is for the partes to the dispute to decide the number of conciliators. Unlike an arbitrator, a conciliator is not a judge but only a facilitator. Accordingly, a conciliator assists the parties in resolution of disputes amicably in an independent and impartial manner. A conciliator derives his authority from the parties to the dispute. Therefore, the scope of his authority is determined by the agreement between the parties, In discharge of his duties, he must keep i mind the following: ) principles of objectivity, faimess and justice; Gi) usage of the trade and iti) facts and circumstances of dispute, Aldvertisement To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.CA. M.C.A. M.R.D. M.S.W. M.T.M. B.Sc. BTS BJMC CTE DNHE B.Lis etc. Visit : www.neerajbooks.com 18SOLVED ASSIGNMENT Assignment Solution Guide www:atudybadshah.com (2021-2022) Keeping the above factors in mind, the conciliator may make proposals forthe settlement ofthe dispute. These proposals cean be made by him at any stage of conciliation proceedings, However, these proposals need not be in writing, Also he is not required to give any reasons for his proposals. These proposals will form the basis of settlement agreement between the disputant parties. This settlement agreement duly signed by the partes is final and binding on them and the persons claiming under them, ‘The settlement agreement has the same status and effect as ifit is an Arbitral Award on agreed terms, Also it is enforceable asa decree of court, like an Arbitral Award. However, Parties to conciliation may, before singing the settlement Agreement, terminate the conciliation proceedings by giving written declaration to the conciliator indicating the date from waich the termination will be effective. But they cannot initiate any arbitral or judicial proceeding during the continuance ofthe coneiliat proceeding. The tion being the resort to such proceedings for preserving the parties’ rights. Unless othervileeed by th @) actas Gi) be a represe s Gil) be pre s with he the partigSvat a Jater stages Further, a conei nora twin al ms dng to conciliation proceedifigs confidential, where it has ent or not. Also this priiple of confidentiality sto be maintained 7 res except ary forthe impleme 1 Ans, Section 30 only eat}... to William Anson, wager is a promise to give money or money’s worth upon J SS ‘or ascertainment of an uncertain event. In the words of Justice Hawkins, “A wagering con pe is hich opens persons, professing to hold opposite views touching the issue ofa future uncertain e EhMeben, ietilnaion otha event, one shall pay cor hand over to him, a sum of money or other stake, neither Sri amiss parties having any other interest in that contract than the sum or kone hii ba wot ws ob pe higmehetrtal pesbigeratiqa tod UEImek nena NES by either of ‘the parties.” Tn short 5 ’ it pai event i eemiedn oS EY Bee Ss ec Shllpy tothe ome For example Aad B betas to wheter woudan ona parla dy or nA promising poy Rs {00:0 BitirainedandBpromisingan eu aout oA it dot This agement moet Ensen ofa Wagering Agreements (hts apromisete py many of one's work (2) The promise must be conditional on an event happening or not happening. 6) vent mst be uncertain An event nay be uncertain on aso fo reasns (9) hs not happened fx, of {thas aad happened but the artes reign ofthe ests (9 Boch pry matted ely to no ve, The in of ce prt it be ssf ete An agree i ‘egerifether ofthe partis may win but cama ee om se Dut ano wn proceedings and 1 Advertisement To get IGNOU Basea Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLLis etc. Visit : www.neerajbooks.com 19SOLVED ASSIGNMENT Assignment Solution Guide (2021-2022) (6) Neither party should have any intrest in the event other than the sum or stake he will win oF lose (© Neither party should have control over the happening ofthe event one way or other. Following are the circumstances under which an agreement is nota wager: nsurance is not a wager. In insurance, the insured or assumed has an insurable interest in the subject= ‘matter and parties ae interested in the protection of subject-matter. A contract of insurance is based on scientific calculation of risks. {i Share market transactions in which delivery of stocks and shares is intended tobe given and taken are not wager. (ii) 8 subscription or contribution or an agreement to subscribe or contribute toward any plate prize or sum of money of the value of Rs. 500 or above to be awarded to the winners ofa horse race is not void, and hence, enforceable, Gi) Ka of skill for its successful solution is not a wagering agreement. Ho spondence of the competitors, solution with a previo it isa lottery and wagering transaction (Ga not wager. If skill pays a substantial part in a result ion is not a lottery. the purpose of the corporate enterprise code of spontsiblities of business tOwards various ders having, c rere. People of diferent e ition to meet expectations of all stakeholders? Naturally, the answer is not positive. There are new few multinational corporations who take their business responsibilities seriously-The sen eres ™E THTTO RP is arto be achieved: Hence, there is a need for coe of eis fr mulation ies aay siaple fa qch of malian corporis shoplé have is qwpode of ches. Cpe fees should clear ty do aeRiAcH ted Ueto ode AiteeaGlAtL usthb Slo habs bLchtehligen, omnes tne commun: However some ouside gris hye dae code oct fr muna corporations Tete agecies oun WW Studybadshah.com i) Intemational Chamber of Commerce ii) taternational Labour Organization iv) UN.Committee on Transnational Corporations. ‘These codes address various issues related to MNCs and their stakeholders such as host government, the public, customers and employees. OFCD-OECD is an intemational organization helping the governments tackle the economic social and governance challenges of a globalised economy. Key goal of the OECD is-strengthening the governance structures and practices with in shareholders and other stakeholders. The OECD guidelines for multinational enterprises known as “MNE Guidelines” complement and support the private initiatives of companies for corporate responsibility, These guidelines are recommendations addressed Aldvertisement To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like B.A. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. MRD. MSW. M.TM. BSc. BTS BIMC CTE DNHE B.lis etc. Visit : www.neerajbooks.com 20(Saudy 3" SOLVED ASSIGNMENT Badshah Assignment Solution Guide tom studybadahah.com (2021-2022) to multinational enterprises operating in or ftom adhering countries (30 members countries and many other countries with which OECD hands dialogues). The MNE guidelines of OECD cover the full range of areas relevant to standards of responsible business conduct and therefore, provide the corporations a most valuable international bench matk of society's expectations. However, the ethical codes of multinational corporations should ensure the following: @ MNCs should respect laws and regulations of the host countries, Gi) MNCs should do nothing to compromise with the health and safety of consumers. Gii) MNCs should not sell the products in the host countries, market ifthe products are banned elsewhere. It means that MNCs should not exploit the weakness in the legislation. (iv) TNCs pros ive and assist the governments in preventing the marketing of usage products. (0) TNCS should not us Jocal ise in particular area, ( y = Badshah Private Limited Badshah of Online Study and E-Learning www. studybadshah.com Plvertisoment- To get IGNOU Based Chapterwise Reference Books Including Many Solved Sample Question Papers for Various Courses Like BA. B.Com B.A.Hons. M.A. M.Com M.B.A. B.C.A. M.C.A. M.RD. MS.W. M.T.M. B.Sc. BTS BIMC CTE DNHE BLis etc. Visit : www.neerajbooks.co 2