SYLLABUS

Unit-I
Introduction
Objective
Scope
Perlmutter’s EPRG Model
Unit-2
Country Analysis
PESTEL analysis
The Atlas of Economic Complexity
Porters Diamond
Country Risk analysis
Unit 3-Cross Cultural Management 
Hofstede’s Cultural Dimension  CAGE
Framework Pankaj Ghemawat  Culture and
Leader Effectiveness: The GLOBE Study
Unit 4-Mode of Entry  Market/Country
Entry Strategic Alliances/- JV / M&A
Unit 5-Investment Decisions  Drivers of
FDI – Special emphasis on emerging markets
 Offshore Banking  Forex Management –
ADR-GDR’s- EU bonds
Unit 6-WTO Regional Trade Agreements 
Building Blocks of WTO  Major agreements of
WTO
Unit 7-Managing of Multinationals 
Organization Structure -Matrix -Geographic -
Product  International HRM -Expatriate
Management -Staffing of Subsidiaries 
Integration Response Models -Types of
subsidiaries -Control of subsidiaries  Global
manufacturing and supply chain - Optimizing of
Supply chain - Offshoring V/S Outsourcing
International Business (IB) deals with the
nature, strategy and management of
international business enterprises and their
effects on business and national performance
(e.g., efficiency, growth, profitability,
employment).
IB is interdisciplinary. It draws, among
others, on economics, politics, sociology,
marketing, management (human resources,
strategic).
The world’s largest MNCs (e.g., General
Motors, Exxon, Microsoft etc) have annual
sales higher than the annual gross national
product (GNP) of all but around 15 nation
states.
In the early 2000s in the USA, nearly half
of manufacturing exports and around two
thirds of imports were flowing within
MNCs (intra-firm trade).
Perlmutter’s EPRG Model
.
EPRG Framework helps the company to
decide the way in which strategic
decisions are being made and how the
company manages operations between
headquarter and its subsidiaries. The
concept of EPRG was introduced by
Howard V. Perlmutter within the journal
article “The Tortuous Evolution of
Multinational Enterprises” in 1969.
1. ETHNOCENTRIC
ORIENTATION

2. POLYCENTRIC  APPROACH
(Host country orientation)

3. REGIOCENTRIC
ORIENTATION

4. GEOCENTRIC APPROACH
Ethnocentric(Home country orientation)

In this approach, A firm employs home market

strategies to the international market. Plans for
overseas market are developed in the home office
of the company. Personnel is hired from home
country. Also, promotion and distribution
strategies are similar to that employed in the
home country.
The word ethnocentrism derives from the Greek
word "ethnos", meaning "nation" or "people," and
the English word center or centrism. A common
phrase set for ethnocentrism is "tunnel vision." 
Costs and benefits of ethnocentrism

Costs Benefits
Ineffective planning due to poor
Simple organization
feedback
Subsidiary 'valuable' executive Greater communication and
flight control
Fewer innovations
Inability to build a high caliber
local org.
Lack of flexibility and
responsiveness
Polycentric

In this approach, marketing strategies are

framed out as per the situation of the host
country ( the country where subsidiary is
situated). Decisions can be altered as per
the economic, political and cultural
disparities in the country. This provides a
firm to manage its operations
independently, without much interference
from its headquartered.
Costs and benefits of polycentrism
Costs
Waste due to duplication
Localization costs of "universal"
products
Inefficient use of home-country
experience
Excessive regard for local traditions at
expense of global growth
Benefits
Intense exploitation of local markets
Better sales due to better-informed
local management
More initiative for local products
More host government support
Good local managers with high
morale
Geocentric

This approach maintains a balance

between home and host market.
Marketing strategies are not influenced by
the home or host country preferences. A
firm tries to adopt globalised marketing,
formulates an integrated marketing
strategy for across the globe, this enables
a firm to enjoy economies of scale
Costs and benefits of geocentrism
Costs
High communication and travel costs
Educational costs at all levels
Time spent in consensus decision-
making
International headquarters
bureaucracy
"Too wide" distribution of power
Personnel problems, especially those
of international executive reentry
Benefits
Integrated global outlook
More powerful total company
throughout
Better quality of products and services
Worldwide use of best resources
Improved local country management
Greater commitment to global
objectives
Higher global profits
Regiocentric

In this approach, firm treats a group of

countries with similar characteristics as a
single market and accordingly designs a
marketing strategy. Countries like India,
Pakistan and Bangladesh possess similar
characteristic and can be served well with
a single marketing strategy.
Unit II COUNTRY ANALYSIS
PESTEL analysis
The Atlas of Economic Complexity
Porters Diamond
Country Risk analysis
The Atlas of Economic Complexity is a 2011 economics
book by Ricardo Hausmann, Cesar A. Hidalgo, Sebastián
Bustos, Michele Coscia, Sarah Chung, Juan Jimenez,
Alexander Simoes and Muhammed A. Yıldırım.
The book attempts to measure the amount of productive
knowledge that each country holds, by visualizing the
differences between national economies. The book's
originality is to go beyond standard statistics by making use
of “complexity statistics” of 128 countries.The book
concludes with hints "at how difficult and complex it may
be for government planners to kick-start a new industry —
while showing that there are new industries that will
struggle to get started without help.".
Why do some countries grow and others do not?
The authors of The Atlas of Economic
Complexity offer readers an explanation based on
"Economic Complexity," a measure of a society's
productive knowledge. Prosperous societies are
those that have the knowledge to make a larger
variety of more complex products. The Atlas of
Economic Complexity attempts to measure the
amount of productive knowledge countries hold
and how they can move to accumulate more of it
by making more complex products.
The Atlas of Economic Complexity
attempts to measure the amount of
productive knowledge that each country
holds. Measure of productive knowledge
can account for the enormous income
differences between the nations of the
world and has the capacity to predict the
rate at which countries will grow.
A central contribution of this Atlas is the
creation of a map that captures the
similarity of products in terms of their
knowledge requirements. This map
provides paths through which productive
knowledge is more easily accumulated.
DIVERSITY : Diversity is related to the number
of products that a country exports. This is equal
to the number of links that this country has in
the network that relates countries to the products
that they export.
UBIQUITY : Ubiquity is related to the number
of countries that export a product. This is equal
to the number of links that this product has in
this network.
Countries accumulate productive
knowledge by developing the capacity to
make a larger variety of products of
increasing complexity.
Economic complexity, therefore, is
expressed in the composition of a
country’s productive output and reflects
the structures that emerge to hold and
combine knowledge.
The complexity of an economy is related
to the multiplicity of useful knowledge
embedded in it. For a complex society to
exist, and to sustain itself, people who
know about design, marketing, finance,
technology, human resource management,
operations and trade law must be able to
interact and combine their knowledge to
make products.
COUNTRY ANALYSIS
Country analysis involves the examination and
interpretation of a nation’s economic, social and political
environment. The analysis offers a comprehensive
overview of a country.
Country analysis is useful for:
Investors in the financial market

Companies intending to set up a subsidiary

Companies wishing to enter a new market

People wishing to reside in the country

Country Risk Analysis
.
Country risk is described as the economic, political and
business
. risks that are distinctive to a specific country,
and that might result in unforeseen investment losses.
Mainly, Country risk refers to the risk of investing or
lending in a country, arising from possible
modifications in the business environment that may
unfavourably affect operating profits or the value of
assets in the country. Country risk signifies the
potentially adverse impact of a country's environment
on the MNC's cash flows. Country risk covers factors
to influence the default risk of the country resulting
from economic deterioration, political events, currency
depreciation and so on
Country risk is the degree to which
political and economic unrest affect the
securities of issuers doing business in a
particular country.
Country Risk
All business transactions involve some degree of risk. When business
.
transactions occur across international borders, they carry additional
risks not present in domestic transactions. These additional risks, called
country risks, typically include risks arising from a variety of national
differences in economic structures, policies, socio-political institutions,
geography, and currencies. Many of the individual events investigated
by country risk analysis fall closer to uncertainties than well defined
statistical risks.
 FACTORS
There are many factors from which risk can
be analyzed following are some examples
that can be contributed :- •Political •
Economic •Location •Sovereign •Transfer
Risk •Economical Risk •Exchange Rate Risk
•Financial Factor •Subjective •Terrorism
•Corruption
The most representative economic risk factors are:
Economic Risk Factors
macro-economic policy, commercial policy, the
degree
. and mode of state involvement in economy,
investment policy, propriety structure, inflation,
budget deficit, money supply and the evolution of
domestic credit. Other factors that influence the
economic risk are: policy trends, fiscal policy,
monetary policy, international assumptions,
economic growth and exchange rate.
INDICATORS OF HIGH COUNTRY
RISK
Large government deficit relative to GNP

High rate of money expansion

Substantial government spending yielding low rate of return

High taxes

Vast state-owned firms

Attitude that government’s role is to maintain living standards

Pervasive corruption

Absence of basic government institutions