International Business Management
MMPC 016 solved Free Assignment 2023
MMPC 016 Solved Free Assignment January 2023
IGNOU MBA Assignment 2023
Q 1. Discuss the evolution of globalization and the effects of globalisation.
Ans. Globalization refers to the process of increasing interconnectedness and interdependence among countries and individuals worldwide, facilitated by advances in technology, transportation, and communication.
The evolution of globalization can be traced back to the 15th century when European explorers began to establish trade routes with Asia, Africa, and the Americas.
However, it was in the late 20th century when globalization accelerated due to the liberalization of trade policies and the growth of digital technology.
The effects of globalization have been both positive and negative. On the positive side, globalization has led to increased economic growth, improved living standards, and expanded access to technology, education, and healthcare.
It has facilitated the movement of goods, services, and people across borders, resulting in increased economic integration and greater cultural exchange.
However, globalization has also contributed to income inequality, exploitation of labor, and environmental degradation.
The benefits of globalization have not been evenly distributed, with some regions and populations benefiting more than others.
Globalization has also led to the outsourcing of jobs from developed countries to developing countries, resulting in job losses and wage stagnation in some sectors.
Globalization has also led to cultural homogenization, with the spread of Western cultural norms and values. MMPC 016 Solved Free Assignment 2023
This has resulted in the loss of cultural diversity and the erosion of traditional cultural practices and values.
Moreover, globalization has facilitated the spread of diseases, terrorism, and other security threats, requiring greater international cooperation and coordination.
One of the key drivers of globalization has been the growth of international trade, which has increased significantly over the past few decades.
Advances in transportation and communication technology have made it easier and cheaper to transport goods and communicate across borders, leading to greater integration of global markets.
This has created new opportunities for businesses to expand their markets and access new sources of labor and raw materials.
Another important aspect of globalization has been the increasing movement of people across borders. MMPC 016 Solved Free Assignment 2023
This includes both skilled and unskilled workers, as well as refugees and migrants seeking new opportunities or fleeing conflict and persecution.
The movement of people has led to increased cultural exchange and diversity, but it has also created social and political tensions in many countries.
The growth of digital technology has been a major contributor to globalization, enabling instant communication and information sharing across borders.
The internet and social media have transformed the way people interact and do business, breaking down traditional barriers to communication and opening up new opportunities for collaboration and innovation.
The process of globalization has also had a significant impact on the environment, with increased industrialization and consumption leading to greater pollution and resource depletion. MMPC 016 Solved Free Assignment 2023
Climate change, in particular, is a major global challenge that requires collective action and international cooperation to address.
The rise of multinational corporations has been a key feature of globalization, with companies operating across multiple countries and regions.
This has created new opportunities for investment and job creation, but it has also led to concerns about corporate power and influence, as well as the exploitation of workers and resources in developing countries.
The growth of global financial markets has been another important aspect of globalization, with capital flowing across borders in search of higher returns.
This has facilitated economic growth and investment, but it has also led to financial instability and volatility, as well as increased inequality between those who benefit from financial globalization and those who do not.
The spread of Western cultural values and norms has been a controversial aspect of globalization, with some critics arguing that it has led to the erosion of traditional cultures and values in non-Western countries.
However, others see it as a positive development, promoting human rights, gender equality, and other progressive values.
The COVID-19 pandemic has highlighted both the benefits and challenges of globalization. MMPC 016 Solved Free Assignment 2023
The pandemic has demonstrated the importance of global cooperation and coordination in addressing global challenges, such as the spread of infectious diseases.
However, it has also exposed the vulnerabilities of global supply chains and the need for greater resilience and preparedness in the face of future crises.
Q 2. What are the problems that companies face when they misjudge the cultural leanings of a country? Explain with relevant examples.
Ans. Misjudging the cultural leanings of a country can have serious consequences for companies operating in international markets. Some of the problems that companies face when they misjudge cultural differences are:
Offending customers: Misunderstanding cultural norms can lead to offending customers and damaging a company’s reputation.
For example, in 2007, a Chinese TV ad for a laundry detergent brand showed a black man being washed and transformed into a Chinese man, which was perceived as racist and offensive by many viewers around the world.
Ineffective marketing: Cultural differences can also impact marketing strategies, with messages that are effective in one culture failing to resonate with audiences in another. MMPC 016 Solved Free Assignment 2023
For example, PepsiCo’s slogan “Come alive with the Pepsi Generation” did not translate well in China, as the concept of a “generation” is not as relevant in Chinese culture as it is in the West.
Legal issues: Companies can face legal issues if they fail to understand cultural differences and run afoul of local laws and regulations.
For example, in 2015, Airbnb was fined €30,000 in France for failing to comply with local laws related to discrimination against ethnic minorities.
Operational challenges: Cultural differences can also create operational challenges for companies, such as difficulties in finding and retaining local talent, or in managing local suppliers and partners.
For example, in 2013, Walmart was fined by Chinese authorities for mislabeling pork products, which was seen as a violation of local cultural norms around food safety and labeling.MMPC 016 Solved Free Assignment 2023
Lost opportunities: Misjudging cultural differences can also result in missed business opportunities, as companies may fail to identify emerging trends or consumer preferences in local markets.
For example, in the early 2000s, Starbucks struggled to gain a foothold in the Chinese market due to a lack of understanding of local tastes and preferences, which led to a series of missteps and setbacks.
Brand image: Misjudging cultural differences can also impact a company’s brand image, which can be difficult to repair.
For example, in 2017, H&M faced a backlash in South Africa after releasing an ad featuring a black child wearing a hoodie with the slogan “coolest monkey in the jungle.” MMPC 016 Solved Free Assignment 2023
Many customers and celebrities accused the company of racism, leading to protests and calls for a boycott of H&M products.
Cultural sensitivity: Companies that misjudge cultural differences may also struggle to build trust and relationships with local customers, suppliers, and partners.
Demonstrating cultural sensitivity can help to build goodwill and establish a company’s reputation as a responsible and respectful global citizen.
For example, Coca-Cola’s “Share a Coke” campaign, which included personalized bottles with local names and nicknames, was a huge success in many markets around the world, as it showed a willingness to engage with local culture and customs.
Product design: Misunderstanding cultural differences can also lead to mistakes in product design, with products that may be inappropriate or offensive in certain markets. MMPC 016 Solved Free Assignment 2023
For example, in 2016, Nike faced criticism in Muslim-majority countries for a shoe design that featured a logo that resembled the Arabic word for “Allah.”
The company quickly apologized and recalled the product, but the incident highlighted the need for companies to be more careful and considerate in their product design and branding.
Employee relations: Cultural differences can also impact employee relations, with misunderstandings and conflicts arising from differences in communication styles, work norms, and values.
For example, in 2013, a dispute between workers and management at a Samsung factory in Brazil was attributed in part to cultural differences, with Brazilian workers feeling disrespected and undervalued by Korean managers.
Supply chain management: Misjudging cultural differences can also impact supply chain management, with companies struggling to find and retain local suppliers and partners who understand the local market and culture.
For example, in 2017, Nestle faced criticism in India for using a supplier accused of violating local environmental laws and harming local communities.
The incident highlighted the need for companies to work closely with local partners and suppliers who share their values and commitment to responsible business practices.MMPC 016 Solved Free Assignment 2023
Ethical considerations: Companies must also be aware of ethical considerations when operating in international markets.
They must ensure that they are not contributing to human rights violations, labor exploitation, or environmental damage.
For example, in 2016, Apple was accused of exploiting Chinese workers in its supply chain, leading to negative publicity and calls for the company to improve its labor practices.
Competitiveness: Finally, companies that misjudge cultural differences may struggle to compete effectively in international markets, as competitors who better understand local culture and preferences gain an advantage.
To remain competitive, companies must invest in cross-cultural training and research, and develop strategies that take into account local cultural norms and values.
Q 3. What are the pros and cons of various entry modes? Critically comment upon them from the current perspective.
Ans. Entering a foreign market requires a company to choose an appropriate entry mode, which refers to the way in which a company establishes and operates its business in a foreign market. MMPC 016 Solved Free Assignment 2023
The choice of entry mode can have a significant impact on a company’s success in the foreign market, as well as its costs, risks, and control over operations. Here are some pros and cons of various entry modes:
> Low risk and low investment
> Quick entry to the foreign market
> Can test the market with minimal investment
> Allows for economies of scale
> Limited control over distribution and marketing
> Dependence on intermediaries for sales
> Tariffs and trade barriers can increase costs
> May face competition from local manufacturers
Pros: MMPC 016 Solved Free Assignment 2023
> Low investment and low risk
> Allows for quick entry into the foreign market
> Can benefit from local expertise of the licensee
> Can generate revenue from licensing fees and royalties
> Limited control over product quality and marketing
> May face legal and regulatory issues
> Can lead to loss of intellectual property
> The licensee may become a competitor in the future
- Joint Ventures
> Shared investment and risk with a local partner
> Access to local expertise, resources, and networks
> Can benefit from local government support
> Allows for shared control and decision-making
Cons: MMPC 016 Solved Free Assignment 2023
> Can lead to conflicts with the local partner
> Requires significant investment and effort to establish the partnership
> Can face legal and regulatory issues
> May face cultural and communication barriers
- Wholly-owned subsidiaries
> Full control over operations and decision-making
> Allows for direct management of resources and distribution
> Can benefit from economies of scale and learning
> Provides protection of intellectual property
> High investment and risk
> Requires significant time and effort to establish the subsidiary
> Can face legal and regulatory issues
> May face cultural and communication barriers
> Low investment and low risk
> Quick entry into the foreign market
> Can benefit from the local knowledge and network of the franchisee
> Can generate revenue from franchise fees and royalties
Cons: MMPC 016 Solved Free Assignment 2023
> Limited control over product quality and marketing
> Dependence on the franchisee for sales and marketing
> May face legal and regulatory issues
> The franchisee may become a competitor in the future
In the current perspective, companies are facing increasing challenges and opportunities in the global market.
The COVID-19 pandemic has disrupted supply chains, altered consumer behavior, and accelerated digital transformation, which has affected the viability of different entry modes.
Companies need to consider the following factors while choosing the entry mode:
Strategic goals: Companies need to align their entry mode with their strategic goals, such as market penetration, product diversification, or risk mitigation.
Market factors: Companies need to assess the market factors, such as market size, growth potential, competition, and cultural differences, to choose an appropriate entry mode. MMPC 016 Solved Free Assignment 2023
Resource availability: Companies need to consider their resources, such as capital, technology, human resources, and brand reputation, while choosing the entry mode.
Legal and regulatory environment: Companies need to assess the legal and regulatory environment of the foreign market, such as tax laws, labor laws, and intellectual property rights, to avoid legal issues.
Risk tolerance: Companies need to consider their risk tolerance, such as financial risk, operational risk, and reputational risk, while choosing the entry mode.
In conclusion, there is no one-size-fits-all entry mode that can ensure success in the foreign market. Companies need to carefully evaluate the pros and cons of various entry modes, and choose an appropriate entry mode that aligns with their strategic goals, resources, and risk
Q 4. Discuss the key drivers of international marketing.
Ans. International marketing refers to the process of planning and executing the conception, pricing, promotion, and distribution of goods and services in foreign markets. MMPC 016 Solved Free Assignment 2023
There are several key drivers of international marketing that influence a company’s decision to expand into the global market.
Globalization: Globalization is one of the primary drivers of international marketing. The increased interconnectedness of economies, cultures, and technologies has created new opportunities and challenges for companies to expand their business globally.
Market opportunities: Market opportunities refer to the potential for growth and profitability in foreign markets.
Companies often expand into foreign markets to tap into new consumer segments, increase revenue streams, and gain a competitive advantage.
Competitive pressures: Competitive pressures refer to the threat of new and existing competitors in the domestic and foreign markets.
Companies may expand into foreign markets to defend their market share or gain a first-mover advantage.
Technological advancements: Technological advancements have facilitated the expansion of international marketing by enabling companies to overcome geographic barriers, communicate with consumers in real-time, and access new distribution channels. MMPC 016 Solved Free Assignment 2023
Government policies: Government policies, such as trade agreements, tariffs, and regulations, can facilitate or hinder the expansion of international marketing.
Companies need to understand the legal and regulatory environment of foreign markets to avoid legal issues and trade barriers.
Resource availability: Resource availability, such as capital, technology, human resources, and brand reputation, can influence a company’s decision to expand into foreign markets.
Companies need to assess their resources and capabilities to determine their readiness for international expansion.
Cultural factors: Cultural factors, such as language, values, beliefs, and behaviors, can influence consumer preferences and purchase decisions.
Companies need to understand the cultural differences of foreign markets to develop appropriate marketing strategies.
Economic factors: Economic factors, such as inflation, exchange rates, and economic growth, can affect the demand for goods and services in foreign markets.
Companies need to monitor economic trends and adjust their marketing strategies accordingly. MMPC 016 Solved Free Assignment 2023
Demographics: Understanding the demographics of a particular country can help companies determine the needs and preferences of their target market.
Age, income, and education levels are just a few examples of demographics that can impact a company’s marketing strategy.
Technology adoption: Different countries may have different levels of technology adoption, which can affect how companies market their products or services.
For example, some countries may be more receptive to digital marketing strategies, while others may prefer more traditional forms of advertising.
Infrastructure: The availability and quality of infrastructure, such as transportation and communication systems, can impact a company’s ability to enter and operate in a particular market.
Companies need to be aware of infrastructure limitations and adjust their strategies accordingly.
Language: Language is a significant barrier to international marketing. Companies need to consider the language preferences of their target market and tailor their messaging accordingly. MMPC 016 Solved Free Assignment 2023
Translations and localization may be necessary to ensure effective communication with customers in different countries.
Ethics and values: Companies need to be aware of ethical and cultural values in different countries and ensure that their marketing efforts are consistent with these values.
Cultural insensitivity or perceived unethical behavior can damage a company’s reputation and harm its chances of success in the market.
Legal and regulatory frameworks: Different countries may have different legal and regulatory frameworks that can impact a company’s ability to enter and operate in a particular market.
Companies need to be aware of these frameworks and ensure that their marketing efforts comply with local laws and regulations.
Brand recognition: A company’s brand recognition in its home country may not necessarily translate to success in international markets.
Companies need to invest in building their brand awareness in different countries and adapt their branding strategies to local cultures and preferences.
Market research: Conducting thorough market research is crucial to the success of international marketing efforts. MMPC 016 Solved Free Assignment 2023
Companies need to understand the needs, preferences, and behavior of their target market in different countries to develop effective marketing strategies.
Q 5. Discuss the major challenges associated with appraisal of expatriate managerial performance. What should be the main objectives of a multinational firm with regard to its compensation policies?
Ans. Appraisal of expatriate managerial performance can be challenging due to several factors, including:
Cross-cultural differences: Expatriates are often placed in a foreign environment with different cultural norms, which can affect their performance and make it difficult to evaluate them objectively.
Language barriers: Communication difficulties can arise when expatriates do not speak the local language fluently, making it hard to assess their performance accurately. MMPC 016 Solved Free Assignment 2023
Different work practices: Expatriates may be used to different work practices in their home country, which can be challenging to adapt to in a new environment.
The expatriate’s personal life: The expatriate’s personal life, such as family or health issues, can affect their work performance, making it difficult to separate personal and professional issues when evaluating their performance.
To address these challenges, multinational firms should have a well-designed performance appraisal system that takes into account the unique challenges faced by expatriates.
This system should include clear performance standards, regular feedback, and opportunities for the expatriate to provide input on their own performance.
In addition to the appraisal system, multinational firms must also have a compensation policy that reflects the objectives of the company. The main objectives of a multinational firm’s compensation policies should include:
Attracting and retaining talent: Multinational firms need to attract and retain top talent, including expatriate managers, to maintain a competitive advantage in the global marketplace. MMPC 016 Solved Free Assignment 2023
Ensuring equity: Compensation policies should be fair and equitable across all employees, regardless of their country of origin or location.
Motivating employees: Compensation policies should be designed to motivate employees to perform at their best and align with the company’s objectives.
Managing costs: Compensation policies should be cost-effective and sustainable, taking into account the company’s financial resources.
Compliance: Compensation policies should comply with local laws and regulations, including tax and social security requirements.
To achieve these objectives, multinational firms may use various compensation strategies, including:
Home country-based compensation: Expatriates are paid according to the compensation policies of their home country, regardless of the cost of living in the host country. MMPC 016 Solved Free Assignment 2023
This approach may be suitable for short-term assignments but may not be sustainable in the long run.
Host country-based compensation: Expatriates are paid according to the compensation policies of the host country, taking into account the cost of living and other factors.
This approach may be more expensive but can be necessary for long-term assignments.
Balance sheet approach: This approach aims to balance the cost of living differences between the home and host countries by providing additional benefits, such as housing allowances, tax equalization, and cost of living adjustments.
Global compensation: This approach aims to provide a standardized compensation package across all locations, regardless of the cost of living or local factors.
This approach may be suitable for highly skilled expatriates who are in demand globally.
Multinational firms should also consider the impact of currency fluctuations on their compensation policies.
Currency fluctuations can affect the purchasing power of expatriate managers’ salaries, so companies may need to adjust their compensation policies accordingly.
Another challenge associated with expatriate management is the repatriation process. MMPC 016 Solved Free Assignment 2023
Multinational firms need to have a well-designed repatriation process to ensure that expatriates can successfully reintegrate into their home country’s workforce.
The repatriation process should include career planning, training, and support to ensure that the expatriate’s skills and experience are utilized effectively within the company.
Q 6. Write notes on the following:
a) Heckscher-Ohlin Theory.
Ans. The Heckscher-Ohlin Theory is an economic theory that explains the basis for international trade.
The theory is named after its two originators, Eli Heckscher and Bertil Ohlin, who developed the theory in the early 20th century.
The theory states that countries will export goods that make use of their abundant and cheap factors of production and import goods that require their scarce factors of production. MMPC 016 Solved Free Assignment 2023
The Heckscher-Ohlin Theory is based on the following assumptions:
Countries have different endowments of factors of production, such as labor, capital, and land. These endowments determine a country’s production possibilities and comparative advantage.
The factors of production are mobile within countries, but immobile between countries. That is, labor and capital can move freely within a country, but they cannot move freely across borders.
Production technology is the same across countries, and there are constant returns to scale. That is, a doubling of inputs will lead to a doubling of outputs.
Under these assumptions, the Heckscher-Ohlin Theory predicts that countries will specialize in the production of goods that make intensive use of their abundant and cheap factors of production and export those goods.
Conversely, they will import goods that require their scarce factors of production.
For example, a country with an abundance of capital and a shortage of labor will specialize in producing capital-intensive goods, such as cars, and import labor-intensive goods, such as clothing.
The Heckscher-Ohlin Theory has several important implications for international trade. MMPC 016 Solved Free Assignment 2023
First, it suggests that trade can be beneficial to all countries involved, as they can specialize in producing goods in which they have a comparative advantage.
This can lead to increased production and consumption of goods, higher economic growth, and increased welfare for all countries.
Second, the theory predicts that trade can result in income redistribution within countries.
Countries that are abundant in capital will experience an increase in the demand for capital-intensive goods and a decrease in the demand for labor-intensive goods.
As a result, the owners of capital will benefit from trade, while laborers may be negatively impacted.
Third, the theory predicts that changes in a country’s factor endowments can affect its trade patterns. MMPC 016 Solved Free Assignment 2023
For example, if a country experiences an increase in its labor supply, it may shift its production towards labor-intensive goods, leading to increased exports of those goods.
Despite its contributions to understanding international trade, the Heckscher-Ohlin Theory has been subject to several criticisms.
One major criticism is that it does not account for differences in production technology across countries.
If one country has a more advanced production technology than another, it may be able to produce goods more efficiently, even if it does not have an absolute advantage in any particular factor of production.
Another criticism is that the theory assumes that factors of production are completely immobile between countries.
In reality, there are various barriers to the movement of labor and capital, such as immigration policies, tariffs, and regulations.
These barriers can limit the ability of countries to specialize in the production of goods in which they have a comparative advantage.
Finally, the theory assumes that production technology is the same across countries and that there are constant returns to scale.
In reality, production technology can differ greatly across countries, and there may be decreasing or increasing returns to scale in different industries.
b) Foreign Investment.
Ans (b) Foreign investment refers to the acquisition of assets or control of a company by an individual or organization from another country.
It can take many forms, including direct investment, portfolio investment, and foreign aid. MMPC 016 Solved Free Assignment 2023
Foreign investment can have significant economic and political implications for both the investing country and the host country.
Direct investment is a type of foreign investment where an individual or organization acquires a controlling stake in a company or establishes a new subsidiary in the host country.
Direct investment allows the investing country to control the operations of the company and to gain access to the host country’s market, resources, and technology.
Direct investment can bring several benefits to both the investing country and the host country.
For the investing country, direct investment can provide access to new markets and resources, diversify their operations, and reduce their production costs.
By investing in a foreign country, the investing country can also reduce its political risk, as it can spread its investments across different countries and regions.
For the host country, direct investment can bring several benefits, including job creation, technology transfer, and access to capital.
Direct investment can also stimulate economic growth and development by increasing investment, production, and trade.
Additionally, direct investment can help the host country to develop its infrastructure, such as transportation, communication, and energy systems.
Portfolio investment is a type of foreign investment where an individual or organization invests in a company without acquiring a controlling stake.
Portfolio investment can take many forms, including purchasing stocks, bonds, or other securities. MMPC 016 Solved Free Assignment 2023
Portfolio investment allows the investing country to benefit from the performance of the company, without having to manage its operations.
Portfolio investment can bring several benefits to both the investing country and the host country. For the investing country, portfolio investment can provide diversification and higher returns than domestic investments.
For the host country, portfolio investment can provide access to capital, increase liquidity in the financial markets, and stimulate economic growth.
Foreign aid is a type of foreign investment where an individual or organization provides financial or technical assistance to a host country.
Foreign aid can take many forms, including grants, loans, and technical assistance.
Foreign aid is often provided by developed countries to developing countries to support their economic development, alleviate poverty, and promote political stability. MMPC 016 Solved Free Assignment 2023
Foreign aid can bring several benefits to the host country, including access to capital, technical expertise, and resources.
Foreign aid can also help to improve the host country’s infrastructure, education, and healthcare systems, and promote social and economic development.
For the providing country, foreign aid can help to promote their political and economic interests, enhance their reputation, and promote global cooperation.
However, foreign investment can also pose several challenges and controversies. One major challenge is the risk of political instability and expropriation.
In some countries, the government may seize the assets of foreign investors or restrict their operations, leading to significant financial losses.
Additionally, foreign investment can also lead to conflicts over the distribution of resources, labor standards, and environmental protection.
Another challenge is the risk of cultural clashes and social disruption. Foreign investors may encounter resistance from local communities, who may feel that their cultural traditions, natural resources, or livelihoods are threatened by the investor’s activities. MMPC 016 Solved Free Assignment 2023
Additionally, foreign investors may also face challenges in finding and retaining skilled workers, navigating local regulations, and adapting to local customs and practices.