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Historical perspective of international

business
VI MALKANTH R
121202127
Indus valley civilization(2500-
1500 B.C

Harappa- Dayaram.R.B.
Mohenjo-Daro- John Marshall
Kalibangan- shayar B.K
Lothal- S.R.Rao
Mother goddess- Greece and India
Gold, silver, cooper, tin and lead
seals- Harappa- Mesopotamia
Domestication of animals like oxen, buffaloes,
goats, sheep & pigs- summerians




The Aryans
4 vedas, Samhitas, Aranyakas and Upanishads
Roman year originally consist of 10 months & Rig-
Veda speaks dasagvas.
Pitri & Matri( Sanskrit), Pidar & Madar (Persian) &
Patar & Matar(Latin). Greeks, Persians, Germans &
Romans.
Horse is brought from Babylon.
Stones from Newzealand
Trade was carried with other countries but system of
exchange is not known.





Ancient India and Persia
Gold & Silver coins imported from Persia
Kharoshti script of India and Aramaic script of
Persia.
Pillars of Ashoka
Persian nobles ( tushaspa) were employed in
Mauryan kingdom
Burning sacred fire in the room.
Persian yavanis as body guards
Polishing the stones taught by Persians

Mauryas
Arthashasra, Mudraraksha, Rajatarangini, Indica
and Inscriptions.
Periplus of Erythrenia sea and Geography
Bindusara-pigs and wine from Syria and ship from
Egypt.
Political relationship and trade through religious
activities in Ceylon, Egypt and Macedonia.



Shatavahanas paithan and kalyan seaport.
art and titles
Kushanas- Kadphises I issued gold coins got Roman
influence.
Ghandara school of art and foreign pilgrims.
Kanishkas court poet Asvaghosa and his work
compared with Milton, Goethe, Kant and Voltaire.
Nagarjuna with Martin Luther.
Western and southern India and Rome trading (
gold, silver and muslin)
Deities from Greek, Sumerian and Zoroastrian


Guptas: Puranas, Dharmasastras, Nitisara,Kaumudi
Mahotsava, Mudrarakshasa, Hiung Tsang, Itsing,
Fahien, Allahabad pillar inscription, Udayagiri cave
ins, Mathura stone ins, Sanchi stone ins.
Ceylon enjoyed central position for trade along with
Indonesia and china.
Roman influence and war equipments and financial
reforms
Harshavardhana: sent embassy to china and recived
Wang-hiuen-tse and Tsiang-cheu-jenn( political
relationship)

Nalanda and taxila
Rajputs- chandela rulars- Kajaraho
Rashtrakutas
Chalukyas
Pallavas and cholas: Ceylon, Maldives, Burma.
Greek merchants entered India.
Silk, wool, silver, sandal, coral, pearls etc are
imported.
Buddhism in china, Korea, japan and Tibet and
places like Bodhgaya, Sanchi and Amarvati known
for religious activities.
India during 650- 1000 A.D:
India exported to Arabs musk, pearls, diamonds,
corals and medicine herbs specially from Gujarat
India imported from Arabs incense, copper, dates,
ivory, emeralds, coral and horses.
India imported pearls, dry ginger and tin from
Ceylon.
Taxila connected to kabul, roman trade
Vijayanagara
Bahamani
Mughals
British rule in India

International Business Approaches
Douglas Wind and Pelmutter:
1. Ethnocentric Approach
2. Polycentric Approach
3. Regiocentric Approach
4. Geocentric Approach
why IB:
1. To achieve higher rate of profits:
Hewlett Packard and Apple.
2. Expansion of production capacities beyond the demand
of the domestic country:
Japanese automobile company Toyota


3. Severe competition in the home market
4. Political stability versus political instability.
5. Availability of technology and human resources:
USA, Japan and Europe- India, China and Thailand
6. High cost of transportation:
Mobil-Ethiopia, Kenya, Eritrea and Sudan- Saudi
Arabia- Eritrea.
7. Nearness to raw materials:
US and Europe- S.Arabia, Bahrain, Qatar, Iran etc.

8. To avoid tariff and import quotas:
US on Japanese automobiles and electronic
components imports
Japan on US rice and agricultural goods imports
SONY, Honda, Toyota, canon, Xerox, Philips,
Unilever, Pepsi, Coca-Cola etc.

Advantages of IB:
1. High standard of living
2. Wider market
3. Reduced the effects of business cycle
4. Reduced risk

5. Potential untapped market:
BATA shoes in UK and India
6. Provides opportunity for and challenge to domestic
business
7. Division of labour and specialization:
Brazil, Kenya, japan and India coffee, tea,
automobile and textile.
8. Economic growth of the world
9. Optimum utilization of world resources
10. Cultural transformation

Cultural environment
Culture is learned:
Spanish male child: bull fighting, acquire food by
farming and be a catholic.
East Africa male child: acquire food from his cattle,
obey the laws of his elders, spend his leisure time
telling tribal folktales, and worship his ancestors as
gods.
Kikuyu farmer from Kenya: kinship
Juhoansi hunters in Namibia: wounded impala

Culture influences biological processes:
Clyde, an anthropologist who spent many years in
Arizona and New Mexico.
Cheyenne men engaged in the Sun Dance ceremony,
Fiji firewalkers, or U.S. women practicing the
Lamaze (psychprophylactic) method of childbirth.
Padaung tribe-Burma-steel neck rings.
Masai men and women-East Africa-larger pieces of
wood through their earlobes.
Men-New Guinea-bones through their noses.
Nubians-Sudan-scar their faces and bodies in
intricate geometric designs.



Pacific Islanders- elaborate body tattooing
A number of cultural groups throughout the world
circumcise both men and women.
Canada and Mexico-barbaric practice of putting
holes in their earlobes for the purpose of hanging
pieces of jewelry.
surgical cosmetic procedures-liposuction, eyelid
surgery, abdominoplasty (tummy tuck), nose jobs,
forehead lifts, lip augmentation, tooth veneering,
and chin implants.
Beef-india, foot-china and plastic surgery
Cultural universals:
Economic Systems:
In capitalistic countries-goods and services-
principle is each according to his or her capacity to
pay.
In socialist countries-goods and services are
distributed- principle is each according to his or her
need.
The Pygmies of Central Africa-avoid face-to-face
contact during the exchange.
The Hadza of Tanzania-kinship.
Marriage
Cultural environment
1. Prescriptive:
consumption of wine & smoking.
2. Socially shared:
Child marriage & Sikhs tradition.
3. Culture facilitates communication:
Caring nature of Indians.
4. Learned: Enculturation and acculturation.
Contamination of culture
5. subjective:
Dowry system

6. Enduring: passing from generation to generation.
Taking care of old people, respecting the elders and
offering food first to the guests.( spending income).
7. Dynamic:
Youth want to be slim, reduced fat content in
consumption, work smart than hard and housewife
attitudes at present.
8. Cultural Attitudes and IB:
Dressing style, living styles, eating habits
9. Culture and thinking process:
SRC concept.

10. Cultural universals:
Video games, cars and TV's
11. Time and culture:
Appointment and timing
Friday- middle East and Sunday- West
Time is money for American
12. Space and culture:
Latin American and Asians.
13. Culture and superstition:
Americans, Asians and Africans.



14. Culture and colour:
Red rose- lust than love- Spain
Yellow and cut flowers- unlucky- France
Bouquet of 13 is inappropriate in France and Latin
America.
Yellow- disease in Africa and red is lucky- china and
anger in USA.
15. Culture and gifts:
China and Taiwan- clock- poor choice
knife is poor choice in France, Russia, Germany and
Thailand.
Handkerchiefs in Thailand, Italy, brazil & Venezuela.




Social Environment
1. Religion:
Religious taboos include pork and alcohol for
Muslims, beef for Hindus and Shellfish for Jews.
Holidays for various festivals.
2. Family system:
Joint and nuclear family and role of women.
3. Impact of social and culture environment on
consumer behaviour:


Behaviour based on group membership:
Females and males
Motivation and achievement:
Compensation and reward basis
Power distance:
Superior and subordinate relationship in Morocco and
other advanced countries.
Individualism vs. collectivism:
Risk taking behaviour:
Norway-trust not brazil, Swiss, nether, Canada-future
whereas Russia and Poland-present



Political Environment
Stability and Instability in political system.
Political parties, Nature of Constitution and
Government system.
Political relations and IB:
Former USSR and India
USA and Pakistan
Arab Countries and Israel.
Political risks:
1. Confiscation
2. Expropriation


3. Nationalization
4. Domestication
5.General instability risk
6. Operation risk
Indicators of political stability:
1. Social unrest
2. Attitude of nationals
3. Policies of the host government

1. Political factors:
Iran-Iraq, Australia- new Zealand, India-Pakistan,
Iraq-Kuwait, disintegration of USSR, Civil war in Fiji,
Malaysia and Srilanka
2. Huge foreign indebtedness:
Mexico, brazil, Poland, Kenya, Congo and Indonesia.
3. Exchange instability:
Currency depreciation in Zambia, India, Pakistan and
Philippines.
4. Entry requirements:
MNC-Eritrea-joint ventures
5. Corruption

Technological Environment
Meaning of Technology
Influence of Technology
Investment in Technology
Technology and Economic development
Technology transfer
Appropriate Technology
Technology and Globalization


Economic Environment
Economic conditions:
Inflation, balance of payments,
Economic policies
Economic systems
World Bank
Functions:
1. Reconstruction and development of territories
2. Provide foreign investment
3. Growth of international trade
4. Maintain BOP
5. Increase productivity
6. Increase standard of living and working conditions
7. Loans to small and large projects
Organization structure
1. Membership
2. Board of Governors
3. Executive Directors
4. President
Loans:
1. Structural adjustment facility: luxury and military
goods
2. Enhanced SAF: concessional resources to LIC.



IDA:
Part I and part II
MIGA:
1. Flow of DFI to LIC
2. Insurance cover for investor against political risk
3. New investment and expansion of existing
investment
4. Guarantee against currency transfer, civil
disturbances etc.



Case study
1. Tackling HIV among vulnerable groups in
Burundi
2. Democratic republic of Congo dictatorship
3. Land of bread now without bread
4. Development of tourism
5. Education and water crisis
6. Natural calamities


Tackling HIV among vulnerable
groups in Burundi

My older child has begun the advanced level and
my second child is Primary Two, Jeanne says, I
gave up sex work because I am now able to get food
and school fees for my children.
Jeanne-39, Bella-13 and Cecile-25
Cassava flour and pam oil
15-49 men multiple partners
Movies, testing, ARV, condom distribution, VC,MC
and PMTCT
14% to 6% men


Dead sea-red sea project
50 Kms and 15 Kms
E-J, W-I&P, Tributary- Jordan
Lake Amor and Lisan
C.C-14.4, P.C-4.4, M.C-50.8 and S.C-30.4
Climate therapy, Heliotherapy and Thalassic therapy
Palestinian water rights from the Jordan River.
Replace the Jordans rivers natural fresh water
Grave damage to the West Bank
destroy the unique features of the Dead Sea and
its ecosystem.

Bread basket of Africa
White farmers land
39 farms
6.5 sextillion inflation
$ 7 billion loss
Maize, Cotton and Tobacco- 50%
Wheat, Beef and Diary- declined
Currency abandoned in 2009
US and South African currency in circulation
Unemployment and life expectancy

ChadCameroon Pipeline Project


World trade organization
1. Rock n roll in Bangladesh- day light robbery
2. Armenia- importation of cigarettes and alcoholic
beverages( Ukraine)
3. United states- importation, marketing and sale of
tuna and tuna products- Mexico
4. European communities- poultry meat and poultry
meat products- USA ( pathogen reduction
treatment) ( asc, tsp, cd & peroxyacids)
5. Brazil- anti dumping duties on jute bags- India
6. Argentina- import of pharmaceutical products-
India

7. Nicaragua- importation of black beans-
Mexico

Shrimp-Turtle and Tuna-Dolphin case
Seven
Direct and indirect
ESA 1973
1991 legislation
1997
TED
US discrimination
Day light robbery in murder
Mumbai-Bollywood-Hollywood
Prothasa in 1993
Santana- BMW
2004, Murder
50 million rupees

Heckscher-Ohlin model
Assumptions:
1. There are two countries involved
2. Each country has two factors
3. Each country produce two commodities
4. There exist perfect competition
5. Factors are freely mobile within country and
immobile between countries.
6. Two country have identical production technology
7. There is full employment
8. Free trade
9. No transport cost


Econometric testing of H-O model
The Leontief paradox
Time element of Alfred Marshall
Stolper-Samuelson theorem: price, rent and wages
Factor equalization theorem: japan and vietnam
Identical production function
Homogeneous capital
Political background


XX is product curve for producing commodity X- UK
YY is product curve for producing commodity Y- IND
XX is capital intensive and YY is labour intensive
PA is price or budget line- UK. PA is tangent to XX
@E. the price line PA is also tangent to YY @K. K is
helping us to find out how much capital and labour is
required to produce one unit of Y in UK.

Economic integration and trading bloc
1. Free trade area
2. Custom union
3. Common market
4. Economic union
1. Abolish all restrictions on trade among themselves
or low charge of tariffs
2. Uniform commercial policy with non members
3. Free movement of human resources and capital
4. Achieve uniformity in monetary and fiscal policy
among member countries.
NAFTA
1. Job creation and job quality:
Mexico and in USA

2. Agriculture:
USA dumping of agricultural products
Asian financial crisis
Currency depreciation in Canada
Competition from Canada and Mexico
Bacterial contaminations in Mexico
Low wage of labour and low subsidy


3. Environment:
Hazardous industries in Mexico
Increase in passing truck and C0
4. Public health:
Safety inspection declined
Strawberry floods
Water contamination- STD
5.Wage levels in USA and Mexico:
Increase and decrease
Huffy bicycles, bass shoes and Thomson consumer
electronics
6. Economic development and living standards:
Job in Mexico and low standard jobs
MNC and small business
Low subsidy
Fall in wages
Middle class vanished
Purchasing power decreased
Increase in poverty

7. Sovereignty and democratic government:
Political unrest and disturbances

Tariff and Quotas
Protective trade devices
Easiest tax to collect
Vary from country to country
Types of tariffs:
1. Export Duties.
- custom duties levied on exports
2. Import Duties.
-custom duties levied on imports
3. Specific Duties.
- fixed Charge for each unit of the product imported.
- E.g. tariff of Rs.1000 on each TV imported.

4. Ad-Valorem Duties.
-levied on the basis of value of the goods.
Eg. Fixed percentage of 300 per cent imposed on the
value of the TV set imported

5. Compound Duties.
- Commodity is subject to both Specific Duties and
Ad-Valorem Duties

6. Single column Tariff
-uniform rate of duty on all commodities

7. Double Column Tariff
-two rates of duty on some or on all commodities,
discriminates between countries.

8. Triple- Column Tariff
-Countries which have close political ties with other
countries. may have a lower level of tariffs for goods
from their affiliated countries




9. Revenue Tariff
- imposing a tariff to obtain revenue.

10. Protective Tariff.
- to protect the domestic industries from Foreign
Competition

11. Countervailing Duties.
- imposed on certain imports when they have
been subsidized by foreign governments

12. Anti-Dumping Duties.

Effects of tariffs
1. Price effects
2. Protection effects
3. Consumption effects
4. Balance of payments effects
5. Income effects
6. Employment effects
7. Competitive effects
8. Revenue effects
9. Redistribution effects


Balance of payments
Current a/c:
1. Trade a/c: goods
2. Invisible a/c: services, gifts, charities, interest on
loans, tourist expenditure, transport charges etc.

Capital a/c: private loans, bank loans, assistance by
international institutes,

Types of/causes for BOP
1. Cyclical disequilibrium:
Prosperity, depression, demand variation, price
fluctuations
2. Structural disequilibrium:
Jute industry, crop failure, labour strike and shortage
of raw materials
3. Political and social disequilibrium:
4: Long run disequilibrium:
Capital formation, population growth, territorial
expansion, technological advancement and
innovations.



Correcting disequilibrium in BOP:

1. Deflation
2. Exchange depreciation
3. Devaluation
4. Exchange control
5. Tariff
6. Import quotas
7. Import substitution
8. Export promotion:
Subsidies, tax concession, marketing facilities,
incentives and loan priorities, EOU,EPZ and FTZ

Free trade v/s protection
6 countries cocoa
West Africa
40%- Ghana
43%- IC
2,84,000-children
66% - school
Pesticides and insecticides
12,500 no relatives
Trafficking, child slave labour and low wages


1. USA trade certificate:
- Increased and guaranteed fair price
2. Fair trade producer cooperatives:
- Construction of schools
- Health clinics
- Organic agricultural training
Other countries:

NAFTA(1994) NAAEC & NAALC
Increased pollution and decreased wages:
EOM and AP- profit to US- Mexican eco crippled
Env pollution and over population
Sewage and waste disposal-Ha
Increase in industry and trade
Breathing problem and death
Spread of toxic on land and water
Working condition
Wages and purchasing power
Later shift in industry

Devasting Mexico's rural peasants:
Lands of farmers used for industry( 2 million)
Agricultural goods to US
Corn import from US
Unemployment

Impact on Mexico's natural resources:
Water pollution and resources
Soil salinity, ground level ozone, lake and river
acidification and disruption of forest processes
Deforestation

Trucks
California 450000 to 1000000-CM
cocaine:
70 % smuggling and 330 tons. Heroin
Stolen cars:
200000 through ship
Stolen guns:
90% illegal
Economy class:
Middle class vanished and pushed to poverty
Productivity increased and wages fallen

Currency depreciation in Canada
Bacterial contaminations in Mexico
Strawberry floods
Water contamination- STD
Huffy bicycles-Ohio-650
Bass shoes-Maine-350
Thomson consumer electronics-indiana-1200
Hazardous industries in Mexico
Sovereignty and democratic government:
Political unrest and disturbances


Advantages:
1. division of labour:
- Export and import: USA wheat
- Specialization (labour and capital movement):
BATA
- Increase in income and NI. Japan Agriculture
2. Factors of production earns more
3. Imports at cheaper rates:
Electronic products
4. Widens size of market
Chinese products
5.Widens area of competition:




Agriculture in USA
6. Prevents injurious competition:
Dis advantages:
1. Under developed countries suffers:
British rule in India-handicrafts industries
2. Leads to economic interdependence:
Politically weak and war times
3. Free imports of injurious and harmful products
4.Cutthroat competition in world market
Permanent injuries to economic interest of countries:
Nigeria
5. Infant industries protection is difficult.





Parrot Trade( neo tropical parrots)
25,000-nests- smuggled across border
Transportation, suffocation and starvation
140 species- W.Hemi, 40%, 17%, 36% & 7%
Cruel techniques of smugglers- bleed to death,
floating the cages- RG- beak closed
Next to drug
Two agents are expected to patrol the entire
Texas-Mexico border and jails & courts
1992 Wild Bird Conservation Act
Parrot could not breed in captivity
Culture-status symbol and life style


Fair Trade Chocolate
Cocoa is a $16 billion a year industry
two million farmers are employed in cocoa
production
In the Ivory Coast, 66% of cocoa farmers have never
attended school.
Trafficked child labor and child slave labor(12500)
applying pesticides and insecticides
Trans Fair USA Fair Trade Certified
50000 cocoa growers with Fair Trade cooperatives
construction in 11 countries
Protection policy
Tariffs- Car-japan-$30 to 35k
Quotas- Australian bananas
Dumping- Japanese bikes and USA wheat
Inspections- Australian oranges to japan
Australian wheat to Iran
Dumping -surplus stock, to drive out domestic
competitors and unable to find a market for a
particular product. UK, AUS and China



Tariffs:
a) Specific tariffs : price per unit
b) ad valorem: proportion of value of product
Quotas
Voluntary export restrains:
Request of both country: japan and US automobile
Anti dumping legislation:
A) persistent (B)Predatory: enter market later
C) sporadic (d) Reverse
Export subsidies
Exchange rate manipulation

Comparative advantage has lost its legitimacy: GE,
GM, and Hershey Chocolate
Infant industry argument
Unrestricted trade undercuts domestic policies for
social good:
collective bargaining
child labor
competition
environmental protection
equal opportunity
intellectual property
minimum wage
occupational safety and health

Counter trade
Barter counter trade:
Counter purchase:
Brazil and Saudi- steel
Compensation:
Japan and China sewing machine
Switch trading:
India, USA and UAE
Offset: purchase of local products: USA, Middle
east and defense
Clearing agreement: central banks
Mismanagement of land:
Land reforms of Zimbabwe
Subdivision and fragmentation
Misused money:
Nuclear weapons, large debt for education
and medical purpose
Ghana, Akosombo and Aswan, two lane
highway, storage silos.
Nile river and Mediterranean sea block
Corruption:
Human resources: Ebola
Lack of infrastructure:
Conflict:
Civil war in Somalia, border issues of
Ethiopia and Eretria, military rule and
refugees, Angola and sierra Leone-
diamonds
Unemployment, Famine, drought and
inflation
Live animal export
Country
Different breeds
Religious reason
Suffering
Humane chain
Health welfare throughout supply chain
AMSA
Halal certificate



South American economic crisis 2002
World recession(1970-80):
1. Oil prices
2. Capital market
3. Finance minister
Income, economic growth, import, inflation,
unemployment, buying power of middle class, social
issues and poverty.
Extreme high debt, devaluation of currency, trade
imbalances, balance of payment problem, instability
in economy, hydroelectricity plant.

GDP decline o.8 to 4.4 to 10.9
More loan for reducing poverty and economic
stability
Whirlpool of debt
Abandoned import substitution industrialization
Adopted export oriented industrialization
IMF-neoliberal strategy
Reformist strategies- C and CR
Innovations and improvements
IMF- free market capitalism
Hatred


Outsiders control
Never sign
Favoured officials and heads
More drop in PCI and poverty gap,
plummeting unemployment, youth-drugs,
prostitution, homicides, crime, undesirable
place

Arguments for protectionism
safeguard domestic employment
correct balance of payments disequilibrium
prevent labour exploitation in developing
economies
prevent dumping
safeguard infant industries
developing country to diversify
Source of government revenue
Arguments against protectionism
Inefficiency of resource allocation in the long run
Downward multiplier effects
Bureaucracy
Environmental costs
Cases for disequilibrium in BOP
Population growth
Development programmes
Demonstration effects
Natural factors
Cyclical fluctuations
Inflation
Poor marketing strategies
Political uncertainties
Globalization
Measures to correct BOP
Deflation
Depreciation
Devaluation
Exchange control
Tariffs
Quotas
Import substitutions: R&D
Export promotion