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 ASSIGNMENT SOLUTION GUIDE (2020-2021)

IBO-01: INTERNATIONAL BUSINESS

ENVIRONMENT
Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the Questions
given in the Assignments. These Sample Answers/Solutions are prepared by Private
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and solution. Student should must read and refer the official study material provided by the
university.

Attemp all the question.

Q1. Critically examine the modern theory of international trade.

Ans.
Q2. What do you mean by globalization? Describe major forces of globalization with
suitable examples.
Ans.
Q3. Explain the structure and functions of WTO. Is WTO helpful to international
business or is it a hindrance? Substantiate your answer with examples.
Ans.
The WTO is at the forefront of efforts to ensure unimpeded global free trade and reduce trade barriers,
operating on a rules-based multilateral system.
It has made important contributions to the progress made around the world towards promoting global
trade. This has led to the growth of a number of economies, the emergence of new markets – all
important factors not only in improving business, but also in lifting people out of poverty.
It does this by implementing, regulating and operating trade agreements between countries, and
provides a fair forum for trade negotiations between member countries, mediating on disputes as they
arise. It aims to help with imports, exports and conducting trade fairly.
The WTO also cooperates with the IMF (International Monitory Fund) and World Bank to ensure
global economic policies are fair and cohesive. Therefore, it isn’t a matter of the WTO being important
for international business, but of it being absolutely fundamental.
Different countries operate on different regulations and rules between different countries, and it’s not
easy for an international business to stay on top of these when it operates in multiple countries. But
the job would be a lot more difficult if these rules were unfair or unreliable, or not consistently
applied.
The importance of a regulatory body such as the WTO is especially pressing at a time of such
pronounced global uncertainty – several of its members are currently using it to dispute President
Trump’s Trade tariffs, while a no-deal Brexit scenario would likely see the UK revert to WTO rule.

Q4. Comment on the following statements.

a. Instability of export earnings of developing countries is caused by both demand and
supply factors.
Ans. Export earnings instability in developing countries is the result of a number of factors. First,
many developing countries have specialized on the export of primary commodities, which are
peculiarly susceptible to shifts in supply and demand, as well as being more price inelastic than are,
for example, manufactured goods. The transmission of instability of demand for developing country
exports through the business cycles in the industrialized countries or fluctuations in the quantities
supplied for export may thus be one potential source of instability in export revenues. Second, the
exports of many developing countries are not only concentrated by sector (commodities) but also
geographically, with obvious implications when linked to factors affecting demand in the importing
countries. Third, the markets for products in which developing countries have specialized are often
characterized by speculation on the one hand and oligopoly on the other. Instability affects
development through such variables as imports, savings, investment, employment, government
revenues and private income.

b. Culture cannot be easily isolated from factors such as economic and political
conditions and institutions.
Ans.

especially if there was “work to be done”, in fact their compensation system did not give them the
privilege of spending much time on each business transaction. The Arab businessmen had no
compulsion to finish at a given time, viewed time spent in a café as doing something and considered
small talk an indication of whether they could ga along with potential business

c. ECGC enhances credit worthiness of not only export business but also of exporters.
Ans. I have been getting many enquiries about the risk coverage on non-payment of export proceeds
by buyer like How to provide credit to the overseas buyer? Is credit extending to importer safe? How
can an exporter provide credit to an unknown buyer? What is the remedy to provide credit to an
overseas importer? Is there any insurance to cover the risk of non-payment of export goods value? Is
there any insurance to protect the exporter in non-payment of exported amount etc.? Export Credit
Guarantee Corporation is a central government undertaking body to provide credit guarantee on the
default of payments by the buyer. It works as an insurance firm who guarantees export payment, if the
buyer defaults in making payment. Once after finalizing the order, the buyer execute a purchase order
to the seller with the terms and conditions as agreed by both. The purchase order should contain full
details of buyer and buyer’s bank account details. The exporter approaches Export Guarantee
Corporation to get approval on the buyer with amount of limit. Here, the ECGC with their available
contact with overseas network finds out the credit worthiness of the said buyer and arrives a figure of
creditworthiness and inform the maximum limit of amount can be shipped at any point of time.
Export Credit Guarantee Corporation collects premium on the amount of approval and issue
insurance policy accordingly. The exporter can apply with ECGC for insurance on shipment wise order
as specific insurance policy, or at lump sum as comprehensive policy. If an exporter obtain a specific
policy, the contract of insurance is only for that particular shipment. You as an exporter has to pay
premium only against the said shipment. If you prefer to obtain a comprehensive policy against any
buyer, you can get approval from ECGC, the amount of credit worthiness of the said buyer.
d. Ethical dilemmas and ethical lapses are the same.
Ans. An ethical lapse is when someone is harmed because you’re not paying attention.
This can be confusing, since harm due to sloth and inaction is actually a solution of some trolley
problem, being one way, just another way, the lever doesn’t get pulled. Hmmm.
But then, any reason for inaction, for not pulling the lever, is actually a solution to some trolley
problem.
And an ethical lapse can also be the result of positive action- pulling the switch.
So an ethical lapse can only be not taking responsibility for your actions. Since whatever they are or
aren’t, they have consequences.

Q5. Write notes on the following:

a. Political Environment
Ans.
b. UNCTAD’s Integrated Programme on Commodities
Ans.
c. WTO and Environmental Agenda
Ans.
d. Multilateral Investment Guarantee Agency (MIGA)
Ans.