Internal Assessments

Program – MBA
Subject - International Business Environment
Assessment Type – Internal Assessment (Subjective Assignment)
Total Marks - 100
Guidelines:

The response sheet should be in word format which should be uploaded

in the learning management system
A plagiarism check should be done by student through plagiarism tool
provided in the learning management system
Permissible plagiarized limit is 10%. Response sheet found with
plagiarized content above 10% would not be evaluated for the said
assessment.
The said assignment is for 100 marks with 5 questions each. (20 marks
per questions)
Passing criteria is 50% for every assignment.

Questions:
1. What are the international business environment factors?
2. What are the factors affecting foreign direct investment?
3. What is the Nature, Significance, and Scope of Financial
Management?
4. What are the features of the Foreign exchange market?
5. What are the five strategies for negotiating international business
contracts?
1. What are the international business environment factors?

The international business environment is influenced by various factors that

organizations need to consider when operating in global markets. Some key
factors include:

1. Political and Legal Factors: These include government policies, regulations,

trade agreements, political stability, and legal frameworks. Political changes,
such as shifts in government or changes in trade policies, can significantly
impact international business operations.

2. Economic Factors: Economic conditions, such as GDP growth rates,

inflation, exchange rates, and interest rates, play a crucial role in international
business. Organizations need to assess the economic stability and market
potential of different countries before expanding their operations.

3. Socio-cultural Factors: Socio-cultural factors encompass cultural norms,

values, beliefs, and consumer behavior. Understanding the cultural
differences and preferences of target markets is essential for successful
international business operations.

4. Technological Factors: Technological advancements and infrastructure

availability vary across countries. Organizations need to consider the level of
technological development and digital readiness in different markets to
effectively leverage technology for their international operations.

5. Environmental Factors: Environmental regulations, sustainability concerns,

and natural resources availability are important considerations for
international businesses. Organizations need to align their operations with
environmental standards and adapt to local environmental conditions.

6. Competitive Factors: The competitive landscape in international markets is

influenced by factors such as market saturation, industry rivalry, and the
presence of local and global competitors. Understanding the competitive
dynamics is crucial for developing effective market entry and expansion
strategies.

7. Ethical and Social Responsibility Factors: Organizations operating

internationally need to consider ethical practices, social responsibility, and
corporate governance standards. Adhering to ethical guidelines and
demonstrating social responsibility can enhance reputation and mitigate risks.

These factors collectively shape the international business environment and

organizations must analyze and adapt to them to succeed in global markets.
2. What are the factors affecting foreign direct investment?

Several factors can influence foreign direct investment (FDI). Here are some
key factors:

1. Economic Stability: Countries with stable economic conditions, including

low inflation rates, predictable fiscal policies, and a strong legal framework,
tend to attract more FDI. Investors seek stability to ensure the safety and
profitability of their investments.

2. Political Environment: Political stability and a favorable investment climate

are crucial for attracting FDI. Countries with transparent governance, low
corruption levels, and a supportive regulatory framework are more likely to
attract foreign investors.

3. Market Size and Potential: The size and growth potential of a market play a
significant role in attracting FDI. Investors are attracted to countries with large
consumer bases and growing markets, as it offers opportunities for expansion
and profitability.

4. Infrastructure: Adequate infrastructure, including transportation,

communication networks, and reliable utilities, is essential for attracting FDI.
Investors require efficient logistics and connectivity to operate their
businesses effectively.

5. Labor Force: The availability of skilled and educated labor is an important

factor for FDI. Investors seek countries with a well-trained workforce that can
contribute to their operations and drive innovation.

6. Natural Resources: Countries rich in natural resources often attract FDI in

industries such as mining, energy, and agriculture. Access to resources can
be a significant factor for investors in these sectors.

7. Taxation and Incentives: Favorable tax policies, investment incentives, and

special economic zones can attract FDI. Governments often offer tax breaks,
subsidies, or other incentives to encourage foreign investment and stimulate
economic growth.

8. Trade Policies: Openness to international trade and participation in regional

or global trade agreements can positively impact FDI. Countries with liberal
trade policies and reduced trade barriers tend to attract more foreign
investment.

9. Exchange Rates and Currency Stability: Stable exchange rates and

currency convertibility are important for investors. Fluctuations and uncertainty
in exchange rates can impact the profitability and repatriation of investment
returns.

10. Legal and Regulatory Framework: A transparent and efficient legal

system, along with investor-friendly regulations, is crucial for attracting FDI.
Investors seek countries with clear property rights, contract enforcement, and
intellectual property protection.

It is important to note that these factors can vary in importance depending on

the specific industry, investor preferences, and the overall global economic
climate.

3. What is the Nature, Significance, and Scope of Financial

Management?

Nature: Financial management involves the planning, organizing, directing,

and controlling of financial resources within an organization. It encompasses
various activities such as financial planning, budgeting, investment decision-
making, capital structure management, and risk management. Financial
management aims to maximize shareholder wealth by effectively managing
the financial resources of the organization.

Significance: Financial management plays a crucial role in the success and

sustainability of any business. It helps in ensuring the availability of funds for
day-to-day operations, as well as for long-term investments. Effective financial
management enables organizations to make informed decisions regarding
capital allocation, investment opportunities, and risk management. It also
helps in evaluating the financial performance of the organization and providing
insights for strategic planning and decision-making.

Scope: The scope of financial management is broad and encompasses

various areas. It includes financial planning, which involves forecasting and
budgeting for future financial needs. It also involves investment decision-
making, where organizations analyze and select investment opportunities that
align with their financial goals. Capital structure management is another
aspect, which involves determining the optimal mix of debt and equity
financing. Risk management is also a significant component, where
organizations identify and mitigate financial risks. Additionally, financial
management includes financial reporting and analysis, which provides
insights into the financial health and performance of the organization.

In summary, financial management involves the effective management of

financial resources to maximize shareholder wealth. It is significant for the
success and sustainability of businesses and encompasses various activities
such as financial planning, investment decision-making, capital structure
management, risk management, and financial reporting.

4. What are the features of the Foreign exchange market?

The foreign exchange market, also known as the forex market, has several
key features. Here are some of the prominent features:

1. Global Market: The forex market operates on a global scale, with

participants from various countries and time zones. It is a decentralized
market, meaning there is no central exchange or physical location. Trading
occurs electronically over-the-counter (OTC), allowing for 24-hour trading
from Monday to Friday.

2. High Liquidity: The forex market is the most liquid financial market globally,
with trillions of dollars traded daily. This high liquidity ensures that participants
can enter and exit positions easily, without significant price fluctuations.

3. Currency Pairs: Trading in the forex market involves the simultaneous

buying and selling of currency pairs. Currency pairs represent the exchange
rate between two currencies, such as EUR/USD (Euro/US Dollar) or GBP/JPY
(British Pound/Japanese Yen). The most actively traded currency pairs are
known as major pairs.

4. Volatility: The forex market is known for its volatility, which presents
opportunities for profit but also carries risks. Exchange rates can fluctuate
rapidly due to various factors, including economic indicators, geopolitical
events, and market sentiment.

5. Leverage: Forex trading often involves the use of leverage, which allows
traders to control larger positions with a smaller amount of capital. Leverage
amplifies both potential profits and losses, making risk management crucial in
forex trading.

6. Market Participants: The forex market includes a wide range of participants,

including central banks, commercial banks, institutional investors,
corporations, retail traders, and speculators. Each participant has different
motivations and strategies, contributing to market dynamics.

7. Market Influences: The forex market is influenced by various factors,

including economic indicators (such as GDP, inflation, and employment data),
central bank policies, geopolitical events, and market sentiment. These
factors can impact exchange rates and drive market movements.

8. Market Transparency: The forex market is relatively transparent, with real-

time price quotes and access to market data. This transparency allows
participants to make informed trading decisions and monitor market conditions
effectively.

5. What are the five strategies for negotiating international business

contracts?

When it comes to negotiating international business contracts, there are

several strategies that can be employed to ensure a successful outcome.
Here are five commonly used strategies:

1. Preparation and Research: Thoroughly researching the cultural, legal, and

business practices of the target country is crucial. Understanding the local
customs, norms, and legal frameworks will help in developing a negotiation
strategy that aligns with the local context.

2. Building Relationships: Building strong relationships with the other party is

essential in international negotiations. Taking the time to establish trust and
rapport can help in creating a positive and collaborative atmosphere, leading
to more favorable outcomes.

3. Flexibility and Adaptability: Being flexible and adaptable during negotiations

is important when dealing with different cultural and business practices. Being
open to compromise and finding mutually beneficial solutions can help in
reaching agreements that satisfy both parties.

4. Effective Communication: Clear and effective communication is vital in

international negotiations. This includes active listening, asking clarifying
questions, and ensuring that both parties have a shared understanding of the
terms and conditions of the contract.

5. Legal Expertise: Engaging legal experts who are well-versed in

international business law is crucial. They can provide guidance on legal
requirements, contractual obligations, and potential risks, ensuring that the
contract is legally sound and protects the interests of all parties involved.