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International Business
September 2022 Examination
Q1.“Globalization is the interdependence and integration of the global economy
to enhance the
worldwide exchange
of capital, goods and services.”
– In the light of above statement analyze advantages
and
disadvantages of Globalization. (10 Marks)
Ans 1.
Introduction:
The fusion of financial and cultural
systems is what propels globalization, also called as globalization in some
places of the globe. The method of globalization is how concepts, technology,
expertise, products, and activities go across national and international
borders. The phrase is used in the business world to refer to linked economies
characterized by trade liberalization, the free movement of capital across
nations, and simple access to international resources, especially labor
markets, in order to maximize profits and advantage for the general welfare.
Countries specialize in the goods
Q2. “Payment
instruments are the documents
needed to fulfil formalities and
legal requirements of a contract between an exporter and importer” – In context of above statement explain about various payment options used in International Business.
Also, explain different types of Letters of Credit. (10 Marks)
Ans 2.
Introduction:
International commerce involves a
range of risks, which raises issues about the timeliness of transactions
between both the exporter i.e. seller and the importer i.e. foreign buyer.
Payment terms are the requirements that international commercial parties have
agreed on in order to finalize payment. They are sometimes known to as the
payment options that exporters and importers can use to finish their trade
contracts. The payment schedule includes a wide range of crucial trade-related
concerns. These compromise whether payment will be made prior to delivery, who
owns
Q3. Gillette Targets
Emerging Markets’
As it entered the
twenty-first century, Gillette faced a
difficult choice. Should it continue targeting emerging markets or not? Its strategy to move aggressively into markets in the developing world and the former Soviet bloc had been hailed as a success only a few years before. Recent poor earnings, however, had management considering
whether this choice had
been a wise one.
The Boston-based firm was founded in 1895 and is still best known for
its
original products,
razors and razor blades. By the end of the twentieth century, Gillette had grown into a global
corporation that
marketed. its
products in 200 countries
and employed 44,000 people worldwide. About
1.2 billion people use Gillette products every day. Its sales are about equally
distributed among the United States (30 per cent), Western Europe (35 per cent), and the rest of the
world (35 per
cent).
As markets matured in developing countries, Gillette sought growth through product diversification, moving into lines such as home permanents, disposable lighters, ballpoint pens, and batteries. In the mid-1990s, Gillette targeted several key emerging markets for growth.
Among them were Russia, China,
India and Poland.
Russia was already a success story. Gillette had formed a Russian joint venture in St.Petersburg
and within 3 years, Russia had
become
Gillette’s third-largest blade market.
Gillette’s move into the Czech Republic had prospered as well and in 1995 Gillette bought
Astra,
a 10caI; privately-owned razor blade
company. Astra gave Gillette expanded brand presence in the Czech market. Astra’s relatively strong position in export markets in East
Europe, Africa
and
Southeast Asia proved a
boon to Gillette
in those markets as well. Jus.t as
in other markets in the developing world, 70 per cent of East European blade
.consumers used
the older, lower-tech double-edge blade. In more
developed markets, consumers appreciated product innovation and the shaving market had moved to more high-tech systems such as Gillettes Sensor.)
Then disaster
struck. A financial crisis
that began in Thailand quickly spread across Asia. Many wary investors responded by pulling money out of other
emerging markets as well as depressing
economies across the
globe. Bad economies meant slower sales for Gillette, especially in Asia,
Russia and Latin America. In Russia, wholesalers could not afford to buy
Gillette products. Consequently, these products disappeared from retail stores and Gillette’s Russian sales
plummeted 80 per cent
in a single
month.
Gillette
found it could not meet its projected annual profit growth of 15-20 per cent. The
price
of Gillette shares tumbled 36 per cent in 6 months. To save money, Gillette planned to close 14 factories and
layoff 10 per cent of its workforce.
Despite its recent bad experience in developing countries and in the former Soviet bloc, Gillette was still moving ahead with plant expansion plans in Russia and Argentina that would
total $64 million. Some even suggested that this
was
a good time to expand in the emerging markets by
buying up smaller competitors that had been hurt even worse by the crises.
Meanwhile, back in the developed world,
another large global consumer
products firm, Unilever, announced that it would be entering the razor market.
a. Why do companies such as Gillette target
emerging markets? Do you agree with this
strategy? (5 Marks)
Ans 3 a.
Introduction:
Emerging markets are countries that
are increasing their production capability. They are shifting away from
conventional economies focused on agriculture and raw commodity exports.
Leaders in emerging nations aim to improve the standard of living for their
citizens. They are fast industrialising and transitioning to either a free
market or a mixed economy. They are also referred to as emerging economies or
developing countries. "Emerging markets" refers to an economy that
has had significant economic growth and has some, though not all, of
b. What are the dangers to
Gillette of targeting emerging markets? (5 Marks)
Ans 3 b.
Introduction:
An economy
that is developing into a mature planned economy is called as an emerging
market economy. Emerging market economies are currently industrialising and
frequently have a single currency, equity markets, and financial system. Due to
their quick expansion, emerging market economies may provide investors with
higher returns. It has a developed
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