mib question

8/9/2019 Mib Question

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Q1 (a) How international business is different from domestic business?

What challenges are involved in managing international business? Discuss

in brief.

Ans. International business! International business is concerned with the issues facing

internationalcompanies and governments in dealing with all types of cross border

transactions. It involves all business transactions that involve two or more countries.It

consists of transactions that are devised and carried outacross borders to satisfy the

objectives of individuals andorganizations.It consists of those activities private and public

enterprisesthat involve the movement across national boundaries of goodsand services,

resources, knowledge or skills.

Domestic business! Domestic business is a commercial activities conducted with in a

nation or a commercial entity that conducts economic transaction inside the borders of its

home nation. A domestic business typically has the advantage of only having to deal with its

local currency, customs, culture, regulations and tax system.

Difference between International business and domestic business

International "usiness Domestic "usinessIt is extension of domestic business and

marketing principles remain same.

he domestic business follows the marketing

principles.

Differences in customs, cultural factors. !o such differences in large countries

languages like India, we have many

languages.

It is conduct and selling procedure change. "elling procedure remains unaltered.

#orking environment and management

practices change to suit local conditions.

!o such changes are necessary.

$!%&s have perfected principles, procedures

and practices at international level.

!o such experience or exposure.

'igh volume of cost advantage %ost advantage by automation, new methods

etc.

(arge companies enjoy benefits of

experience curve.

It is possible to get this benefit through

collaborators.

#hallenges in International business

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1) $olitical science!It is the study of politicians, political institutions, and their

effects on business and society. Democracies are present in many countries, but over

)* percent of people live under autarchies+hereditary monarchies, dictatorships,

chiefs, shahs, and the like. In autarchies, the leader&s word is often law, and usually,that person&s control is absolute. In democracies, politicians control national destinies,

but are accountable to voters. International businesses must therefore routinely

monitor political changes via elections, wars, and coups d&tat. -oliticians have major

impacts on economic conditions+whether national markets grow or contract major

influences on corporate sales and profit levels/. 0overnments also control corporate

access to national markets via trade and investment policies. 1ust as important,

governments provide the legal frameworks that ultimately control business behaviors

within their national borders.

%) Anthro&olog'! It is the study of the evolution of mankind in its various

environments. he evolution of human behaviors during economic development from

traditional to modern societies entails major disruptions to political and economic

institutions, as well as group and individual behaviors. A major key to understanding

important emerging markets like India and %hina is appreciating how economic

development changes affect business operations in rapidly industrializing markets.

) conomic develo&mentoccurs as nations industrialize and grow economically.

As they progress toward higher living standards, significant changes occur in national

institutions and behaviors. hese changes, in political, economic, and cultural

institutions, affect behaviors and values at all levels of society. 2nowledge of these

institutions and the development process helps businesspeople understand changes in

foreignmarkets and provides insights as to how a country&s past affects its present and

future prospects. 3nderstanding the economic and cultural development process

re4uires insights from the anthropological, sociological, and economic development

fields to illustrate the multifaceted nature of change as nation5statesmove fromsimple,

self5sufficient societies to complex nation5states producing varieties of goods.

*) +ociolog'!Itis the study of group behaviors in society. In tradition5based

societies, extended family units are common, and familial obligations run deep in

affecting business behaviors, the awarding of contracts, and employment

opportunities. Another group behavior+the assigning of social class+determines

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societal hierarchies. In traditional societies, hereditary criteria family pedigree/ and

seniority e4uated with wisdom/ are major sources of social status. 6ut as countries

urbanize, industrialize, and modernize, money and the accumulation of wealth

become key indicators of social class standing. 7inally, as countries industrialize,

gender roles change, andmale5oriented patriarchal/ societies come under pressure as

female contributions to societal well5being outside of the home are recognized.

,) -eligion!Itis a primary determinant of behaviors and attitudes in all countries. In

!orth America and #estern 8urope, %hristian religions including -rotestantism and

9oman %atholicism/ provide behavioral and ethical guidelines to followers, but their

effects on daily lives are not as pronounced as in other parts of the world. In the

developing world, religion tends to have profound effects on daily lives. It is difficult

to understand the $iddle 8ast without significant knowledge of the Islamic $uslim/

faith. "imilarly, attitudes and behaviors in India are best understood when placed in

their 'indu context. 6oth Islamic and 'indu religions have followings of over :

billion people. "ome religions are nontheistic that is, they do not recognize or

worship a god or gods/ but are life5guiding philosophies affecting behaviour&s.

%onfucianism and Daoism have affected %hinese behaviour&s for centuries.

6uddhism, another nontheistic religion, affects daily behaviours in many Asiannations e.g., 2orea, hailand, (aos, %ambodia, %hina, 1apan/. hus, understanding

world markets re4uires in5depth appreciations of the world&s major religions and their

effects.

) /eogra&h'!It is a known 4uantity to national companies competing in their

native markets. It warrants little analysis or commentary. In advanced national

markets, technology e.g., bridges, tunnels, irrigation systems/ overcomesmany

geographic obstacles, and products and services are easily adjusted to prevailing

climatic conditions. 6ut as businesspeople evaluate new international markets,

geography, climate, and topography the study of terrains and land surfaces/ become

major elements in market analysis. 0eographic resource availability minerals,

agriculture/ is a key shaper of national development. opography and climate

influence target markets where populations reside/; distribution how to reach and

service customers/; and, in a more general sense, attitudes toward life e.g., in severe

climates or harsh terrains, where


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whose major orientations are to the present and the future. >et it is difficult to

understand country markets without appreciating how national histories have shaped

current political, economic, and cultural circumstances. 'istorical analysis, with its

emphasis on how the past influences the present, is a key tool in interpreting and

anticipating.

(b) Discuss in brief the controllable and uncontrollable environment of

international business0 and how it affects the business.

Ans. hese factors are classified into two broad categories. hese are?

a/ Internal or %ontrollable factors of 6usiness environment.

b/ 8xternal or 3ncontrollable factors of 6usiness environment.

Internal actorshe factors those are related to the internal operations of a business and

can be controlled by proper management are controllable or internal factors of business

environment. 7or instance (and, (abor, %apital, 6usiness (ocation etc.

2ternal actorshe factors those are not controllable at any cost but have to adopt for

success of business are external or uncontrollable factors. 7or example Demography, -olitical

forces, (eagal practices, %ultural influences, echnological advancement, competitiveness

etc.

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34-5A6 7- 85#754-766A"6 59I-75:54A6 A#47-+

1) Demogra&h'! Demography means the total number of population of any

particular territory. hey have a greater influence of any business operation. 7orexample in a mass populated area demand of consumer products will be

comparatively higher than any lesser populated area. "o, we can say that demography

has a direct impact on business environment. 6ecause demand direct towards

maximization of sales. he more sales the more the profit. he more profits impacts

on success business operations.

%) #ultural orces! %ulture is that what we are that means our living, eating, food

habit, way of dressing and way of speaking everything accumulated to our culture.

7or example wiring lungi, taking panta with hilsha fish on 6engali new year is part of

6angladeshi culture every 6angaldeshi respect or practices this culture. It is usual

tasks for 6angladeshi inhabitants. 6ut it is not acceptable in western or 8uropean

culture. #iring shorts taking fast food, having wine party are their culture. 6ut is not

acceptable in 6angadeshi culture. As a result demand of shorts and wine is completely

higher in the western society than that of in 6angladeshi society.

) $olitical Influences! -olitical environment has a direct impact on any county&s

business environment. "ome political environment resultant a comparatively better

business environment and vice versa. 7or instance Instable political environment in

6angladesh is a mayor obstacle for 6angladesh 6angladeshi operations.@n the other

hand before two decades 6angladesh ietnam,$alaysia these were same ranking

countries form economic aspects. 6ut today $alaysia and ietnam have advanced a

lot themselves throw their proper political decisions, skilled leadership, finally stable

political situation and responsible leadership make them emerging economical power

in the southeast Asia as well as around the globe.

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*) 6egal $ractices?5(egal practices of any country have a direct impact on the

business operation of that country. 7or example, if there are any bindings on the

international business transaction from the legal authority of any country then no

company can brake down that rules. "uch as doing business of wine, addicted drugs inopen market is legally restricted in 6angladesh. As result, no company can produced

wine and marketing it inside the 6angladeshi territory. 6ut producing wine is not

illegal even in the India because they have no legal bindings on the production of

wine.

B/ 4echnological Advancement! echnology is upgrading itself so 4uickly than

that of our imagination. elecommunication system has revolt every system then ever

before. 6ecause, before only three decades communicating with a 8uropean partner withdocumentation was one month lengthy process. 6ut today we are doing it within a

moment. It has a greatest impact on business communication. #ithout rapid

communication no business can run smoothly, profitably in the competitive market.

C/ #om&etitiveness!here is no monopoly, duopoly, ripoli market of any product

around the 0lobe. hat means in every product has mass competitors in the market. o

become success in the competitive market one must have competitiveness. %ompetitiveness

are some features of the product, the features are

a/ Distinguished 4uality

b/ @utstanding performance

c/ 8conomy in price

d/ 6etter outlook

I54-5A6 7- #754-766A"6 59I-75:54A6 A#47-+

1) 6and! 0enerally land means soil but in business land includes everything inside the

factory like boundary of land, size of building, machinery installments etc.

%) 6abour! #orkforce is another vital element of productions and other business

operations. "killed manpower is not available everywhere but manpower can be skilled

up through a marathon coaching of related tasks. At the same time we will have to think

about the wages, working environment, job security, job satisfactions of the workers.

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1ob satisfactions can provide best performance as well as creative outputs. (abors can be

satisfied through offering different motives. It may be financial rewards and mental

supports.

) #a&ital!%apital means financial li4uidity of the organization. 7und may be collected

from different sources. "uch as

a/ 7ully owned capital

b/ hrough partnership agreement

c/ aking loan from the financial institutions

d/ %ollecting capital from capital market

e/ 1oint venture fund collection from foreign market

%ollecting fund is not the final tasks for proper business operations. 6ecause proper

utilization of the fund i.e. capital management functions have to be operated efficiently.

*) "usiness 6ocation! 6usiness location is a major factor for successful operation of

any business. (ocation should be selected based on the following criterions?

a/ ransportation facilities

b/ Availability of raw materials

c/ Availability of labors

d/ "ecurity

6etter transporting facilities resultants 4uickest communication which is an essential

factors for every business. 6usiness location should be selected after thinking availability

raw materials, skilled labor force and high security.

,) 7wners;


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