Q5. Does Globalization Impact National or Organization Culture yes or no?

Define with the

drive of Globalization. (20 marks)

The organizations today exist in a variable environment that is directly affected by the process of
globalization. All this leads to many social changes as well as changes in the national culture, on
which, in turn, depend the organizational culture, ethical behavior and values in the organization.
The impact of globalization does not solely refer to the cultural segment; on the contrary, the
impact is felt in the economy, where certain global values are created, values which are the basis
for development and advancement in the business. Although globally there are many differences
and even opposing value systems, globalization imposes significant impact in changing the
communication process and certain transformations, especially in countries in transition, to
facilitate communication between organizations of the same or similar activities, needing more
frequent cooperation. In this regard, the process of homogenization of value systems in different
fields is increasingly happening and is more noticeable, which is certainly reflected in the
organizational performance. In this way, the economic globalization provides the countries in the
world many development opportunities that can serve as a good example of organizations that
are currently joining the process of conquering the global market. The primary objective of this
paper refers precisely to this context, which is to see the connection between the process of
globalization and its impact on the cultural dimensions of organizations and therefore the impact
on the microenvironment, discussed in the long-term strategic aspect.

Drivers of Globalization

The media and almost every book on globalization and international business speak about
different drivers of globalization and they can basically be separated into five different groups:

1) Technological drivers

Technology shaped and set the foundation for modern globalization. Innovations in the
transportation technology revolutionized the industry. The most important developments among
these are the commercial jet aircraft and the concept of containerisation in the late 1970s and
1980s. Inventions in the area of microprocessors and telecommunications enabled highly
effective computing and communication at a low-cost level. Finally the rapid growth of the
Internet is the latest technological driver that created global e-business and e-commerce.

2) Political drivers

Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign
direct investments in almost all over the world. The institution of GATT (General Agreement on
Tariffs and Trade) 1947 and the WTO (World Trade Organization) 1995 as well as the ongoing
opening and privatization in Eastern Europe are only some examples of latest developments.

3) Market drivers

As domestic markets become more and more saturated, the opportunities for growth are limited
and global expanding is a way most organizations choose to overcome this situation. Common
customer needs and the opportunity to use global marketing channels and transfer marketing to
some extents are also incentives to choose internationalization. (Ferrier, 2004)

4) Cost drivers

Sourcing efficiency and costs vary from country to country and global firms can take advantage
of this fact. Other cost drivers to globalization are the opportunity to build global scale
economies and the high product development costs nowadays. (Ferrier, 2004)

5) Competitive drivers

With the global market, global inter-firm competition increases, and organizations are forced to
“play” international. Strong interdependences among countries and high two-way trades and FDI
actions also support this driver.

Q6. Explain the role of EXIM Bank in International Business along with the Methods of
payment in International Trade (20 marks)
The Export and Import Bank of India, popularly known as the EXIM Bank was set up in 1982. It is
the principal financial institution in India for foreign and international trade. It was previously a
branch of the IDBI, but as the foreign trade sector grew, it was made into an independent body.

The main function of the Export and Import Bank of India is to provide financial and other
assistance to importers and exporters of the country. And it oversees and coordinates the working of
other institutions that work in the import-export sector. The ultimate aim is to promote foreign
trade activities in the country.

Functions of the EXIM Bank

Let us look at some of the main functions of Export and Import Bank of India bank:

1. Finances import and export of goods and services from India

2. It also finances the import and export of goods and services from countries other than
India.

3. It finances the import or export of machines and machinery on lease or hires purchase

basis as well.

4. Provides refinancing services to banks and other financial institutes for their
financing of foreign trade

5. EXIM bank will also provide financial assistance to businesses joining a joint
venture in a foreign country.

6. The bank also provides technical and other assistance to importers and exporters.
Depending on the country of origin there are a lot of processes and procedures
involved in the import-export of goods. The EXIM bank will provide guidance and
assistance in administrative matters as well.

7. Undertakes functions of a merchant bank for the importer or exporter in transactions

of foreign trade.
 8. Will also underwrite shares/debentures/stocks/bonds of companies engaged in foreign
trade.

9. Will offer short-term loans or lines of credit to foreign banks and governments.

10. EXIM bank can also provide business advisory services and expert knowledge to
Indian exporters in respect of multi-funded projects in foreign countries

Importance of the EXIM Bank

Other than providing financial assistance, the Export and Import Bank of India bank is always
looking for ways to promote the foreign trade sector in India. In the early 1990s, EXIM introduced a
program in India known as the Clusters of Excellence.

The aim was to improve the quality standards of our imports and exports. It also has a tie-up with
the European Bank for Reconstruction and Development. It has agreed to co-finance programs with
them in eastern Europe.

In order to promote exports EXIM bank also has schemes such as production equipment finance
program, export marketing finance, vendor development finance, etc.

To sell internationally, it's critical to offer appropriate payment methods that are safe and have
favorable terms for both the buyer (importer) and the seller (exporter). There are risks involved
in international trade

Methods of payment in international trade are:

1. Cash in Advance

The cash in advance method is the safest for exporters because they are securely paid before
goods are shipped and ownership is transferred. Typically, payments are made by wire transfers
or credit cards.  This is the least desirable method for importers because they have the risk of
goods not being shipped, and it is also not favorable for business cash flow. Cash in advance is
usually only used for small purchases. No exporter who requires only this method of payment
can be competitive.

2. Letter of Credit

A letter of credit, or documentary credit, is basically a promise by a bank to pay an exporter if all
terms of the contract are executed properly. This is one of the most secure methods of payment.
It is used if the importer has not established credit with the exporter, but the exporter is
comfortable with the importer’s bank. 

3. Documentary Collection

A documentary collection is when the exporter instructs their bank to forward documents related
to the sale to the importer’s bank with a request to present the documents to the buyer as a
request for payment, indicating when and on what conditions these documents can be released to
the buyer. The importer may obtain possession of goods if the importer has the shipping
documents. The documents are only released to the buyer after payment has been made.

4. Open Account Terms

An open account is a sale in which the goods are shipped and delivered before payment is due
usually in 30, 60, or 90 days. This is one of the most advantageous options to the importer, but it
is a higher-risk option for an exporter. Foreign buyers often want exporters to offer open
accounts because it is much more common in other countries, and the payment-after-receipt
structure is better for the bottom line

Q4. How would you describe the modern challenges in the International Business with the
possible solutions (10 marks)

INTERNATIONAL BUSINESS

International business is the production and sale of goods and services between countries. There
are several ways a business can be international:

 It produces goods domestically and sells both domestically and internationally.

  It produces goods in a different country but sells domestically.
 It produces goods in a different country and sells both domestically and
internationally.
Businesses typically produce goods overseas due to lower labor costs or taxes, and they sell
products and services in the global market because of the high potential for gaining a larger
audience, new customers, and increased revenue.

“Although international business is extremely exciting, it can also be risky,” Reinhardt says
in Global Business.

Because every country has its own government, policies, laws, cultures, languages, currency,
time zones, and inflation rate, navigating the global business landscape can be difficult. Here are
five challenges to consider.

5 COMMON CHALLENGES OF INTERNATIONAL BUSINESS

1. Language Barriers

When engaging in international business, it’s important to consider the languages spoken in the
countries to which you’re looking to expand.

One example of a product “lost in translation” comes from luxury car brand Mercedes-Benz.
When entering the Chinese market, the company chose a Mandarin Chinese name that sounded
similar to “Benz”: Bēnsǐ. The name translates to “rush to death” in Mandarin Chinese, which
wasn’t the impression Mercedes-Benz wanted to make with its new audience. The company
quickly adapted, changing its Chinese name to Bēnchí, which translates to “run quickly, speed,
or gallop.”

It’s also critical to consider the languages spoken by your company’s team members based in
international offices. Once again, investing in interpreters can help ensure your business
continues to operate smoothly.
2. Cultural Differences

Just as each country has its own makeup of languages, each also has its own specific culture or
blend of cultures. Culture consists of the holidays, arts, traditions, foods, and social norms
followed by a specific group of people. It’s important and enriching to learn about the cultures of
countries where you’ll be doing business.

When managing teams in offices abroad, selling products to an international retailer or potential
client, or running an overseas production facility, demonstrating that you’ve taken the time to
understand their cultures can project the respect and emotional intelligence necessary to conduct
business successfully.

One example of a cultural difference between the United States and Spain is the hours of a
typical workday. In the United States, working hours are 9 a.m. to 5 p.m., often extending earlier
or later. In Spain, however, working hours are typically 9 a.m. to 1:30 p.m. and 4:30 to 8 p.m.
The break in the middle of the workday allows for a siesta, which is a rest taken after lunch in
many Mediterranean and European countries.

3. Managing Global Teams

Another challenge of international business is managing employees who live all over the world.
When trying to function as a team, it can be difficult to account for language barriers, cultural
differences, time zones, and varying levels of technology access and reliance.

To build and maintain a strong working relationship with your global team, facilitate regular
check-ins, preferably using a video conferencing platform so you can interact in real time.

Research by Gallup shows that employees who have regular check-ins with their managers are
three times more likely to be engaged at work than employees who don’t.

When distance divides teams, as it has for many during the coronavirus (COVID-19) pandemic,
communication is key to ensuring everyone feels valued and engaged.
4. Currency Exchange and Inflation Rates

The value of a dollar in your country won’t always equal the same amount in other countries’
currency, nor will the value of currency consistently be worth the same amount of goods and
services.

It’s also important to monitor inflation rates, which are the rates that general price levels in an
economy increase year over year, expressed as a percentage. Inflation rates vary across countries
and can impact materials and labor costs, as well as product pricing.

5. Nuances of Foreign Politics, Policy, and Relations

Business doesn’t exist in a vacuum—it’s influenced by politics, policies, laws, and relationships
between countries. Because those relationships can be extremely nuanced, it’s important that you
closely follow news related to countries where you do business.

The decisions made by political leaders can impact taxes, labor laws, raw material costs,
transportation infrastructure, educational systems, and more.

One hypothetical example Reinhardt presents in Global Business is that if the Chinese
government decided to subsidize Chinese dairy farms, it would impact dairy farmers in all
surrounding countries. This is because, with extra funding, Chinese dairy farms may produce a
surplus of dairy products, causing them to expand their markets to neighboring countries.

It’s both exciting and intimidating that the nuances of international politics, policies, and
relations can impact your business. Stay informed and make strategic decisions as new
information arises.