Q1. Define Globalization. Mention the benefits of Globalization.

Globalization is defined as a process of economic integration 0f the entire world through the
removal of barriers to free trade and capital mobility as well as through the diffusion of
knowledge and information. One of the results is that firms, whose output was previously
significantly more limited by the size of their domestic market, now have the chance to reap
greater advantages from economies of scale by ‘being global’. The organization should
become global does not mean that it shall necessarily be doing business globally what it
essentially connotes is that it shall be able to survive global competition.

Q2. Two types of Political risk are there in International Business. Write a note with
suitable example.

1. Macro Political Risk

2. Micro political Risk

Macro Economics: A macro political risk affects all international businesses in the same way.
Expropriation, the seizure of assets by government with little or no compensation to the
owners, is a macro political risk.

Micro Economics: Firms which have high visibility in host countries are targets of micro
political risk. Includes, industry regulations, taxes, kidnapping and terrorist threats.
Q3. Globalization of Capital means? Also please give the examples of Capital Goods and
Consumer Goods.

Globalization of capital, or capital flows, is the movement of capital across borders. This
includes debt, portfolio equity, and direct investment.

Globalization of capital markets allows companies to access capital outside of their home
countries. This can be done through initial public offerings (IPOs), cross-listings, depository
receipts, and other methods. Companies can also access debt resources through bank loans
and foreign bond issues.

Globalization is the process of a national economy moving towards a borderless world

economy with open markets.

Capital goods are physical assets used by businesses to produce consumer goods or other
capital goods, while consumer goods are products used by consumers. Capital goods are
used in the production process but don't generate revenue on their own, while consumer
goods are used by the final customer and generate revenue. For example, a machine used
to make cars in a factory is a capital good, while a finished car is a consumer good.

Consumer Goods: - food, appliances, clothing, automobiles, pens, etc.

Capital Goods: - Buildings, Machinery, Tools, and Industrial Machinery.

Q4. With the example of any company, explain the parameters by which a company is
Assure for its success in their advertising process are culturally correct and satisfying
Different types of consumer around the world? (Application question)
 Q5. Explain Economic integration with suitable examples.

Economic integration, or regional integration, is an agreement between countries to reduce

or eliminate trade barriers and coordinate monetary and fiscal policies. The goal is to
increase the level of welfare and economic productivity of the countries involved.

Some examples of economic integration include:

1. North American Free Trade Agreement (NAFTA)

An agreement between the U.S., Canada, and Mexico that sets trade standards
2. European Union (EU)
A trade agreement between 27 European countries that includes the European Customs
Union
Economic integration can have many advantages, including:
1. Reducing costs for countries
2. Reducing prices for consumers
3. Improving the overall economics for all countries involved
4. Expanding production capacity and creating new opportunities
5. Increasing bargaining power, efficiency, and productivity levels of small countries.

Q6. Explain in detail about Comparative Advantage theory by David Ricardo. Give suitable
example.

FOR THIS QUESTION REFER GC PDF: - (Comparative Cost Theory by David Ricardian)

Q7. There are majorly two types of international distribution channels. One is Indirect and
the second is Direct. Explain all intermediaries in both types of channels.

FOR THIS QUESTION REFER GC PPT: - (Types of Distribution Channel in International

Market)
Q8. Write a short note on international monetary system.
The International Monetary Fund (IMF) is an international organization that promotes global
economic growth and financial stability, encourages international trade, and reduces
poverty.

The IMF mission is to promote global economic growth and financial stability, encourage
international trade, and reduce poverty around the world.

The IMF was originally created in 1945 as part of the Bretton Woods agreement, which
attempted to encourage international financial cooperation by introducing a system of
convertible currencies at fixed exchange rates.

The IMF collects massive amounts of data on national economies, international trade, and
the global economy in aggregate and provides economic forecasts.

In the beginning, 29 member countries, today, 187 member Countries, Staff of about 2680
Persons.

Purpose of IFM:-

Functions:-

1. Surveillance: (like a doctor)

2. Technical Assistance: (like a teacher)
3. Financial Assistance: (like a banker)
Q9. Explain in detail foreign exchange market. List its functions.

The foreign exchange market is a market in which foreign exchange transactions take place.
In other words, it is a market in which national currencies are bought and sold against one
another.

Functions:-

1. Transfer of purchasing power: The primary function of a foreign exchange market is

the transfer of purchasing power from one country to another and from one
currency to another. The international clearing function performed by foreign
exchange markets plays a very important role in facilitating international trade and
capital movement.
2. Provision of Credit: The credit function performed by foreign exchange markets also
plays a very important role in the growth of foreign trade, for international trade
depends to a great extent on credit facilities are available also for importers. The
Euro dollar market emerged as a major international credit market.
3. Provision of Hedging Facilities: The other important function of the foreign
exchange market is to provide hedging facilities. Hedging refers to covering of export
risks, and it provides a mechanism to exporters and importers to guard themselves
against arising from fluctuations in exchange rates.

Q10. Elaborate joint venture and licensing as the market entry strategy to enter foreign
markets.

Joint ventures and licensing are both market entry strategies that companies can use to
enter foreign markets:

Joint ventures
Two or more companies form a new entity to share resources, risks, and rewards in a
foreign market. Joint ventures can help company’s access local knowledge, expertise, and
distribution channels, while sharing the costs and risks of entering a new market. Joint
ventures can also help companies gain access to advanced technology that might be
difficult to create in-house.
Licensing
A company grants a foreign company the right to use its intellectual property, such as
patents, trademarks, or technology, in exchange for royalties or fees. Licensing allows
companies to enter a new market quickly without investing in production or operations.
Q11. Pen down all the factors of Social and Cultural Differences

1. Religion aspects
2. Language
3. Customs
4. Traditions
5. Beliefs
6. Tastes
7. Preferences
8. Social stratifications
9. Social institutions
10. Buying and consumption habits

Q12. Draw a flow chart for the level of culture?

Q13. Explain in detail any one international trade theory.

International trade theories are simply different theories to explain international trade.
Trade is the concept of exchanging goods and services between two people or entities.
International trade is then the concept of this exchange between people or entities in two
different countries. People or entities trade because they believe that they benefit from the
exchange. They may need or want the goods or services. While at the surface, this many
sound very simple, there is a great deal of theory, policy, and business strategy that
constitutes international trade.
Trade Theories:-

1. Mercantilism
2. Absolute Advantage
3. Comparative Advantage
4. Heckscher-Ohlin Model
5. New Trade Theory
 (OR EXPLAIN Absolute Advantage OR Comparative Advantage Theory)

Q14. Write down the functions of International Monetary fund.

Functions:-

1. Surveillance: (like a doctor)

2. Technical Assistance: (like a teacher)
3. Financial Assistance: (like a banker)

Q15. Write a note on Balance of Payment theory.

According to Kindle Berger, "The balance of payments of a country is a systematic record of

all economic transactions between the residents of the reporting country and residents of
foreign countries during a given period of time". It is a double entry system of record of all
economic transactions between the residents of the country and the rest of the world
carried out in a specific period of time.

Features:-
Components:-

1. Current Account
2. Capital Account
3. Reserve Account
4. Errors & Omissions

BOP on current account is a statement of actual receipts and payments in short period.

It includes the value of export and imports of both visible and invisible goods. There can be
either surplus or deficit in current account.

The current account includes: - export & import of services, interests, profits, dividends and
unilateral receipts/payments from/to abroad.

BOP on current account refers to the inclusion of three balances of namely – Merchandise
balance, Services balance and Unilateral Transfer balance.
Q16. Explain the absolute advantage theory by Adam smith with example

REFER GC PDF: - (Absolute Advantage theory by Adam Smith)

Q17. Few standard codes of business ethics prescribed by the governing body. Which are
those?

Code of Ethics: The council of fair business practices (CFBP) established in 1966, by leading
private sector industrialists in western India, adopted the following code of fair business
practices.

Q18. There are two types of barriers in international trade, one is tariff and another is
non-tariff. Draw chart diagram of barriers in trades.
 Q19. What is the meaning of Currency convertibility?

Currency convertibility can be defined as the ability to exchange one currency for another at
a given conversion rate and in terms of the usability of a currency for foreign transactions.
Various degrees of convertibility can be identified, ranging from the extremes of total
convertibility to total inconvertibility. A currency is considered fully convertible when any
holder can convert it into a major international reserve currency at market exchange rates,
which can be fixed or flexible. Examples of fully convertible currencies include the U.S.
dollar, Euro, Japanese Yen, and the British pound.

Q20. Discuss importance of global HRM.

Global human resource management (HRM) is important for companies that operate
internationally because it helps them manage their workforce, support foreign employees,
and improve organizational performance. Global HRM involves:
 Managing employee development
 Integrating HR systems, processes, or data
 Addressing communication and language barriers
 Planning pay and benefits policies
 Considering differences in government regulations and cultural aspects
 Ensuring employees have the resources they need to transition into a new country and
culture.
Q21. Draw a chart of Internalization Stages with brief explanation.

Q22. International financial management is subject to five major external forces. Draw a
diagram with these forces or list down all.

1. Foreign exchange market

2. Currency convertibility
3. International financial markets
4. Balance of payments
5. International monetary system
Q23. There are six characteristics of culture. Write those.

There are six characteristics of Culture.

1. Learned - Culture is not inherited or biologically based, it is acquired by learning and

experience.
2. Shared - People as member of a group, organization, or society share culture it is not
specific to specific individuals.
3. Trans generational - Culture is correlative passed from one generation to the next.
4. Symbolic - Culture is based on the human capacity to symbolize or use one thing to
represent another.
5. Patterned – Culture has structure and is integrated a change in one part will bring
changes in another.
6. Adaptive – Culture is based on the human capacity to change or adapt, as opposed
to the more genetically driven adaptive process of animals.

Q24. How many types of trade theories are there in International business?

Trade Theories:-

1. Mercantilism
2. Absolute Advantage
3. Comparative Advantage
4. Heckscher-Ohlin Model
5. New Trade Theory

Q25. What do you mean by managing diversity? Write advantages and disadvantages of
diversity.

Managing Diversity means establishing a heterogeneous workforce to perform to its

potential in an equitable work environment where no member (or groups of members)
has an advantage or a disadvantage. Managing diversity is a challenge for an international
manager. The challenge is to create a work environment in which each person can
perform to his or her full potential and therefore compete for promotions and other
reward on merit alone. Success in international arena is greatly determined by an MNC’s
ability to manage diversity.

A typical firm today is an amalgam of a diverse workforce in terms of gender, race and
ethnicity. Ex. Wipro, HCL, Kotak India, HLL, HSBC, Infosys

Advantages:-
Disadvantages:-

Q26. Mention the types of Strategic alliance. Pen down the benefits and drawback of the
same in international business?
Q27. Explain the role of Foreign Direct Investments in economic growth. (Application
base)

Foreign Direct Investment, or FDI, is when a company or individual from one country invests
in a business or assets located in another country. This is different from buying stocks or
bonds of a foreign company in the stock market. FDI involves actually owning and
controlling a part of that business.

FDI is a form of cross-border investment. It involves establishing a lasting interest and

control in a foreign enterprise.

Foreign direct investment contributes to the economic development and growth of both the
investor and the host countries. FDI facilitates the transfer of technology, knowledge, and
skills across borders. FDI enhances the competitiveness and innovation of firms and
industries. FDI fosters the cooperation of countries in regional and global value chains. FDI
also influences the political, social, and environmental aspects of the countries involved.
Q28. “Adaptation of the business strategies to the local condition”. Which type of
approach is this? Explain in brief.

Polycentric Orientation

Polycentric Orientation: Basically Multinational orientation, As the company begins to

recognize the importance of inherent (existing in something as a permanent) differences in
overseas market.

Q29. Explain the concept of accounting in international business.

A consolidated financial statement brings together all the financial statements of a parent
and its subsidiaries into a single financial statement. The consolidated financial statement
must reconcile all the investment and capital accounts as well as the assets, liabilities, and
operating accounts of the firms. Consolidated financial statements demonstrate that firms—
although legally separate from the parent and each other—are in fact economically
interdependent. Most of the developed nations require consolidated statements so that
losses can’t be hidden under an unconsolidated subsidiary. The International Accounting
Standards Board (IASB) standards mandate the use of consolidated financial statements.

Currency Risk:-
Q30. Write all major challenges in International Business/Globalization.
Q31. List down the common business ethics expected in international business

Ethics includes:-

1. Bribery/corruption

2. Sale banned products

3. Damaged product

4. Degraded product

5. Illegal entries in the countries

6. Policies

7. Working standards and conditions

8. Work place diversity and equal opportunity

9. Child labour

10. Social responsibility

11. Environmental pollution

12. Employment practices

Q32. State the meaning of foreign exchange. There are majorly three functions of foreign
exchange, which are those?

Foreign exchange means the process of converting one currency into another Foreign
Currencies.

The foreign exchange market is a market in which foreign exchange transactions take place.
In other words, it is a market in which national currencies are bought and sold against one
another.

Functions:

Q33. Global marketing and R &D is important in business. Why?

Global marketing and research and development (R&D) are closely related and important
for business success. Marketing helps R&D determine the right products to develop by
identifying customer needs and gaps in the market. R&D can then use that information to
develop new products and services that meet those needs.

1. Innovation: R&D can lead to new products, services, and processes that can help
businesses grow and increase profits.
2. Competitive advantage: R&D can help businesses stay ahead of market trends and
maintain a competitive advantage.
3. Global markets: Global R&D allows companies to design processes across different
countries, cultures, and languages, which can help them compete in global
markets.
4. Brand reputation: R&D can help businesses understand market needs and trends,
which can help them, project an image of innovation and cater to those needs.

Q34. Write a short note on International Monetary fund with the purpose of
establishment. Also mention the three functions of IMF.

Covered in Question 8 Answers

Q35. Strategic alliances majorly fall in three categories. Write those

Q36. What do you understand with Wholly owned subsidiaries? Give 2 example for the

Same

Wholly Owned Subsidiary is a separate independent legal entity that is 100% owned and
controlled by another company (parent company) and directly works under the guidance
and decision-making of the parent company. It has its senior management to control the
company’s business operations; however, all the strategic decisions at the group level have
been taken by the Parent Company only.
Examples: - Jaguar Land Rover, Microsoft India Private Limited, Daimler India Commercial
Vehicles, Coca-Cola India Private Limited etc.

Q37. Discuss international business strategy of any two companies of your choice.
(Application base question)

Q38. What do you understand with Global Production?

Global production is the total volume of finished products produced by a manufacturer,

including production from all of its manufacturing sites, affiliated companies, and
contracted production. It can also be defined as the production of goods in more than one
location.

Global production involves a broad range of business arrangements and organizational

forms. It includes the interconnected functions, operations, and transactions required to
bring a product from prototyping to final delivery. This is closely related to supply chain
management and is well-suited for on-demand manufacturing.

Global production can be important in international business because it can make it possible
to obtain cheaper labor, more expertise, and richer production inputs. This can reduce the
cost of forming global production networks.

Q39.There is seven major pitfalls of strategic alliances. Write all and Elaborate any one out
of those.

Covered Question 26 Answer

Q40. Pen down main reasons to go for export and import goods and services

1. Profit advantage

2. Growth opportunities

3. Domestic market constraints

4. Competition

5. Governments Policies and Regulations

6. Monopoly Power
7. Spin-offs of International business

8. Strategic Vision