International Business Management
(IBM) - Long Answers
1. Characteristics and Features of International Business
International business refers to all commercial transactions that take place between
two or more countries, involving the exchange of goods, services, resources, and
technology, and it is characterized by large-scale operations, the involvement of
multiple currencies, diverse cultural practices, varying legal and economic systems,
and the need to adapt to different political and regulatory environments.
2. Reasons for Entering International Business
Firms enter international business to expand their market reach, increase revenues,
take advantage of cost efficiencies, utilize surplus production, access new customer
bases, diversify risks, and benefit from global branding and recognition.
3. Advantages and Disadvantages of International Business
The advantages of international business include access to larger markets, improved
profitability, global brand recognition, and exposure to new ideas and technologies,
while the disadvantages may involve risks such as currency fluctuations, political
instability, cultural barriers, and compliance with foreign laws and regulations.
4. Challenges in International Business
The major challenges in international business include managing cultural
differences, handling legal and regulatory complexities, navigating currency
exchange risks, dealing with political uncertainties, and maintaining effective
communication across borders.
5. Current Trends in International Business
Current trends in international business include the rise of e-commerce and digital
trade, increased use of automation and artificial intelligence, growth of global
supply chains, focus on sustainability, and the increasing importance of emerging
markets.
6. What is Subsidy?
A subsidy is a financial support provided by the government to businesses or
industries to lower production costs, make products more affordable, encourage
production, or promote economic and social policy goals.
7. Reason for Formation of Regional Trading Blocks
Regional trading blocks are formed to promote trade and economic cooperation
among neighboring countries by reducing tariffs, eliminating trade barriers,
enhancing political stability, and fostering collective economic growth.
8. Free Trade Area
A free trade area is a region where a group of countries agrees to reduce or
eliminate trade barriers such as tariffs and quotas among themselves while
maintaining their individual trade policies toward non-member countries.
9. Major Regional Trading Blocks
Some of the major regional trading blocks include the European Union (EU), South
Asian Association for Regional Cooperation (SAARC), North American Free Trade
Agreement (NAFTA), South Asian Free Trade Area (SAFTA), South East Free Trade
Area (SEFTA), and the Association of Southeast Asian Nations (ASEAN), all of which
aim to enhance economic integration and trade among member countries.
10. Need for International Trade
International trade is necessary to acquire goods and services that are not available
domestically, to make use of surplus production, to promote economic growth, to
improve efficiency through competition, and to build international relationships.
11. International and Domestic Trade
Domestic trade takes place within the boundaries of a single country, involving the
exchange of goods and services using the same currency and legal framework,
whereas international trade occurs between countries, requiring foreign exchange,
adherence to international laws, and consideration of different cultures and
business practices.
12. Export Procedure
The export procedure typically includes receiving an order from a foreign buyer,
confirming the terms and conditions, preparing and packaging the goods, obtaining
necessary export licenses and documentation, arranging transportation, clearing
customs, and receiving payment through secure channels like banks.
13. Import Procedure
The import procedure involves identifying suppliers, placing an order, ensuring
compliance with import regulations, obtaining an import license if required, paying
applicable customs duties, clearing the goods through customs, and receiving the
goods at the designated location.
14. Factors Affecting the Selection of Global Market Entry Strategies
The selection of a suitable global market entry strategy depends on factors such as
the size and growth of the target market, political and legal environment, economic
conditions, cultural differences, competitive landscape, cost of entry, and the firm’s
overall objectives and resources.
15. Methods of Direct Exporting
Direct exporting involves selling products directly to a foreign customer or through
foreign intermediaries like agents and distributors, allowing the exporter more
control over pricing, marketing, and customer relationships.
16. License Advantages and Disadvantages
Licensing allows a company to grant another party the rights to use its intellectual
property, brand, or technology in exchange for a fee or royalty, offering advantages
like low investment and quick market entry, but it also has disadvantages such as
limited control and risk of creating future competitors.
17. Franchising
Franchising is a business model where a franchisor grants the right to operate a
business using its brand, system, and support in exchange for fees or royalties,
enabling rapid expansion while reducing operational risk for the franchisor.
18. Strategies of FDI
Foreign Direct Investment strategies include setting up wholly owned subsidiaries,
forming joint ventures, acquiring existing companies, and entering into strategic
alliances, with the goal of gaining direct control and long-term interest in foreign
operations.
19. What is Globalization? Explain its Features
Globalization is the process of increasing interconnectedness and interdependence
among countries through the exchange of goods, services, information, and culture,
and its key features include the expansion of international trade, rise of
multinational companies, easy flow of capital, technological advancements, and
cultural integration.
20. Advantages and Disadvantages of Globalization
Globalization brings advantages such as access to global markets, innovation,
employment opportunities, and cultural exchange, but it also has disadvantages like
job displacement, environmental degradation, and loss of cultural identity.
21. Importance of the International Business Environment
Understanding the international business environment is crucial for businesses to
analyze opportunities and threats, make informed decisions, adapt strategies to
foreign markets, and ensure compliance with local laws and standards.
22. Factors Affecting the International Business Environment
The international business environment is influenced by political stability,
government regulations, economic policies, legal frameworks, cultural differences,
technological developments, and social trends in different countries.
23. EXIM Bank Objectives and Functions
The Export-Import Bank (EXIM Bank) supports international trade by providing
financial assistance such as loans, guarantees, and insurance to Indian exporters and
importers, with the aim of boosting the country's foreign trade and economic
development.
24. DGFT Roles and Responsibilities
The Directorate General of Foreign Trade (DGFT) is responsible for implementing
India’s foreign trade policy, issuing licenses for exports and imports, regulating
trade practices, and supporting exporters through schemes and incentives.
25. Objectives of Export Promotion Councils
Export Promotion Councils aim to promote and support Indian exports by providing
exporters with relevant information, organizing trade fairs, conducting training
programs, and helping with compliance and certifications.
26. Role of EPC
Export Promotion Councils (EPCs) play a significant role in enhancing India’s export
performance by representing industry interests, advising the government on export
policies, and facilitating market access for exporters.
27. Export Credit Guarantee Corporation: Role and Objectives
The Export Credit Guarantee Corporation (ECGC) protects Indian exporters from
payment risks by providing credit insurance and financial guarantees, thereby
encouraging exporters to explore new and risky markets.
28. Types of Economic Zones
Types of economic zones include Special Economic Zones (SEZs), Export Processing
Zones (EPZs), Free Trade Zones (FTZs), and Industrial Parks, all designed to attract
investment, promote exports, and generate employment.
29. Objectives and Role of Special Economic Zones
The main objectives of Special Economic Zones (SEZs) are to boost exports, attract
foreign and domestic investment, generate employment, and simplify procedures,
offering tax incentives and improved infrastructure to businesses.
30. Benefits, Advantages, and Disadvantages of FDI to Host and Home Countries
FDI benefits host countries by providing capital, creating jobs, and transferring
technology, though it may lead to profit repatriation and market dominance by
foreign firms; for home countries, FDI expands global reach and profits but can
result in job losses at home.
31. Features of India’s Foreign Trade
India’s foreign trade is characterized by a diverse range of exports including IT
services, pharmaceuticals, textiles, and agricultural products, a dependency on oil
and electronic imports, and continuous government efforts to improve trade
balance and competitiveness through policy reforms.