Question No. 2 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 2

International marketing communication includes all methods companies use to provide information to and communicate with existing and potential customers and other stakeholders. The international communication process is affected by many factors that complicate communication in an international (cross-country or cross-cultural) setting (see Chapter 9). In this context, aspects such as language differences, economic differences, socio-cultural differences, legal and regulatory differences or competitive differences are crucial.

The international communication mix consists of a diverse set of communication tools such as advertising, personal selling, sales promotions, public relations or direct marketing.

The most viable form of communication is advertising, which often constitutes the most important part of the communication mix in the consumer goods industry. However, in business-to-business markets, advertising is often less important than personal selling.

Marketers engage in international marketing communications with the following objectives in mind: 

Question No. 1 IBO - 02 International Marketing Management Mcom 1st Year

Solutions to Assignments 

IBO-02 International Marketing Management

Solutions to Question No. 1 

After a firm has chosen an attractive market, the next decision to be made is the timing of entry. Entry is considered early, when an international business enters the market prior to other foreign firms and late when it enters after other firms have already established themselves in the market. Entering the market early brings first mover advantages that include the opportunity to establish a strong brand name, acquire demand from the market, increase sales volume, and create switching costs that attach a customer to a given product or service (Kotabe & Kothari, 2016).

However, entering the market early can bring pioneering costs that a firm that enters the market later may be able to avoid. Pioneering costs include the costs of promoting and establishing the product. The probability of a firm surviving in a market increases, if they enter after several other firms have already established the market. Government regulations can also put an early entrant at a disadvantage, because laws can hinder the value of the early entrant’s investment (Hill, 2013).

The next decision that needs to be made is the scale of entry and strategic commitments. Significant assets and resources are needed for a large scale foreign market entry, which commits a firm to the market. Strategic commitments alter the competitive playing field for other firms and produce various changes and inflexibility for the firm. Large scale market entry implies rapid entry and offers the first mover advantages, such as demand acquisition, scale economies, and switching costs.

An entry on a smaller scale allows the firm to build themselves up gradually while becoming better acquainted with the market and limiting exposure to the market. Small scale market entry can also make it difficult for the firm to increase market share, because of their lack of commitment to the market. The small scale entrant reduces potential risk but also misses out on the opportunity for first mover advantages (Porter, 1980).

Taking all of these considerations into mind, there are not right or wrong decisions for a firm to make. Each series of decisions offers unique rewards and benefits and costs and risks.

Different companies grow globally by adopting different types of strategies of entering into foreign markets. Some companies even adopt different strategies for different nations. Various strategies of entering into foreign markets are discussed as follows:

(1) Exporting: Exporting is the most traditional way of entering into foreign market. Initially, a domestic business unit starts its international business by exporting to one nation. Gradually, it expands its exports to various nations. Exporting is very useful when a country has surplus production capacity i.e., its domestic consumption is less than its production capacity 

(2) licensing and Franchising: In licensing business unit of one country (Licensor) allows the business unit of other country (Licensee) to use its technical know-how (patents, trademarks, copyrights, etc.). For this, licensor charges royalty from license for a stipulated period of time. In most of the nations, the rate of royalty ranges from 5 per cent to 8 per cent of sales. Licensing agreements enable the licensor to make maximum utilization of its intellectual property. Licensee, too, can avail the benefits of modern technology by entering into licensing agreement. Under franchising, business unit of one nation (Franchiser) grants right to do business in a particular manner to the business unit of other nation (Franchisee). This right can be with regard to selling the goods under the brand name of franchiser. In some cases, the key components are provided by franchiser to franchisee. In another form of franchising, the manufacturer may appoint dealers in other nations. For example, soft drink manufacturers like Pepsi and Coca-Cola provide the key part of their product, Le. syrup to their franchisee in other nations. The franchisees have their own bottling plants where they make soft drinks but they sell the same under the brand name of franchiser.

(3) Contract Manufacturing: In this agreement, business unit of one nation enters into agreement with manufacturers of other nations to allow them to manufacture the goods at their own, but right to market these goods is retained by the parent foreign enterprise. Under such agreement, the parent foreign enterprise can expand its business to other nations without setting up its own manufacturing plant in other nations. If the parent enterprise feels that marketing in a particular nation is not much profitable, it can have easy exit from that nation as it has not set up its own production plant in other nation.

(4) Joint Ventures: It is a common strategy for getting an entry into foreign market. In joint venture, foreign partner makes an arrangement with local unit of other country in which ownership and management are shared by iocal unit and foreign partner. Local unit has thorough knowledge of domestic conditions and it has its local set-up and infrastructure like manufacturing unit, distribution network, service centres, etc.

(5) Management Contracting: In this arrangement, parent enterprise of one nation sets up management agencies. Through these management agencies, business units of other nations are managed without any stake in ownership/capital. It means the parent enterprise simply provides its managerial expertise to business units of other nations. For this, some fees in the form of percentage of profit or lump sum fee is charged by parent enterprise.

(6) Wholly Owned Subsidiaries: Some companies open wholly owned manufacturing units in other nations. These subsidiary companies are wholly owned by their parent company. MNCs prefer this route for globalization when they want to have complete control over manufacturing activities in other nations. Instead of entering into joint ventures, licensing, franchising, exporting, etc., they set up their own subsidiary units in different nations. MNCs have full ownership and control over these subsidiary units. For example, LG Electronics has set up LG India as its wholly owned manufacturing subsidiary unit. 

IBO-02 International Marketing Management Mcom 1st Year

SOLUTIONS TO ASSIGNMENTS

IBO - 02 - International Marketing Management

Question No. 1 “One of the critical decisions in international marketing is the mode of entering the foreign market”. Discuss                                                     CLICK HERE 

Question No. 2 What is international marketing communication? Discuss its objectives and highlight the key issues in international marketing communication.                 CLICK HERE

Question No. 3 Write short notes on the following: 

(a) International Sales People 

(b) Export agency agreement 

(c) Data sources 

(d) Transfer Pricing                                                  CLICK HERE

Question No. 4 Differentiate between the following: 

(a) Probability and Non-probability Sampling Methods 

(b) Adaptation and Standardization International Advertising 

(c) Domestic agent and Domestic merchants. 

(d) Ethnocentric orientation and Polycentric orientation             CLICK HERE

Question No. 5 Comment briefly on the following statement: 

(a) In addition to the general considerations in packaging, there are certain special factors to be considered in export packaging. 

(b) International marketing displays an interesting paradox with respect to control situation. 

(c) The revolutionary changes in the information technology is sweeping across global business. 

(d) A market research report must use the format that best fits the needs and desires of its readers. 

                                                                                                        CLICK HERE

Question No. 5 IBO - 01 International Business Environment Mcom 1st Year

 

Solutions to Assignments

IBO-01 International Business Environment

Question No. 5 A) 

Political Risks

Geopolitical risk, also known as political risk, transpires when a country's government unexpectedly changes its policies, which now negatively affect the foreign company. These policy changes can include such things as trade barriers, which serve to limit or prevent international trade.

Some governments will request additional funds or tariffs in exchange for the right to export items into their country. Tariffs and quotas are used to protect domestic producers from foreign competition. This also can have a huge effect on the profits of an organization because it either cuts revenues from the result of a tax on exports or restricts the amount of revenues that can be earned.

Countries have implemented free-trade agreements, such as the North American Free Trade Agreement (NAFTA) and other similar measures, in an effort to reduce the number of trade barriers. However, not all of these measures are successful, and ongoing trade wars can disrupt an international company's business and market efficiency. Thus, the everyday differences in the laws of foreign countries continue to influence the profits and overall success of a company doing business transactions abroad.

Question No. 5 B) 

Alternative Dispute Resolution (ADR)

Alternative dispute resolution (ADR) is, in an insurance sense, a number of disparate processes used by companies to resolve claims and contractual disputes. Insured clients who are denied a claim are offered this course of action as a form of recourse. It is employed to avoid expensive and time-consuming litigation and arbitration.

Alternative dispute resolution (ADR) is designed to settle disputes outside of the courtroom with the help of an impartial third party. This path is generally accessible after efforts between the client and the insurer to resolve any differences between themselves fails and reaches an impasse.

Many insurance policies contain mandatory alternative dispute resolution (ADR) clauses, depending on the state. The two most common forms of alternative dispute resolution (ADR) are:

1. Mediation: An independent third party steps in to try and find a way for the insured and the insurer to agree on a mutually acceptable outcome. The mediator is not called upon to decide who is right but rather to add structure to communication between the disputing parties, so that they can, hopefully, eventually reach a resolution between themselves.
2. Arbitration: A neutral independent party called an arbitrator listens to arguments from both sides, collects evidence, and then decides on the outcome of the dispute, similar to a court ruling. Arbitration can either be non-binding or binding. The latter means the decision is final and enforceable, while the former implies that the arbitrator’s ruling is advisory and only set in stone if both parties agree to it.

Question No. 5 C) 

Wagering Agreement

Agreements entered into between parties under the condition that money is payable by the first party to the second party on the happening of a future uncertain event, and the second party to the first party when the event does not happen, are called Wagering Agreements or Wager. There should be mutual chance of profit and loss in a wagering agreement. Generally wagering agreements are void.

Wager means a bet. It is a game of chance where the probability of winning or losing is uncertain. The chance of either winning or losing is wholly dependent on an uncertain event.

Parties involved in a wagering contract mutually agree upon the nature of the agreement that either one will win. Each party stands equally to win or lose the bet. The chance of gain or the risk of loss is not one sided. If either of the parties may win but not lose, or may lose but cannot win, it is a wagering contract.

The essence of a wagering contract is that neither of the parties should have any interest in the contract other than the sum, which he will win or lose. Parties to a wagering contract focus mainly on the profit or loss they earn.

Question No. 5 D) 

Code of Ethics for International Marketing

A large amount of international trade is carried out by MNCs that are under conflicting pressures of their stakeholders. Some of the notable pressures on them are listed below.

Pressure to meet demands of consumers of their products, having apparently similar characteristics and expectations from products and services, but differing in their lifestyles and environmental factors. Pressure to meet the expectations of shareholders about rate of return on investment, requiring them to be prudent investors and to effectively handle various risks of their activities. Pressure to do effective financial management including availing all legally permissible tax benefits. Pressure to compete effectively in their markets.

A review of various pressures on major player in international trade shows the need to clearly lay down guidelines, in form of code ethics, for their employees. Such code of ethics should lay down guidelines for operating in various markets, particularly focusing on places where unethical behaviour is more common. However, as the player have been more concerned with growth and development of their business, the code of conduct has been emphasized and laid down by outside agencies such as OECD, International Chamber of commerce, International Labour Organization and UN Committee on Transnational Corporations. These codes address issues related to MNCs and their stakeholders such as host government, the public, consumers and employees.

Apart from conforming to general ethical behaviour, the ethical codes of the companies active in international trade should ensure the following.

i) Need to respect laws and regulations of the host countries and do nothing to compromise with the health and safety of consumers. US laws on product liability, a big litigation issue, is an extreme case that affects the development of new products, especially the pharmaceuticals. Such legislation makes small firms reluctant to export to USA due to prohibitive cost of litigation.

ii) Firms should not exploit the weakness in legislation in host countries such as selling products in these markets that are banned elsewhere.

 iii) The firms can be proactive and assist the governments in preventing marketing of unsafe products. However, the close relationship developed by firm with the local government, should not be misused such as gaining competitive advantage through adaptation of company's product specification, taking advantage of local lack of expertise in a particular area.

Question No. 4 IBO - 01 International Business Environment Mcom 1st Year

Solutions to Assignments

IBO-01 International Business Environment

Question No. 4 A) 

Indian foreign trade policy does not facilitate the import of technology. 

The foreign trade policy is constitutionally a set of guidelines for the import and line of goods and services. These are established by the Indian foreign trade policy does not facilitate the import of technology Directorate General of Foreign Trade (DGFT), the governing body for the advancement and facilitation of exports and contents under the Ministry of Commerce and Industry. The policy is notified for a period of five generations. It's contemporized every generation on March 31, and the changes come into effect from April 1.

The problem may lie in the low penalty assessed on companies that don't meet their line obligation. Reports say that there are cases of conscious delinquency, where companies find that it’s cheaper to import under the EPCG yea after considering government- Indian foreign trade policy does not facilitate the import of technology assessed penalties. That defeats the ambition of the scheme, which is to increase exports. The new FTP should either strengthen the being scheme or revamp it to promote exports.

The being FTP focuses on the Commodities Exports from India Scheme (MEIS)-- an blend of anterior staples creation schemes. The MEIS is constitutionally an impetus scheme, where exporters admit duty credit scrips for a chance of the value of the goods exported. These scrips can be used to pay a variety of duties and duties.

The government also has the duty disbenefit scheme (DBK) in place to help exporters. Notwithstanding, Indian foreign trade policy does not facilitate the import of technology as it stands, the DBK scheme is n’t like effective, and we'd like to see it caught in the new FTP. It offers a duty disbenefit as a chance of the exported price-- but with a cap. Effectively, this gives an exporter of extravagant, high- quality goods the same DBK as an exporter of cheap goods. The new DBK (or its substitutive) should count for the value of exports and promote it therefore.

WTO docile schemes This should be at the core of the FTP. The WTO works to discourage governments from heavily subsidizing exporters to give a ranking playing field to all nations. The Indian government is well mindful of the need to stay within the WTO morality and has before taken significant pathway to withdraw appropriation- led schemes.

Fabric breakthrough An fruitful and far-reaching fabric network-- magazines, harborages, SEZs, quality testing labs, document centers, and so on-- will help exporters stay competitive in a cut-throat demand. The Trade Fabric for Indian foreign trade policy does not facilitate the import of technology Export Sector (TIES) is a good drive set up to give backing hand for commodity fabric including cold chains, quality testing labs, havens, payload fence, and so on. TIES was launched in 2017 for three whiles.

Exports are a vital part of the country’s GDP. Foreign trade must be given sufficient weightiness and investment. Several good way have before been taken, but there’s a long way to go. Rather than take reactive makeshift measures, the Indian foreign trade policy does not facilitate the import of technology FTP could take visionary way to secure that exports are sustainable for Indian companies and in line with WTO standards. The new FTP could be one other step on the path to a vibrant, durables- led thrift.

Question No. 4 B)

ICC has no role in arbitration and conciliation. 

During the last quarter of the twentieth century, multinational mass-market arbitration has gained worldwide acceptance as the normal means of resolving multinational mass-market dissensions. National laws on arbitration have been modernised on all mainlands. International conventions on arbitration have been inked or hewed to with poignant success. ICC has no role in arbitration and conciliation. Arbitration has run part of the institute of large math of law academies. With the piecemeal junking of political and trade hedges and the quick globalisation of the world scrimping, new challenges have been created for arbitration institutions in response to the growing demand of parties for certainty and pungency, lower speed and pliantness as well as justice and efficacity in the resolution of multinational dissensions. There has been a substantial increase not only in the number of cases, their complexity, the quantities in dissension and the diversity of the parties, but also in the demands made on the process by the parties.

 Since the International Court of Arbitration was established in 1923, ICC arbitration has been constantly nourished by the experience gathered by the ICC International Court of Arbitration in the course of administering some ICC has no role in arbitration and conciliation. ten thousand multinational arbitration cases, now involving each span parties and referees from over 100 countries and from a diversity of legal, moneymaking, artistic and vocabular backgrounds.

The present ICC Rules of Arbitration, in effect as of January 1, 1998, constitute the first major review of the Rules in fresh than 20 spells, following an intense, worldwide dialogue process. The changes made are designed to reduce holdups and obliqueness and to fill certain gaps, taking into account the progress of arbitration practice. ICC has no role in arbitration and conciliation. The meat-and-potatoes features of the ICC arbitration system haven't been altered, notwithstanding, notably its universality and suppleness, as well as the central purpose played by the International Court of Arbitration in the administration of arbitral cases.

 Every ICC arbitration is conducted by an arbitral court with responsibility for examining the values of the case and rendering a final award. Each spell, ICC arbitrations are held in some 40 countries, in several languages and with referees of some 60 different races. The work of those arbitral courts is watched by the ICC International Court of Arbitration, which meets at least three (and hourly four) times a month all spell round. ICC has no role in arbitration and conciliation. Presently composed of some 65 members from over 55 countries, the Court's function is to organise and supervise arbitrations held under the ICC Rules of Arbitration. The Court must remain constantly alert to changes in the law and the practice of arbitration in all tract of the world and must put its working tacks to the evolving requirements of parties and referees. For the day-to- day regulation of cases in several languages, the ICC Court is supported by a Secretariat predicated at the headquarters of the International Chamber of Commerce, in Paris.

The current ICC Rules of Conciliation entered into force on January 1, 1988. Conciliation is a process independent of arbitration. ICC has no role in arbitration and conciliation. It remains entirely voluntary unless the parties have otherwise agreed. The ICC Rules of Arbitration don't warrant the parties to try war previous to commencing an arbitration. So, too, the Rules permit war to be tried without warranting that the nonconcurrence be related to arbitration subsequently if the war work is vain.

 The ICC recommends that all parties wishing to make reference to ICC arbitration in their contracts use the succeeding standard clause.

"All dissensuses arising out of or in connection with the present contract shall be ultimately settled under the Rules of Arbitration of the International Chamber of Commerce by one or further referees appointed in consonance with the said Rules."

Question No. 4 C) 

All contracts are agreements but all agreements are not contracts.

All Contracts are Agreements

All Contracts are agreements as for the formation of a contract, an agreement is always necessary. There cannot be a contract where there is no agreement. Without an agreement, a contract cannot be formed. Therefore, All Contracts are Agreements. 

All Agreements are not Contracts 

Only those agreements become contract which gives rise to a legal obligation. If no legal duty is enforceable by an agreement, it can never be a contract. And hence agreement is a broader term than Contract.

When Agreement becomes Contract

An agreement is regarded as a contract when it is enforceable by law. The conditions of enforceability are stated in S. 10 of the Indian contract act 1872. According to this section, an agreement becomes a contract when the agreement is made for some consideration between the parties which are competent to contract and are entering into Contract with their free consent and has a lawful objective. A lease agreement between two bodies corporate was held legal where it was signed by one only, representing both sides because he was a director in both the legal entities. 

What Agreements are Contracts?

All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void.

Question No. 4 D)

World Trade is not concentrated in a few countries and products.

Integration into the world economy has proven a powerful means for countries to promote economic growth, development, and poverty reduction. Over the past 20 years, the growth of world trade has averaged 6 percent per year, twice as fast as world output. But trade has been an engine of growth for much longer. Since 1947, when the General Agreement on Tariffs and Trade (GATT) was created, the world trading system has benefited from eight rounds of multilateral trade liberalization, as well as from unilateral and regional liberalization. Indeed, the last of these eight rounds (the so-called "Uruguay Round" completed in 1994) led to the establishment of the World Trade Organization to help administer the growing body of multilateral trade agreements.

The resulting integration of the world economy has raised living standards around the world. Most developing countries have shared in this prosperity; in some, incomes have risen dramatically. As a group, developing countries have become much more important in world trade—they now account for one-third of world trade, up from about a quarter in the early 1970s. Many developing countries have substantially increased their exports of manufactures and services relative to traditional commodity exports: manufactures have risen to 80 percent of developing country exports. Moreover, trade between developing countries has grown rapidly, with 40 percent of their exports now going to other developing countries.

However, the progress of integration has been uneven in recent decades. Progress has been very impressive for a number of developing countries in Asia and, to a lesser extent, in Latin America. These countries have become successful because they chose to participate in global trade, helping them to attract the bulk of foreign direct investment in developing countries. This is true of China and India since they embraced trade liberalization and other market-oriented reforms, and also of higher-income countries in Asia—like Korea and Singapore—that were themselves poor up to the 1970s.

But progress has been less rapid for many other countries, particularly in Africa and the Middle East. The poorest countries have seen their share of world trade decline substantially, and without lowering their own barriers to trade, they risk further marginalization. About 75 developing and transition economies, including virtually all of the least developed countries, fit this description. In contrast to the successful integrators, they depend disproportionately on production and exports of traditional commodities. The reasons for their marginalization are complex, including deep-seated structural problems, weak policy frameworks and institutions, and protection at home and abroad.