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Chapter: Business Science : International Business Management

Important Short Questions and Answers: International Business Management

- Conflict Management and Ethics in International Business Management - Important Short Questions and Answers: International Business Management

1.What is International Trade?


International Trade is the process of focusing the resources & objectives of an organization on global market opportunities & threats.


2.Explain ‘CARTEL’?


CARTEL is an agreement to restrict competition between production of the same commodity in one country or other


3. What is ‘GATS’?


GATS – General Agreements on Trade in service rules for multilateral, legally enforceable rules


4. What are the objectives of WTO?


To study & supervise on a regular basis the operation of revised GATT agreements.


To provide trade review mechanism.


To create goods council, services council, & TRIPS council as subsidiary bodies


5. What is comparative advantage?

Comparative advantage is a situation in which a person or country is more

efficient at producing a good in comparison with another person or country


6. Write the functions of WTO?


To administer & implement the multilateral & plurilateral trade agreements, which together make up the WTO.


To acts as a forum for multilateral trade negotiations. To resolve trade disputes.


To examine national trade policies.


To provide technical assistance & training for developing countries


7. Discuss about export – import policy?


The Government of India announced the export – Import policy on March 31, 1992. The main purpose of the current export – import policy is to consolidate the gains of the previous poicy & to further carry forward the process of liberalization


8. Discuss the Important features of URUGUAY round agreements?


URUGUAY Round was launched at Punta Del Este in Septemver 1986. The wide range of negotiations covered GATT rules & disciplines, safeguards, etc.


It covers TRIPS, TRIM, Trade in service & Agriculture.


9. Write short notes about TRIPS?

Trade related aspects of Intellectual property Rights.


Intellectual property is a term referring to a number of distinct types of creation of the mind for which property rights are recognised. Under intellectual property law owners are granted certain exclusive rights.


Common types of intellectual property include copy rights, trademarks, patents, industrial design rights & trade secrets, etc.


10. .Write the benefits of Globalization ?


Contribution to the developing economy. Increased productivity.


Change in living standards. Increased competition.


Innovative ideas to abroad as well as domestic opportunities. Employment opportunities3


            What is Quotas explain?

Quotas are a quantity control on imported goods, which can be used for export control. Generally they are specific provisions limiting the amount of foreign products imported in order to protect local firms & to conserve foreign currency


            EMBARGO Explain?

An EMBARGO refers to a complete banned on trade (Import &Export) in one or


more product with a particular country. It is the most restrictive non – tariff trade barrier available & its typically applied to political goals & reliagenous feeling.


            What is global competitiveness?

Competitiveness denotes the relative standing of one competitor against others &


competitiveness is like the game of musical chairs. There are finite numbers of places to sit & some are more desirable than others


            What is the source of competitive advantage?

The “Value chain” approach proposed by michael porter is one of the most cited


& widely utilized portar separates the internal components of a firm into five primary activities & four support activities.


            Explain Trade policy?

Trade policy refers to all the procedures & processes, practices that have a bearing


on the trade movement of the country. At the international level, trade policy of a country may be inward looking or outward looking.


            What are the theories of International trade? Theory of Mercantilism


Theory of Absolute advantage


Theory of comparative cost advantage Theory of factor Endowments


They of product lifecycle.


            Write the concept Mercantilism?

Theory merged in middle of 16th century in England. Theory states that gold & silver of wealth of nation.


Countries consisted of kingdom giving importance to collecting gold & silver. Based on this theory it is gain by one country & lost by country


            What is absolute Advantage?


Trade can happen between 2 countries, if one country is able to produce at absolute low price & offer to the 2nd country & 2nd country similarly produced another product at absolute low price & offer to 1st country.


            List out the assumption of comparative cost theory made by Ricardo? Comparative cost theory was first systematically formulated by Ricardo, This


theory is based on the following assumptions.

Labor is the only element of cost of production.


Labor is perfectly mobile within the country but perfectly immobile between countries.


Labor is homogenous.


International trade is free from all barriers


            What is the law of comparative advantage?

The law of comparative advantage indicated that a country should specialize in


the production of those goods in which it is more efficient & leave the production of the other commodity to the other country. The two nations will then have more of both goods by engaging in trade.


            Write short notes about factor endowment theory?

Factor endowments theory was developed by Heckscher & Bertilohlin. It means


the assets, resources of the country like land, labor, and capital. Each nation has its own factor endowments (or) assets.


The more factor endowments the lower will be the cost of produce of the country


            What are two important theorems of factor endowment? Heckscher-ohlin Theory


Factor price Equalization Theory


23. List out the Investment Theories?


Theory of capital Movements Market imperfections theory Internalization theory


Location specific advantage theory Eclectic theory


Other theories


            What are Trade barriers?

To achieve the objects of trade, every country imposes certain restrictions on its

international trade ie. Imports & exports.


The main purpose of imposing trade barriers is to protect domestic industries from foreign competition.


            Regional Trade blocks Refer?

Regional Trade block designed to achieve various economic, social & political


RTA is an important international business environment.


RTA Trade blows European union


NAFTA: US, Mexico, Canada.


MERCOSUL : Brazil , Argentina, Uruguay APSC: 21 Pacific RIM Countries.


26. Define International strategic planning?


It is a continuous process of determining an organization’s basic mission & long term objectives. It also involves implementing a plan of action for pursuing the mission & attaining these objectives


27. Write the need for strategic planning?


This need is justified as the amount of foreign Direct Investment that has occurred in recent years. It is necessary to co-ordinate & integrates diverse operations with a unified & agreed on focus


28. What are the approaches require to formulating & implementing the strategy? There are four main approaches to strategic planning.


They are:

                                                        Dealing on the economic implications

                                                        Facing the political consequences

                                                        Stressing the quality imperative

                                                        Implementing an administrative co-ordination strategy


            What is meant by strategic management


The process of determining an organization’s basic mission & long – term objectives, the implementing a plan of action for attaining these goals


30. What is economic Imperative?


A worldwide strategy based on cost leadership differentiation & segmentation. Many of these companies typically sell products for which a large portion of value is added in the upstream activities of the industry’s value chain


31. Write about political Imperative?


Political imperative is strategic formulation & implementation utilizing strategies that are country responsive & designed to protect local market niches


32. Meaning of Global strategy?


Global strategy, referred as an integrated strategy based primarily on price competition


            What are the types of strategy? Global strategy Transnational strategy International strategy Multi – domestic strategy


            Why national responsiveness is need?


The national responsiveness is need to understand the different consumer tastes in segmented regional markets & respond to different national standards & regulations imposed by autonomous governments & agencies



35. What is KFS?


Key factor for success a factor necessary for a firm to effectively compete in a market niche


Ex: KFS for an International airline is price. 11. Write the benefit of strategy implementation?


Strategic implementation provides goods & services in accord with a plan of action


12. Define portfolio management?


Portfolio Management may be defined as the process of construction, revision & evaluation of a portfolio, to obtain maximum returns, commensurate with the risk disposition of the investor


            Write the process of portfolio Management?


Specification of investment objectives & constraints Choice of asset mix


Formulation of portfolio strategy Selection of securities


Portfolio execution Portfolio revision Portfolio evaluation


                                                        Write the different forms of International business?


International business management must consider three general areas in strategy implementation,

First MNC must decide where to locate operations.


Second, MNC must carry out entry & ownership strategies.


Finally, management must implement functional strategies in areas such as marketing, production & finance


15. Discuss about organizational issues?


Capture is important organizational issues. Regulatory organization can either be capture by policy – making entities or by dominant market players or by both. Another one is advantage & disadvantage competition between regulatory agencies


16. Refers organizational structure?


Organizational structure refers to the way that an organization arranges people & jobs so that is work can be performed & its goals can be met organizational structure its composite three important aspects namely differentiation formalization & centralization


17. Explain the term Multinational Corporation?

(MNC is a corporation that controls production facilities in more than one country) Such facilities having been acquired through the process of foreign direct investment.


(MNC is also called as International Corporation Transnational & Global Corporation Multinational refers to direct investment in several countries & a considerable share of the total business being in foreign countries)


18. Give short notes about WCO?


WCO means world class organizations are enterprises that are able to compete with anybody, anywhere, anytime.




To become a WCO, an organization must excel in a number of dimensions which create a new level of competitive excellence


19. What is meant by control in International business?


Control involves evaluating results in relation to plans or objectives & deciding what action to take


20. What are the approaches to control?


The following are the approaches of various MNC’s to control their processes.


British controls German controls French controls U.S. Controls


Japanese controls



            Write the performance of global business?

A number of performance measures are used for control purposes. Three of the most common types are those related to


Financial performance Quality performance Personnel performance


            Give the meaning of evaluation?


Evaluation is the analysis & comparison of actual progress vis – a-visprior plans. Evaluation is oriented toward improving plans for future implementation to ensure improved performance


            What are the types of evaluation system/ Qualitative evaluation system Quantitative evaluation system Formative evaluation system Summative evaluation system


            Write short notes about evaluation system?



There are good evaluation systems, benchmarking also the best practice benchmarking. Budgetary system is a planning & controlling tool. Budget & Budgetary control constitute budgetary system.


Evaluation is need for overall management.

Evaluation for efficiency


Evaluation of accountability


Evaluation of development & dissemination Evaluation for studying on track


            List out the disadvantage of international business


The negative drivers of globalization include culture which is a major hold back of globalization.


Government policy Input cost


Lack of Infrastructure facilities


Obsolete machinery 7 technology


            What is conflict in International Business


‘International Conflict’ referred to conflicts between different nations – states & conflicts between people & organization in different nation – states. It also applies to inter-group conflicts within the country when one group is fighting for independence or increased social, political or economic power.


            What are factors causing conflict?


The Nature & analysis of political Risk Macro & Micro political Risk.


                                                                                                                                  Macro risk


                                                                                                                                  Micro risk with issues Devaluing of the currency


Refusing to give import licenses





            Write short notes on Negotiation?


Negotiation is a method of bargaining with one or more parties to arrive at a solution that is acceptable to all.


Negotiation is adopted in joint ventures with local firms & in getting the operation off the ground. After the firm is operating additional areas of negotiation often include expansion of facilities


            What is the Role of Negotiation process in International Business? Negotiation process has the following steps.




Impersonal Relationship Building


Exchanging Task related information Agreement


6.       What is Persuasion?

          This is an essential step of negotiations. It depends on

How well the parties understand each other’s position.

The ability of each to identify areas of similarity & differences.


The ability to create new options.


The Willingness to work towards a solution


            What is the final stage of Negotiations?

Agreement is the final phase of Negotiations. It is carried out piecemeal,

& concessions & agreements are made on issues one at a time


            What are the cultural differences affecting Negotiation in International business?


It involves consideration of areas such as communication patterns, time orientation, & social behaviors


            What are the Negotiation tactics in international Business?

The following tactics are used in International Negotiation.


Selection of a location Time constraints.


Buyer – seller relations Bargaining style


Promises, threats & Non-verbal behaviors


            How time constraints important in Negotiation?


Time constraints play an important role in negotiation tactics when one party is under a time constraint


            What are the ethical issues in International Business? Employment practices

Human Rights


Environmental pollution Corruption


Moral obligations Ethical Dilemmas


            What are the elements include in Ethical decision making? Hiring & promotion


Organization cultural & leadership Decision-making processes


Ethics officers Moral courage


            List out International agencies? International agencies are





            Give the expansion of UNCTAD?


UNCTAD refers to the United Nations Conference on Trade & Development. It is a trade body of United Nations


            What is the main objective of UNCTAD?


To reduce the trade barriers & restrictions. To design the trade principles & policies. Integrated program on commodities.


Reducing debt burden.


Commodity development facility.


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