Directorate of Online Education

ASSIGNMENT
NAME VIJAY BHUSHAN CHANDAN
ROLL NUMBER 2314105151
SESSION JUL - AUG 2024
PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER IV
COURSE CODE & NAME DMBA402; INTERNATIONAL BUSINESS
MANAGEMENT

ASSIGNMENT SET – 1

Q. No. 1: Explain the importance of International Business. Explain the challenges faced while
doing international business.
Ans: International Business is the process of focusing on resources of the globe and objectives of
the organization on global business opportunities and threats, in order to produce, buy sell, or
exchange goods and services worldwide. International business is defined as the trading of
goods, services, capital, know-how and technology between two countries and at a global or
transnational level. This involves transactions of economic resources such as capital, labour,
skills meant for production of goods and services at an international level.
International business plays a crucial role in the global economy for several reasons:
1. Economic Growth: By tapping into international markets, companies can significantly
expand their customer base, leading to increased sales, profits, and overall economic
growth.
2. Access to Resources: Countries can obtain resources that are not available domestically,
whether raw materials, technology, or skilled labor.
3. Diverse Markets: Operating in multiple countries allows businesses to mitigate risks
associated with economic downturns in any single market, leading to more stable revenue
streams.
4. Innovation and Competitiveness: Exposure to global competition encourages
innovation, improving products and services. Businesses must stay competitive to
succeed in diverse markets, driving efficiency and creativity.
5. Job Creation: International business activities create job opportunities both in home and
host countries, fostering employment growth and skills development.
6. Cultural Exchange: International business promotes cultural exchange and
understanding, fostering better international relations and cooperation.
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7. Investment Opportunities: Businesses can invest in foreign markets, benefiting from

different economic conditions, market potential, and favourable regulatory environments.
8. Cost Efficiency: Companies can take advantage of lower production costs in other
countries, optimizing their operations and increasing profitability.
Challenges in international business:
International business presents significant opportunities, but it also comes with a variety of
challenges that companies must navigate to be successful. Some of the key challenges
include:
1. Cultural Differences: Understanding and respecting different cultural norms, values, and
business practices is crucial. Miscommunication or cultural misunderstandings can hinder
business relationships.
2. Legal and Regulatory Compliance: Each country has its own set of laws and
regulations governing business operations, including labor laws, tax policies, and
environmental regulations. Complying with these diverse legal frameworks can be
complex and time-consuming.
3. Currency Fluctuations: Exchange rate volatility can impact profitability. Companies
must manage the risks associated with fluctuating currencies, which can affect costs and
revenues.
4. Political and Economic Instability: Political instability, economic recessions, and
government changes can create an unpredictable business environment. Companies need
to be prepared for sudden shifts in policies or economic conditions.
5. Logistics and Supply Chain Management: Coordinating production, transportation, and
distribution across multiple countries can be challenging. Ensuring timely delivery and
managing inventory levels can be particularly difficult in international markets.
6. Tariffs and Trade Barriers: Import and export duties, quotas, and trade restrictions can
impact the cost and availability of goods. Companies must navigate these barriers to
maintain competitive pricing.
7. Communication and Language Barriers: Language differences can lead to
misunderstandings and misinterpretations. Effective communication is essential for
successful international business operations.
8. Intellectual Property Protection: Safeguarding intellectual property (IP) rights can be
challenging in certain markets where IP laws may be less stringent or enforcement is
weak.
9. Local Competition: Competing with established local businesses that have a better
understanding of the market, customer preferences, and local conditions can be tough for
new entrants.
10. Cost of Entry: Establishing a presence in a foreign market can be expensive, involving
significant investments in marketing, infrastructure, and personnel.
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Q. No. 2: Write short note on following:

1. Impact of Legal Environment on IB
2. Impact of Culture on IB
Ans: 1. Impact of Legal Environment on IB:
The legal environment includes the laws passed by the government as well as the decisions
rendered by the various commissions and agencies at every level of the government.
Most nations have their legal systems based on one of the following:
Common law – Common law applies to the entire world including most countries of the
Commonwealth. These systems are based on judgments in specific cases, and his
legislation.
Code law – here laws are bifurcated into Criminal, Civil and Commercial Codes which are
used to determine all legal matters.
Islamic law – This is also termed theocratic law. The base of this law is taken from the
Koran and blended with the existing common law or civil code provisions of the country.
The important rules that apply to the manner of conducting business in Islamic countries.
Socialistic Law: This law is prevalent and influences regulations in former communist
countries such as the Soviet Union, China, Vietnam, North Korea, and Cuba. Socialist Law
is based on the Civil Law system with major modifications from the Marxist-Leninist
ideology.
Overall, the legal environment shapes how businesses operate internationally, influencing
their strategies, costs, and risk management practices. Understanding and adapting to these
legal frameworks is crucial for successful international business ventures.

2. Impact of Culture on IB:

Culture is defined as the sum total of knowledge, arts, beliefs, laws, morals, customs, and
other abilities and habits gained by people as part of society. Art and human customs,
civilization, and the way of life of a specific society or group are all considered as culture.
Culture involves everything from birth to death and everything in between it. Respecting
every culture is a must.
Culture significantly influences international business (IB) in various ways:
1. Communication Styles: Different cultures have unique communication styles, which
can affect business negotiations and interactions. For instance, some cultures value
direct communication, while others prefer indirect or context-based communication.
2. Business Etiquette: Understanding local customs and business etiquette is crucial. This
includes greetings, dress code, meeting protocols, gift-giving practices, and more.
Missteps in etiquette can lead to misunderstandings and harm business relationships.
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3. Management Practices: Cultural values shape management practices and leadership

styles. For example, some cultures emphasize hierarchical structures and respect for
authority, while others promote egalitarian and collaborative approaches.
4. Decision-Making: Cultural attitudes towards risk, uncertainty, and individual vs. group
decision-making can impact how businesses make decisions. In some cultures,
decisions are made collectively, while in others, individual decision-making is more
common.
5. Consumer Behaviour: Culture influences consumer preferences, buying behavior, and
brand perceptions. Companies need to adapt their marketing strategies to align with
local cultural norms and values to effectively reach their target audience.
6. Workplace Dynamics: Cultural differences affect workplace interactions, employee
motivation, and team dynamics. Understanding these differences can help create a
harmonious and productive work environment.
7. Negotiation Tactics: Different cultures have distinct negotiation styles and practices.
Being aware of these differences can enhance the effectiveness of international
negotiations and lead to more successful outcomes.
8. Social Norms and Values: Social norms, values, and beliefs shape the overall business
environment. Companies must align their operations with local cultural expectations to
gain acceptance and build trust within the community.

Q. No. 3: Write notes on the following:

1. Positive impact of Globalization
2. WTO
Ans:
1. Positive impact of Globalization:
According to business terminologies, globalization is defined as ‘the worldwide trend of
businesses expanding beyond their domestic boundaries’.
According to IMF: “the growing economic interdependence of countries worldwide through
increasing volume and variety of cross border transactions in goods and services and of
international capital flows and also through the more rapid and widespread diffusion of
technology.”
Globalization encompasses the following:
• Expanding the business globally.
• Developing a global outlook of the business by not differentiating between domestic
and foreign markets.
• Locating production and other business facilities based on the global business need.
• Developing products and production volumes based on global market requirement.
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• Global sourcing of factors of production such as raw materials, labour, capital,

machinery, technology, managerial expertise, financing from the best possible source
across the globe.
• Global orientation of organizational structure and management culture.

Benefits Of Globalization:

• Globalization helps in the free flow of capital from capital rich countries to developing
countries resulting in an increase in global investment.
• Globalization facilitates free flow of technology to developing nations and ensures
further Innovations and advancement in technology.
• Increase in capital flow into developing nations results in an increase in
industrialization and spread of production facilities across the globe.
• Consumers get better products at competitive prices.
• An increase in employment opportunities also results in a better standard of living and
balanced development.
• It provides several platforms for international business dispute resolutions which
facilitate international trade.

2. Positive impact of Globalization:

WTO was established on 1st January 1995. In April 1994, the Final Act was signed at a
meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April 1994 was formed
to strengthen the world economy which would lead to better investment, trade, income
growth and employment throughout the world. The WTO is the successor to the General
Agreement on Tariffs and Trade (GATT).

The key objective of WTO is to promote and ensure international trade in developing
countries. The other major functions include:

• Increasing trade capacities of economies by encouraging nations to adopt

discriminatory trade policies.
• Promoting employment, expanding production and trade and raising the standard of
living and income and utilizing the world’s resources.
• Ensuring that developing countries secure a better share of growth in world trade.
• Providing forum for trade negotiations.
• Taking steps and measures to act in cooperation with international Institutions.
• Resolving trade disputes.
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The important functions of the WTO as stated in the WTO agreement are the following:

• Developing transitional economies

• Providing help for export promotion
• Cooperating in global economic policy-making
• Monitoring implementation of the agreement
• Providing forum for negotiations
• Administrating dispute settlement
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ASSIGNMENT SET – 2

Q. No. 4: What is International Financial Management? Explain the types International

Accounting Standards.
Ans: The term International Financial Management refers to managing financial resources in an
international business environment, in a manner in which the organization maximizes returns
and profits. This is achieved through accounting, managing fixed assets, and identifying
income and expenses. Financial management involves recording and maintenance of all
monetary transactions in a standard manner in order to show the financial position and
performance of the organization. Financial Management can be categorized into domestic and
international financial management. Domestic financial management refers to managing
financial services within the country. International financial management refers to managing
and sharing finances between countries.
Key aspects of IFM are:
1. Foreign Exchange Management: Managing currency exposure and mitigating risks
associated with currency fluctuations.
2. International Investment: Evaluating and managing investments in foreign markets,
including assessing political, economic, and financial risks.
3. Capital Budgeting: Analysing and selecting international projects and investments
that align with the company’s strategic goals.
4. Financing Decisions: Sourcing and managing funds from international capital
markets, including evaluating different financing options and costs.
5. Working Capital Management: Managing short-term assets and liabilities in an
international context to ensure liquidity and operational efficiency.
6. Risk Management: Identifying, assessing, and managing financial risks, such as
exchange rate risk, interest rate risk, and political risk.

Types of International Accounting Standards:

International Accounting Standards (IAS) are a set of accounting principles and guidelines
developed by the International Accounting Standards Board (IASB) to provide a common
framework for financial reporting across countries. Some of the key IAS include:
1. IAS 1 - Presentation of Financial Statements: Specifies the structure and content of
financial statements, ensuring consistency and comparability.
2. IAS 2 - Inventories: Provides guidance on the accounting treatment of inventories,
including valuation and cost determination.
3. IAS 7 - Statement of Cash Flows: Requires companies to present cash flow
information, classifying cash flows into operating, investing, and financing activities.
4. IAS 16 - Property, Plant, and Equipment: Prescribes the accounting treatment for
tangible fixed assets, including recognition, measurement, and depreciation.
5. IAS 18 - Revenue: Outlines the principles for recognizing revenue from the sale of
goods, rendering of services, and interest, royalties, and dividends.
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6. IAS 21 - The Effects of Changes in Foreign Exchange Rates: Addresses the

accounting treatment for foreign currency transactions and translation of financial
statements into the presentation currency.
7. IAS 36 - Impairment of Assets: Provides guidelines for identifying and measuring
the impairment of assets, ensuring that assets are carried at no more than their
recoverable amount.
8. IAS 37 - Provisions, Contingent Liabilities, and Contingent Assets: Defines the
recognition criteria and measurement bases for provisions and contingencies.
9. IAS 38 - Intangible Assets: Sets out the accounting treatment for intangible assets,
including recognition, measurement, and amortization.

These standards ensure transparency, consistency, and comparability in financial reporting,

enabling investors and stakeholders to make informed decisions based on reliable financial
information.

Q. No. 5: Explain FDI? Elaborate the advantages and disadvantages of FDI.

Ans: Foreign Direct Investment (FDI) refers to an investment made by a company or individual
from one country into business interests located in another country. Typically, FDI involves
acquiring a significant ownership stake (usually 10% or more) in a foreign company,
establishing new operations, or expanding existing business operations in the foreign country.
FDI is a crucial driver of economic growth, fostering global economic integration and
creating opportunities for cross-border collaboration.
Advantages of FDI:
1. Economic Growth: FDI stimulates economic growth by bringing in capital, technology,
and expertise. It boosts productivity and enhances the host country's economic
development.
2. Job Creation: FDI creates employment opportunities, leading to improved living
standards and income levels in the host country. It also contributes to skill development
and workforce training.
3. Technology Transfer: Foreign investors often introduce advanced technologies and
innovative practices, which can enhance the host country's technological capabilities and
overall competitiveness.
4. Increased Exports: FDI can lead to the establishment of export-oriented industries,
boosting the host country's export performance and improving its trade balance.
5. Infrastructure Development: FDI can drive the development of infrastructure, such as
transportation, telecommunications, and energy, which benefits the overall economy.
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6. Access to Global Markets: Local businesses may gain access to international markets
through partnerships with foreign investors, increasing their market reach and growth
potential.
Disadvantages of FDI:
1. Repatriation of Profits: Profits generated by foreign investments are often repatriated to
the investor's home country, leading to a potential outflow of capital from the host country.
2. Loss of Control: FDI can lead to foreign control over key industries and sectors,
potentially affecting national sovereignty and decision-making.
3. Economic Dependence: Heavy reliance on FDI can create economic dependence on
foreign investors, making the host country vulnerable to changes in investor behaviour or
global economic conditions.
4. Market Disruption: The entry of foreign companies can disrupt local markets, posing
challenges for domestic businesses that may struggle to compete with well-established
international firms.
5. Social and Environmental Concerns: FDI projects may have social and environmental
impacts, such as displacement of local communities, exploitation of labour, and
environmental degradation.
6. Inequality: FDI benefits may not be evenly distributed, potentially exacerbating income
inequality and regional disparities within the host country.

So, Foreign Direct Investment (FDI) plays a crucial role in the global economy, offering
benefits such as economic growth, job creation, technological transfer, and market access for
both investors and host countries. However, it also brings challenges, including the risk of
economic dependency, loss of control over local industries, environmental concerns, and
negative impacts on smaller local businesses.
Ultimately, the success of FDI depends on how well the host country manages these
opportunities and challenges, often through policies that promote sustainable economic
development, protect local industries, and ensure fair treatment of workers and the
environment.
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Q. No. 6: Write notes on the following:

1. Recruitment of Expatriates
2. Export Promotion Schemes
Ans:
1. Recruitment of Expatriates:
Recruiting expatriates involves hiring employees from one country to work in another,
typically for multinational companies expanding their operations globally.
Here are some key aspects:
1. Selection Criteria: Expatriates are usually selected based on their technical skills,
international experience, cultural adaptability, and leadership qualities. Companies look
for individuals who can navigate different cultural and business environments effectively.
2. Training and Development: Pre-assignment training is crucial for expatriates. This may
include language training, cultural orientation, and business practices of the host country.
Ongoing development and support help expatriates adapt and succeed in their new roles.
3. Compensation and Benefits: Expatriates often receive attractive compensation packages,
including relocation allowances, housing, education for dependents, healthcare, and
hardship allowances to make the transition smoother.
4. Support Systems: Providing strong support systems, such as mentorship programs,
regular communication with the home office, and assistance for families, can enhance
expatriate success and well-being.
5. Repatriation: Planning for the expatriate's return to their home country is essential.
Companies must ensure that skills and experiences gained abroad are utilized effectively
and that the expatriate's reintegration into the home office is smooth.

The recruitment of expatriates is an essential part of managing international operations for

multinational companies. By selecting individuals with the right skills and cultural sensitivity,
businesses can successfully navigate global markets, transfer knowledge, and manage cross-
border operations.

2. Export Promotion Schemes:

Export promotion schemes are government initiatives designed to encourage domestic
companies to export goods and services. These schemes aim to boost a country's exports,
improve its trade balance, and enhance economic growth. Key features include:
1. Export Incentives: Financial incentives, such as export subsidies, duty drawbacks, and tax
exemptions, reduce the cost of exporting and make domestic products more competitive
in international markets.
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2. Trade Facilitation: Simplifying export procedures, reducing bureaucratic hurdles, and

providing logistical support help streamline the export process, making it more efficient
and less time-consuming.
3. Market Access Assistance: Governments may provide support for market research, trade
missions, and participation in international trade fairs, helping companies identify and
enter new markets.
4. Export Financing: Access to affordable financing options, such as export credit,
guarantees, and insurance, mitigates financial risks and provides working capital to
exporters.
5. Quality Standards and Certifications: Assistance with meeting international quality
standards and obtaining necessary certifications ensures that domestic products are
accepted in global markets.
6. Capacity Building: Training programs and workshops enhance the skills and knowledge of
exporters, helping them navigate international trade regulations, logistics, and marketing
strategies.
7. Export Promotion Councils: Establishing specialized agencies or councils dedicated to
promoting exports can provide focused support, advocacy, and coordination for export
activities.
Export promotion schemes play a vital role in enhancing a country’s international trade by
providing financial, logistical, and educational support to businesses aiming to expand their
global reach. These schemes help improve competitiveness, foster economic growth, and
diversify markets, benefiting both businesses and national economies.