Con.9538-13 (FURTHER REVISED COURSE ) VT-14756(3 Hours) [Total Marks : 60]

International Business

N.B. (1) Question No. 1 (case) is compulsory (2) Answer any four questions out of the remaining six questions.(3) Each of these questions (other than question 1) has internal choices (a) or (b) Please answer any one only. Each question carries 10 marks. (4) In all, answer 5 questions, including question 1.

1. Case : LG Electronics in Emerging Markets: Korea became synonymous with high quality, innovative consumer electronics products. Koreans beat established Japanese brands like Sony, Sharp, Panasonic to claim world leadership in most consumer electronics products. LF Electronics LG Electronics pioneered the growth of Korean electronics industry spurred by present Ponk Chung Hee’s vision for global leadership in key industries like consumer electronics, LG moved to capture the developed markets by 1980’s. However, their early forays failed as dealers in the west relegated LG to the backroom, as they did not have the design, styling, brand equity required by discerning customers in the west. Chastened by this, LG invested in creating world class products. Since the home market was small, Korean companies had to find foreign markets. Foray to Emerging MarketsAfter failing to make any dent in the developed American/European markets, LG moved to Brazil in the 1980’s and started manufacturing television and VDR’s in its factory at Manaus and Taubate. In 1999, The Brazilian Currency, Real became unstable, forcing many foreign companies to close, but LG stayed and converted Brazil into a manufacturing hub of North and Latin America. LG become one of the longest exporters from Brazil. It localized its strategy, sponsoring the wildly popular Soccer Championships there creating huge brand awareness and adopted a premium positioning for its products.

LGE India Ltd. Was established in 1997 with manufacturing in Greater Noida, near New Delhi. LG focused on customizing products to local needs, though the product platforms, design, engineering and R & D remained in South Korea. Local R & D would adopt to local conditions. For example, its “Golden Eye” technology would automatically sense the level of ambient lighting and adjust brightness accordingly to adjust for fluctuating power supply in India. It focused on rural markets with a regional distribution system going to Tier-2 and 3 towns in India. It also provided mobile services centers, sponsored cricket matches and provided excellent repairs

80% of local employees were Indians, only a handful of Koreans were in top management positions. Only major investment decisions needed Head Quarters approval, the local office had freedom on day to day decisions.

LG Invested heavily in Russia by 1998-99; by 2004, it had several localized offerings such as a hot/cold air conditioner that could be used around the year in 2005, LG

received the “Narodnaya Marka” Logo meaning it was considered a National Brand in Russia.LG entered China using strategy similar to India and Brazil by 202, it had 12 manufacturing plants in China. 98% of all personal were Chinese and established a R & D center in Beijing in 2002, it remained in China despite the severe “ SARS” crisis when many foreign companies fled, demonstrating its sense of corporate responsibility.

The Changing Landscape(i) Competition within emerging markets became severe with Samsung and domestic players moving aggressively to gain market share. LG lost market share to Samsung in some categories in these markets. (ii) Japanese held their share in developed markets. Europeans dominated the white goods segment in USA.(iii) Apple and other players leveraged their strength in software to launch innovative products in Consumer Electronics. LG wad very weak in software. The competence in consumer electronics was shifting from hardware to software

Questions:(a) What strategy did LG adopt in its globalization drive?(b) How did LG succeed in Emerging markets?(c ) Should LG remain focused on emerging markets since it has not penetrated large parts of Africa and the Middle-East or should it continue its quest for dominating the developed markets of Europe and USA?(d) Are the lessons learnt in the emerging markets transferable to developed markets?

Attempt any four of the remaining six questions. Each question carries 10 marks.

(a) Discuss the International Product Life Cycle with suitable examples 10OR

(b) Discuss the Key Provisions of WTO in International Trade. 10

Q.3. (a) Discuss the various modes of entry in International Markets with their Pros and Cons. 10

OR(b) “Globalization has led to huge income disparities”- Discuss.

Q.4. (a) Discuss Porters Diamond model of National Competitiveness. 10OR

(b) Explain some Non-tariff barriers in International trade with examples. 10

Q.5. (a) Discuss the role of Free Trade Areas in International trade. 10OR

(b) Discuss ASEAN and NAFTA, explaining their relative advantages in trade 10

Q.6. (a) “China attracts several times the FDI as India”- Discuss 10OR

(b) Discuss the theory of Comparative Advantage with suitable examples 10

Q.7. Write short notes (any Two) :-(i) TRIPS(ii) Purchasing Power Parity(iii) MERCOSUR(iv) International HRM.

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Con . 9198-12 International Business TG – 5977FURTHER – REVISED COURSE

(3 Hours ) Total Marks : 60

N.B. : (1) Question No.8. Case Study is compulsory and carries 20 Marks.(2) Attempt any four from question No’s 1 to 7 each carry 10 marks.

1 What are the various strategies for entry and operation in international business? Give suitable examples in brief for every strategy.

2. Explain Raymond Vernon’s Product Life Cycle Theory in international trade. Illustrate how will it help developing countries.

3. Explain the characteristics of MNCs. How are they different from domestic companies. How do MNCs take advantage in emerging economics like India and how do thy benefit these economics?

4. “WTO is more complex than removing non-tariff barriers and reducing tariff barriers”- discuss the above statement in the context of its various provisions impacting developing countries.

5. Discuss various theories of Foreign Direct Investment.

6. Describe the Political, Social, Economic and other factors in the international business environment. How do these affect the country selection for new companies planning to enter international markets.

7. Answer any TWO of the following

a. Offshoring / Outsourcing in International Businessb. Dumping and Anti –Dumping measuresc. Most Favored Nations (MFN)d. E-Commerce

8. CASE STUDY : -

Nestle with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestle and is today the World’s biggest food and beverage company. Sales at the end of 2010 were around CHF 100 billion with a net profit of over CHF 8 billion. It

employs around 230,000 people and has factories in a almost every Country in the world.

HistoryIn the 1860s Henri Nestle, a pharmacist developed a food for babies who were

unable to breastfeed. His first success was a premature infant who could not tolerate his mother’s milk or any other substitutes. People quickly recognize the value of the new product and soon Farine Lactee Henri Nestle was being sold in Europe. In 1905 Nestle merged with Anglo Swiss Condenses Milk Company. By early 1900, the company was operating factories in US, Britain, Germany and Spain, world War I created new demand for dairy products in the form of government contracts. By the end of war Nestle’s production was more than doubled. After the war, governments contracts dried up and consumers switched back to fresh milk. However Nestle’s management responded quickly streamlining operations and reducing departments. In 1920, Nestle saw first new products chocolates. Nestle also felt the effect of world war II, the war helped with the introduction. Of Nestle’s newest product- Nes café which was the staple drink for US Military. The end of the war was the beginning of dynamic phase of Nestle Growth accelerated and companies acquired. Nestle’s improved bottom line in 1984, allowed the company to launch a new round of acquisitions. The most important being American food giant carnation, the first half of 1990’s proved to be favorable for Nestle as trade barriers crumble and world markets developed into integrated trading areas.

Business principles / strategies Since Henri Nestle developed the first milk food for infants in 1867 and saved the life of a neighbor’ s child, Nestle aimed to build a business an sound human values and principles. While Nestle corporate business principles will continue to evolve and adopt to a changing world, basic foundation of the company is unchanged from the time of the origin and reflects the basic ideas of fairness, honest, and a general concern for people.

Questions: i) How did Nestle follow a variety of strategies for expansion?

ii) How did the drives of globalization help Nestle to grow at a faster rate?

iii) Why did Nestle concentrate on responsibility to the community?

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INTERNATIONAL BUSINESS UNIVERSITY 28 th Nov, 2011

Con. 5913-11 (OLD & REVISED COURSE) EN-3442 FURTHER REVISED COURSE) (3 Hours) [ Total Marks : 60N.B. : (1) Question No. 10 is compulsory and carry 20 marks. (2) Attempt any five Questions including Question No. 10 which is compulsory. (3) All other four questions carry 10 marks each. Paper I

1. Define Globalisation . Explain with examples, the driving and restraining forces of globalisation.

2. Peter Drucker observed that while the international economy is regulated by national government, the transnational economy is a borderless world economy regulated by global institutions. Comment,

3. Export or physical movement of goods and services alone can’t justify international business.Describe various other market entry strategies with examples.

4. Why is FDI important for host and home country ?Discuss the FDI environment in India. Also suggest how to increase inward FDI for the quicker economic development .

5. How can the Porter’s Diamond model of national competitive advantage be used to assess strategies advantage for India in agro based product?

6. “WTO aims at removing non tariff barriers and reducing tariff barriers,” If so , critically evaluate achievements and problem areas which WTO has to encounter in order to succeed in the above objective.

7. Discuss any two of the international issues:a) Intellectual property rightb) Current trends and application of purchase power parity theory.c) Product life cycle theory in international trade.d) G 20 and its impact on India’s foreign trade.

8. Most Favoured nation (MFN) status, boon or bane? “revolution in international logistics have shrunk the world into a global village.” comment.

9. Examine opportunities for Indian business house to prosper in African bloc.

10. Case study ( Compulsory)

The public sector Indian Oil Corporation (IOC), the major oil refining and marketing company which was also the canalizing agency for oil import and the highest ranked Indian company in the

fortune 500, in terms of sales, planned to make foray into the foreign market by acquiring a substantial stake in the Balal Oil field in Iran of the Premier oil. The project was estimated to have recoverable oil reserve of about 11 million tones and IOC was supposed to get nearly four millions tones.

When IOC started talking to the Iranian company for the acquisition in October 1998, oil price were at rock bottom ( US$ 11 per barrel ) and most refining companies were closing shop due to falling margin. Indeed a number of good oil properties in the middle east were up for sale. Using this opportunity, several developing countries “ made a killing by acquiring oil equities abroad.”

IOC, being a public sector company, needed Government’s permission to invest abroad. Application by Indian company for investing abroad is to be scrutinized by a committee represented by the reserve bank of India and the finance and commerce ministries. By the time the government gave the clearance for the acquisition in December 1999 9(i.e. more than a year after the application was made), the price had bounced back to US $ 24 per barrel. And the Elf of France had virtually took away the deal from under IOC’s nose by acquiring the Premier Oil.

The RBI, which gave IOC approval for US $ 15 million investment, took more than a year for clearing the deal because the structure for such investment were not in place, it was reported.

1. Discuss internal, domestic and global environments of business revealed by this case.2. How Elf, France could acquire Premier Oil in time? Even if Elf would not have acquired, what

would have been the impact of the delay in the clearance on IOC?3. What are the major issues confronting the domestic government in concluding the overseas

investments of similar nature ? Please list out your solution in this regard.4. What are the lesson to be learned of this case?

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UNIVERSITY QUESTIONPAPERINTERNATIONAL BUSINESS

NOVEMBER – 2010

N.B. : 1) Question No 8 (Case) is compulsory 2) Attempt any five questions including Question No.8 which is compulsory

3) All questions carry equal marks.

1. International Business is more complex than Domestic Business. Define International Business; State it’s objectives and give an overview of International Business comparing it with domestic business.

2. a) Explain David Ricardo’s Theory of Two Country Two Products Model of International Trade theory. State the limitation of the theory

b) Explain the salient features of Modern Strategic Trade Theory and compare it with Theory of Natural Advantage and Theory of Acquired Advantages.

3. Country Risk and Political Risk Studies are important before one enters International Business. Explain in detail the process of Country Risk and Political Risk analysis.

4. Define Globalization. Explain in detail the process of Globalization, the stages and phases of Globalization and the Role of FDI in Globalization.

5. WTO’s main objective is to promote world trade. Trace the history of WTO. State five basic principles of WTO explain the organizational structure of WTO and its impact (both positive and negative) on India

6. Multinational Corporation is regarded as Double Edged Sword to any economy. Define MNC. Discuss various models of MNC’s state the advantages and disadvantages of MNC highlighting the problems faced by MNC and its role in Economic Development of India

7. Write short notes on any thereof the following :-a) PPP (Purchase Power Parity) Theory and its role in International Business.b) NAFTA Trade Blockc) Five Environmental factors in International Businessd) Three different modes of doing International Business other than imports and

Exports.

8. CASE STUDY : Who will be Master of Planet Retail

SAM WALTON began Walmart, the world’s largest retailer, in 1962. Head quartered in Bentonville, Arkansas Walmart was built on the policies of “Everyday low Prices” and a 100 percent customer satisfaction. Guarantee. Walmart provided the lowest prices, on average, among American retailers, and directed the organization to achieve superior customer satisfaction. He had previously worked for the JC Penney Company and it has been reported that Mr.Penney once told Sam that he did not have a future in retailing. Walton’s views on retailing were iconoclastic and industry defining in the Untied States.

With over 3,000 stores in the United States Walmart has begun an aggressive expansion into the international marketplace. Walmart has over 1,500 stores in Canada, Mexico the UK, Germany, South Korea, China, Brazil and Argentina, it also operates a small number of stores in a few other counties through joint ventures, walmart’s recent entry into the European market (Primarily through acquisition )has caused anxiety, and in some cases panic, among European retailers. Walmart has larger sales than its major competitors Carrefour, Metro AG and Ahold combined. Approximately 80 percent of Walmart’s stores are in the United States.

Carrefour, the second largest retailer in the world, was started in France when two brothers Jacques and Dennis Deforey, who were in the grocery business partnered with Marcel Fournier, who owned a department store, known for its extreme attention to detail and the ability to cater to local tastes, Carrefour established itself as the major retailer in Europe. Carrefour now has over 6,000 the Caribbean, Africa and the Middle East. Carrefour attempts to localize its operations as much as possible and uses few expatriates. Approximately 80 percent of store sales come from outside its home country, France.

Carrefour’s global strategy involves careful study of local markets and careful attention to local customs. For example in China Carrefour cuts its vegetable vertically, not horizontally, to avoid an image of bad luck among its Chinese customers. Carrefour has been a pioneer in the concept of “Store Clustering” internationally, altering its product mix, store facilities, and prices to suit different economic regions, Carrefour is the largest foreign retailer in China and sees the Asian market as critical to its continued success. Carrefour has 226 stores in Asia, compared to Walmart’s 59 stores. One quarter of Carrefour’s new store growth comes form the Asian market.

Walmart is much stronger company financially and it has deep prockets for international expansion. Its everyday low price concept has been a very viable strategy, and Walmart pioneered creative and successful approaches to supplier management and technology integration. In the United States, Walmart has huge scale economies and excellent logistical operations. In terms of domestic operations, Walmart has a very impressive 22 percent return on shareholder equity.

Internationally, walmart has experienced less success. International sales account for only about 20 percent of Walmart’s total revenue and its return on assets for international operations has been considerably lower than for its domestic operations. In Europe, Walmart faces strong unions. Increases regulatory constraints, and weak scale economies, the ability to export its everyday low price concept oto Europe is being challenged, especially in Germany. The everyday low price concept has also not been effective in Japan, where Walmart operates a joint ventures with Seiyu. Man Japanese associated low prices with lower quality goods.

The world’s largest retailer hopes to match its domestic success internationally, and many analysts believe it has the financial and managerial ability to do so. On the other hand, Walmart lacks the international experience of Carrefour and is a latecomer in many markets where Carrefour is well established.

Questions : 1) Which international strategy does Walmart follow? Which international strategy

does Carrefour follow? Which do you feel is a better strategy for global expansion?

2) Can Walmart Learn anything from Carrefour? Can Carrefour learn anything from Walmart’s success? Explain.

3) Which retailer, in your opinion, will win the battle for global leadership?

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CON . 4979-09 INTERNATIONAL BUSINESS-2009 DS-5729 (3 HOURS) TOTAL MARKS :60N.B. 1) Answer any four questions out of seven questions. 2) Question 8 (case ) is compulsory. 3)Candidates are required to give clear concepts, illustration, examples and analysis.

1. Multinational Corporations contribute immensely for the development of economies in the world’-discuss with illustrations.

2. discuss the various methods and models of entering and operating in international business with merits and demerits of each method.

3. 3.what do you mean by risk analysis and , to what extent companies use this tool for framing policies in international business both at the time of entry and operation ?

4. Write short not on the following:--

a) Balance of Paymentb) Free trade Agreementc) Trade Barriersd) International Logistics

5. Foreign Direct Investment has become an effective resource mobilization avenue as compared to foreign Institutional investment. ‘’ Justify the statement with example and criteria for selecting investment destination from investor’s point of view.

6. ‘’ASEAN region is as attractive destination for India for trade, investment and manufacturing specially, in recent period.’’- Discuss the statement with business opportunities and challenges.

7. ‘’Competitive advantage of nation , pronounced by Michael Porter has a complete functional value, management inputs and strategic relevance in today’s Global Business.’’-Discuss the statement with illustrations.

8. CASE STUDY : Pharma Offshoring Market : A Bright Future for India

Business Process Outsourcing, Knowledge Process Outsourcing and Legal Process Outsourcing have dominated Indian scene in the current decade. During the close of current decade India will witnesses an another major sunrise segment in the business is Fharma Offshoring. Pharmaceutical offshoring in the country is poised to become a$ 2.5 billion, nearly Rs. 12,000/- cror opportunity by 2012, according to Zinnov Management Consulting.

A beneficiary segment, the already booming clinical trials industry, alone will set to become a $ 608-million (nearly Rs 3,000 crore) industry by 2012. RISING R & D COST ABROADA key driver of offshoring or outsourcing is the rising cost of R & D destinations such as India, China and other Asian Countries. On the uptrend is the offshoring of processes of the entire drug development value chain. Other areas are clinical trials, discovery research ,clinical data management, bio-statistic, medical writing, marketing and sales. TAENT AND COST RELATIONSHIP

Offshoring itself is aided by the rich pharma talent pool of 13.5 million science graduates and the spread of pharma educational institutes. There may be a demand for 1.6 lakh pharma translators by 2010, spurred by increased number of clinical trials that global majors are conducting in the country.

Another incentives, is the cost of basic production in India , which is up to 50% lower than in the US FDA approved plants. It can be achieved at 30-50% lower cost than in the established markets in Europe. Contract manufacturing worth $ 680 million was done in India in 2008 and may grow at 15%.

Tax incentives, though laws on data security and intellectual property related issues have also helped along with approval of fharma SEZs, all enabling the growth of the Pharma industry, according to the report of Indian Pharma Offshoring Landscap (POL).

Zinnov’s CEO, Mr. Pari Natarajan said, ‘’Today, pharmaceutical space is one of the most happening industries globally and India has a potential to become one of the key global player and also backbone of Offshore services . the influx of outsourced work from global pharmaceutical companies has given the necessary impetus for the creation of pharma SEZs which would be one of the key drivers of outsourced Pharmaceutical services growth in the coming years.’’

The domestic drug industry, growing at over 7% CAGR is heading towards a $ 12 billion, nearly Rs.54,800 crores approximately. By 2010, it is expected to shift from being domestic led to export driven. All the Indian companies such as Cipla, Torrent, Cadila, Himalayas, Dr. Reddy’s Lab and Arabindo Pharma are physically present in every continent in the world. This has brought goodwill through Indian capability in this space.

Mr. Rishikesh Mandilwar, the Director, Zinnov, said, ‘’Clinical trials today dominate the offshoring market landscape followed by clinical data management. Marketing and sales is the another key component of the drug development value chain and is currently a $ 100 million market, which is expected to grow at a CAGR of 36% till 2012.’’

Yet , Indian Pharmaceutical companies need to penetrate further in the generics market in the regulated countries and also increase their investment in R & D to gain expertise in higher value chain process. In the BPO and KPO segment , India was well prepared to focus well before other counterparts and grabbed the business opportunities against it, counterparts. A number driver such as policies, education, business environment , infrastructure ,stability of the government and payment modes play a catalytic role to bust this sector in India. The concern is, ‘’Well India maintain the current dominant position consistently for the whole decade next ?

Questions :1. Discuss the competitive advantage of India in pharma Offshoring markets.2. Name major potential players who can succeed in such an avenue.3. Discuss various strategies that can be adopted to win offshoring business.4. Briefly mention various functions involved I pharma offshoring.

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CON. 5273-08 INTERNATIONAL BUSINESS- 2008 BB-8525 UNIVERSITY QUESTION PAPER Duration : 3 hours [ total marks : 60]

N. B. 1) Answer any four question s out of seven. 2) Question 8 case is compulsory. 3) Candidates are required to give clear concepts, illustrations, examples and analysis.

1. What is globalization? how to global organizations emerge to enjoy global leadership in their business ? Give relevant current illustration from the global organizations.

2. Why do companies and the countries enter into international business when the opportunities exist in the domestic business?

3. Write short note on :-a) Foreign exchange risks.

b) Trade barriers .c) Intellectual property rights .

4. ‘’Modern trade theories are essential for formulating business strategies at macro level in companies ‘’- discuss in detail only relevant three trade theories.

5. Discuss major objectives, agreements and achievements of WTO and the issues encountered by WTO at the end of Dora round.

6. ‘’NAFTA is emerging as an effective trade partner for India despite of global slow down ’’ if so, categorize major sectors and business opportunities for Indian business houses to prosper in future in the NAFTA bloc.

7. Enumerate all the challenges encountered by global human resources division operating in cross border business environment .

8. Case study : FIPB (Foreign Investment Promotion Board ) nod for 30 FDI-boosting proposals

Foreign direct Investment destinations are changing. Investors are now opting for long term projects.The slow down is major challenges throughout the world . despite all these facts India is the offering a great holding companies have been cleared by the Foreign Investment Promotion board (FIPB) in the past couple of months . the proposals involve conversion of an operating company into a operating cum-holding company (OHC) to facilitate downstream investments.

The move is significant since it could boost FDI inflows at a time FII money worth $ 12 billion has left the bourses. The clearance of such proposals increased at least 50% this year compared to last year.

The board is also providing clearances to companies that have made downstream investment without prior permission. Clearance with retrospective effect is being provided in such a cases subject to investment policies of RBI.

Some holding company proposals approved by FIPB in the last two months cover projects such as Essar Global –Asia Motor-works, Adani Power, Mauritius-based private equity major TPG Holdings, Suzio Energy and Krishnapatnam Port.FIPB last week cleared Asia Motor-works proposal for induction of foreign capital worth Rs 590 crores from Essar Global through formation of a holding –cum-operating company. The Indian company would now issue convertible debentures and preference share to Essar Global worth Rs, 590 crores .

Similar approvals were given to TPG to make downstream investments worth Rs 800 crores through a holding company for carrying out investment operations in India. The board also approved Suzion proposal to setup a holding company to make downstream investment in wind turbine energy systems. With FIIS pulling out, officials feel FDI is the only route for boosting capital flows. Hence, approvals are being put on fast track.

The expedite clearance of FDI proposals , the board is also rejecting objections raised by the revenue department. Overruling objections from the department of revenue , the Essar Group’s

Cayman Island-based holding firm Essar Global received FIPB approval for its proposed investment in trunk making company, Asia Motor works. In many other cases, the board has given clearance with the observation that the department could continue with investigations. Once FIPB was cautious in approving every proposals. Now it has become so liberal. There are so many initiatives taken by both the central and state government to attract

FDI. Still the confidence level is low amongst American and European investors before deciding to invest in India as compared to other counterparts . hence , holding companies of business houses of India are slowly becoming major investors and such as investment becomes a boon while major chunk of the capital is pulled out by FIIs.Question:

1. Enumerate various parameters the investors considers prior to investing in any country.2. Discuss the difference between Foreign Institutional Investment (FII) AND Foreign Direct

Investment (FDI) and why FIIs are pulling out the investment from India .3. Name few sectors in India and the reasons for attracting FDI as a fast track capital flow.4. Categorize five major challenges still hampering FDI inflow.

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Con 2154—08 International Business -2007 BB--7195 University Question Paper Total Marks : 100

Note 1) Question number 8 is compulsory 2) Answer any five question including question no. 8 3) All question carry equal marks.

1. What is international Business ? State and explain the forces that are helping internationalization of business. Can it be said that international business has not only encouraged global growth and prosperity but has also resulted in creation of international financial stability. Explain with examples.

2. Define country risk and state , how political and economic risk associated with a country can be evaluated?

3. By using appropriate examples, explain various mode of entry into international business.

4. In your opinion which contemporary international trade theory is most relevant and practical for the purpose of explaining the reasons for growth in world trade? Give reason for your answer.

5. Why is FDI considered important for developing countries. What are the factors that contribute to the growth of FDI or FII investments in an economy? In your view among the two which type of investment is better for India and why?

6. Appreciation of rupee has created trouble for Indian exporter and certain companies state and explain , how pharma export companies and BPO/KPO sector companies can deal with this scenario?

7. Write short not on any two of the following :--a) EMUb) TRIPSc) US recession and its impact on Indiad) Reason for increased M&A activities of companies from BRICS countries.

8. Case Study:Indian companies have been acquiring businesses abroad at a dazzling pace,, and have been on a buying spree in US and Continental Europe in their quest to become global players. Indian outbond deals, which were valued at US $0.7 billion in 2000-01, increased to US $4.3 billion in 2005, and crossed US $15 billion in 2006. Almost 99 per cent of acquisitions were made with cash payments. These acquisitions cover the entire spectrum from small software companies acquired by our IT majors for a few million dollars, to the mammoth deals such as TATA-Corus for US $ 12 bn.This enthusiasm for M& A must be set against the harsh realities, that most acquisitions worldwide fail to create value and are typically nothing more than a wealth transfer to the shareholders of the target firm. BCG consultant, Mark Ironer, an internationally acclaimed experts in the field of mergers and acquisitions found that two-third of the 168 deals between 1979 and 1990 which he analysed, destroyed value for shareholders. A report published by the Boston consulting group in July 2003 indicated that out of the 277 big M & A deals in America between 1985 and 2000, 64 per cent destroyed value for the acquirers shareholders at the time of announcement and 56 per cent continued to do so two years after the deal. Quit clearly, major acquisition have to be handled carefully because they leave little scope for trail and error and are difficult to reverse. The risk involved are not merely financial. A failed mergers can disrupt work processes, diminish customer confidence, damage the company’s reputation causes employee to leave and result in poor employee motivation levels.Acquirers often make two major blunders. One is the tendency to lay too much stress on the strategic, unquantifiable benefits of the deal. This result in overvaluation of the acquired company leading to what is called the winners curse. The second is the tendency underestimate the challenges involved in integration. As s result, the actually realized synergy turn out to be short of projected ones.

Many companies confidently project substantial cost saving before the merger. But the underestimate the practical difficulties involved in realizing them. For example, a job may be eliminated, but the person currently on that job a may simply be shifted to another department. As a result, the headcount remains impact and there is no coast reduction.

Sometime merger is finalized hoping that efficiency can be improved by combining the best practice and core competencies of the acquiring and acquired companies. Cultural factors may, however, prevent such knowledge sharing. The Daimler Chrysler merger is a good example. If

generating saving is not easy, revenue growth – the reason given to justify many merger- is even more difficult. In fact, growth may be adversely affected after a merger, if customer or competitor reaction are hostile. When Lockheed Martin acquired Loral, it lost business from important customer such as McDonnel Douglas, who were Lockheed’s competitors .So companies must also look at the acquisition in terms of the impact it makes on competitors and the possibility of their retaliation.

In India, too some acquirers have got into trouble because of the high premium they paid. Tea reportedly paid £ 100 million more than the second highest bidder when it acquired the UK based Tetley for £ 274 million in a leveraged buyout. To service the additional debt burden which, Tata Tea took, the company needed to realize cash flow of at least £ 48 million per annum whereas cash flow where only 29 million in 1999. Almost immediately after the acquisition , the situation turned worse when retail prices fell in the UK. In 2001, the Tatas had to inject an additional 30 million to restructure the debt which was becoming increasingly difficult to service. During the year, Tetley’s cash flow were only £ 26.4 million, the interest payout being £ 23.3 million.

In their obsession with growth, companies often strike M&A deals of questionable merit. A dispassionate analysis of the potential benefit and pitfalls involved is important before going ahed with a merger.

1. State and explain the dangers which are involved in an international merger and acquisition deal.2. Explain how pitfalls involved in M&A can be avoided by the Indian companies.

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CON / 2013—07 INTERNATIOANL BUSINESS -2007 BB-8774 MMS IV SEM UNIVERSITY QUESTION PAPER (3 Hours) [Total Marks :100]

N.B. :1) Question No.8 is compulsory. 2) Answer any five questions including Q. No.8. 3) All question carry equal marks

1) Discuss the economic, culture, social political and technological environment of International business as it prevails toady. Draw lessons for Indian companies wishing to go global.

2) Why is FDI important for host and home country ? Discuss the FDI environment in Chain and Indian. Draw lessons for India to increase inward FDI.

3) Discuss the contemporary theories of international trade with suitable example. How can the Porter’s Diamond Model of competitive advantage be used to assess competitive advantage for India for fresh fruit and vegetable?

4) Why is Rupee strengthening with respect to Dollar in the last few weeks?What are the tools available to India export companies t protect them from the risk of falling dollar?

5) Multinational Enterprises are a bane or boon ? justify your answer with examples. Discuss the example of an Indian multinational, which has helped the host country, company and India.

6) Discuss any two of the followinga) Honkong round of WTO negociationsb) Ethnocentric and Polycentric orientation of MNEsc) Political risk analysisd) Country selection for international business.

7) Write short note on any two of the following:a) Green and Amber Subsidies under WTOb) IMF and World bank c) SAARC and SAFTAd) Types of multilateral agreements

8) Read the case “ How the new multinational are remarking the old” given bellow and answer the following questions.a) What has led to the rise of multinational enterprises (MNEs) from developing countries?b) How should MNEs from developed countries response to the emerging challenges ?

How the new multinationals are remaking the old While globalization has opened new market to rich-world companies, it has also given birth to pack of fast-moving, sharp-toothed new multinationals that is emerging from the poor World.

Indian and Chinese firms are now starting to give their rich-world rivals a run for their money. So far this year, Indian firms, led by Hindalco and Tata steel, have bought some 34 foreign companies for a combined $ 10.7 billion . Indian IT-services companies such as Infosys, Tata Consultancy Services and Wipro are putting the fear of God Into the old guard, including Accenture and even mighty IBM, Big Blue sold its personal computers business to a Chinese multinational, Lenovo, which is now starting to get its act together. petroChina has become a force in Africa, including controversially, Sudan, Brazillian and Russian multinationals are also starting to make their mark. The Russian have outdine the Indians this year, splashing $ 11.4 billion abroad, and are now in the running to buy Alitalia, Italy’s state airline.

These are very early days, of course. India’s Ranbaxy is still minute compared with a branded-drugs maker like Pfzer, China Haler, a maker of white goods, is a minnow next to Whirlpool’s whale. But then new multinationals are bent on the course taken by their counterparts in Japan in the 1980s and South Korea in the 1990s.Just as Toyota and Samsung eventually obliged western multinationals to rethink how to make cars and consumer electronics, so today’s young thrusters threaten the veterans wherever they are complacent.

The newcomers have some big advantages over the old firms. They are unencumbered by the accumulated legacies of their rivals. Infosys rightly sees itself as more agile than IBM, because when it makes a decision it does not have to weigh the opinion of thousands of highly paid careerists in Armonk, New York. That , in turn, can make a difference in the scramble for talent. Western multinational often

find that the best local people leave for a local rival as soon as they have been trained, because the prospectus of rising to the top can seem better at the local firm.

In developing countries multinational trends to spend better working practices and environmental conditions, but when emerging country multinational operates in rich countries they tends to adopt local mores. So as those companies globalize, the difference are likely to narrow Cost is not big an advantage to emerging-countries multinationals as it might seem. They compete against the old guard on value for money, which depends on both price and quality. A firm like Tata steel, from low cost India, would never have bought expensive, Anglo-Dutch Corus were it not for its expertise in making fancy steel.

A world that is not governed by cost alone suit them, because the already posses a formidable array of skills such as managing relations with customers, polishing brands, building up know-how and fostering innovation.

The question is how to make these count. Sam Palmisano, IBM’s boss, foresees nothing less than the redesign of the multinational companies . in these scheme, multinational began when 19th –century firms set up sales offices abroad for goods shipped from factories at home. Firms later created smaller “Mini Me” version of the parent company across the world.Now Mr Palmisano wants to piece together worldwide operatons, putting different activities wherever they are done best ,paying no heed to arbitrary geographical boundaries. That is why, for example, IBM now has over 50,000 employees in India and ambitious plan for further expansion there. Even as India has become the company’s second biggest operation outside America, it has moved the head of procurement from new York to Shenzen in Chaina.

IBM is even now trying to wash the starch out of its white-shirted management style. But today, general electric alone seems able to train enough of its recruit to think as GE people first and Indians, Chinese and American second. Lenovo’s decision to appoint an American, William Amelio , as its Singapore based chief executive, under a Chinese Chairman, is a hint that some newcomers already understand the way things are going.

Many of the barriers that stopped cross border commerce have fallen. And yet, Mr. Palmisano’s ideas also depends on the fact that the terrains decidedly bumpy.Increasingly, success for a multinational will depends on correctly spotting which places best suit which of the firm’s activities. Make the wrong bets and the world’s bumps will work against you. And now that judgments, rather than tariff barriers, determines location, picking the right place to invest becomes both harder and more important.

Nobody said that coping with new brood of competitors was going to be easy, Some of today’s established multinational companies will not be up to the task. But other will emerge from the encounter stronger than ever. And consumers, wherever they are, wil gain from the contest.

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CON/2211 –06 INTERNATIOAN L BUSINESS-2006 BB—10917 Duration 3 Hours

[total marks-100]

N. B. : 1) Question No. 1 compulsory. 2) Attempt any four Question out of rest. 3) All question carry equal marks. 4) Draw suitable diagram to support your answer.

Analyze the case given below and answer the question using the concepts of International business. DIXON INC

Dixon Inc. is one of the oldest companies in U.S. with a flagship product of pencil which was introduced in 1913. The turnover in 1995 was U.S $ 100 million. The American bought an estimated 4.2 billion pencil in 1999 which was 53% higher than 1991; but an increasing proportion of these come from china.

China entered the American pencil market in 1991 and by 1994 had 20% share of American market.In 1995 U.S. government was persuaded by Dixon to levy Anti Dumping Duty on Chinese imports of pencil and the imports temporarily fell, but the Chinese kept on making better and cheaper pencils and by 1997 achieved the market share levels of 1994. The Chinese were aggressive in marketing pencils in U.S. and to add to the problems, exports of Dixon Inc also fell drastically by about 200 million units in 1991 figures.

By 1999, U.S. imported 50% of its requirement of pencils from China which forced the U.S. Government to impose a whooping 53% Anti Dumping Duty in 2000 on Chinese pencils. However it did not give major boost to Dixon as expected.Dixon Including the decade tried to experiment with cheaper ways to make pencils. The company shifted from California incense cedar wood ( which was expensive raw material)to Indonesia jelutong wood. Dixon also started buying erasers for its pencils from a Korean supplier instead of traditional local source.During all this time it not only lost its shares to cheap imports but also losing money and it strategically started a new Manufacturing unit in Mexico a NAFTA A partner. The original idea was to supplement the U.S. set up but with a view to be more aggressive it expanded Mexico’s unit and started reducing production of its home base, U.S.

In the year 2001.Dixon created a wholly owned subsidiary in China to manufacturer wooden salts-a processed raw material for manufacturing pencils. These salts were exported by Dixon form China to Mexico where they were turned into pencils. The graphite lead for pencils is still made in USA; but erasers are shipped from Korea.

The Chinese subsidiary of Dixon also produces and sells its products internationally. By 2003 Dixon’s performance registered a significant improvement but , the company decided to be aggressive in international business and it shut down its U.S. manufacturing base at Sandusky,

Ohio and expanded it production in Mexico and has also started manufacturing pencils form it’s China venture.Questions:

1) Why do you think that the Chinese apparently have a cost advantage in the production of pencils?2) Do you think that lobbying in the U.S. government to impose antidumping duties on imports of

pencils from China is good way to protect U.S. jobs? Who benefits more from such duties? Who lose?

3) Why has Dixon become a multinational company? What are economics benefits to Dixon of going global?

4) Why does it not simply imports finished pencils from China to the Unite States, instead of making those pencils in Mexico?

5) What is the role of tariff and nontariff barrier in the whole process?

2I. State the objectives of international business. Give an overview of various methods of doing

international business with suitable practical examples .II. State the advantages and disadvantages of FDI to the home and host country?

List out the problems faced by MNEs in the hone country and the problems faced by host country due to MNEs.

III. Risks are inevitable in international business. The success is totally depending on the techniques of handling risk at every stage – justify with example.

IV. WTO was formed to foster international trade. State principles objectives of WTO and list at list 10 objectives monitored by WTO. Discuss the impact of WTO on India and other developing nation with special reference to HONG kong Ministerial Conference.

V. What is meaning of globalization? Categorize manufacturing and servicing sectors of India having global competitive advantages.

VI. Write short note on :-a) Explain salient features of any two Regional Trade Agreements (RTA)b) Discuss general characteristics of intellectual property rights (IPR)

VII. Write short notes on :---a) David Ricardo’s two country- two products theory.b) Purchasing power parity theory.

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CON 2158—05 I NTERNATION BUSINESS-2005 BB-8242Duration 3 HOURS UNIVERSITY QUESTION APER

[TOTAL MARKS]:100

N.B. 1. Question No. 8 is compulsory. 2. Attempt any four questions from the remaining.

3. All question carry equal marks.1. “International business is more complex ad different from domestic business” explain the

difference by using ten functional parameters.2. Multinationals and FDIs have become an integral part of developing economies like India.

State the merits and demerits of permitting MNCs and FDIs from international experiences witnessed by few nations during the previous decade.

3. Explain with practical illustrations ‘international product life cycle theory” propounded by Raymond Vernon. Discuss similarities and contrast aspects of PLC theory with David Ricardo’s two product and two country model.

4. Export or Physical movement of goods and services alone cannot justify International Business. If so discuss other modes of international business with examples.

5. “WTO aims at removing non tariff barriers and reducing tariff barriers”. If so critically evaluate achievement and problem areas which WTO has to encounter in order succeed in the above objective.

6. Answer any two of the following :---a) Doing business with expanded Europe.b) Doing business with ASEAN.c) Doing business with China.

7. Discuss any two of the international issues :--a) Intellectual property rights.b) Current trends and application of Purchase power parity theory.c) G 20 and impact on India’s foreign trade.

Case :8. CRAZY LEATHER-where to invest and grow?

‘crazy leather ‘a 20 million dollar export turn over company located in Chennai has become a successful Leather goods manufacturing company today. Mr. Prsad, 55 years old self mode business man started this company in 1975 as trader of footwear, had ups and downs in the 1980’s and finally made a strong network in Europe and North America. BY 2000 he launched a wide range of leather jackets which lured thousands of new customers. Leather jacket as a product, has few extra advantage as compared to footwear (i) premium price (ii) few competitors (iii) scope of new design and style (iv) cold and affluent countries are the markets. Therefore Prasad has now a product focus. But there are few limitations while the product moves from India from business angle, through India has a raw material base, cheep labour and favorable government policy.

Western countries do not pay high price due to India’s inability to build brand for leather jackets. Fashion and design aspect percolate to India late. Hence Indian manufacturer fails to skim the market. While Italian brands command high price countries like Pakistan and Ethiopia inter into many markets by quoting ridiculously low price for their jackets. Indian manufacturers, including Crazy Leather have to work out different strategy to sustain in the world market.The option is, to expand business by setting up overseas manufacturing unit. Mr. Prasad has selected two locations as an outcome of six months study and planed o start leather

jacket production by Jan 2006 One ideal destination should be immediately finalized for manufacturing 60,000 jackets per year.

Parameters K ENYA ITALY

Investment Minimum ($ 1 m) 5 times higher Labour Cheap ($ 2/day ) 20 times higher R. Material Available nearby Imported form Faroff Demand in the market Local-Nil-only export Huge, the whole Europe Govt. incentive In many forms Nil Bureaucracy High Low Productivity Only through workforce Through automation Ownership Wholly owned Only through local

partner

QUESTIONS :-I) What kind of business approach Crazy Leather should have to set up an unit in Italy?

II) By investing in Kenya, will Crazy Leather have cost advantages? Categories them.

III) Apply Poster’s model of Competitive advantages of nations to both the destination.

IV) Enumerate the risk which are involved in the business operations both in the Kenya and Italy.

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