Beruflich Dokumente
Kultur Dokumente
MBA
SEMESTER
4th
goods and services available to their citizens, rather than their gold reserves.
While there are possible gains from trade with absolute advantage, the gains
may not be mutually beneficial. Comparative advantage focuses on the range
of possible mutually beneficial exchanges.
C) Comparative advantage theory- The classical theory of international trade
is popularly known as the Theory of Comparative Costs or Advantage. It was
formulated by David Ricardo in 1815.
The classical approach, in terms of comparative cost advantage, as presented
by Ricardo, basically seeks to explain how and why countries gain by trading.
The idea of comparative costs advantage is drawn in view of deficiencies
observed by Ricardo in Adam Smiths principles of absolute cost advantage in
explaining territorial specialisation as a basis for international trade.
Being dissatisfied with the application of classical labour theory of value in the
case of foreign trade,
Ricardo developed a theory of comparative cost advantage to explain the
basis of international trade as under:
Ricardos Theorem:
Ricardo stated a theorem that, other things being equal, a country tends to
specialise in and export those commodities in the production of which it has
maximum comparative cost advantage or minimum comparative
disadvantage. Similarly, the countrys imports will be of goods having relatively
less comparative cost advantage or greater disadvantage.
To explain his theory of comparative cost advantage, Ricardo
constructed a two-country, two-commodity, but one-factor model with
the following assumptions:
D) Product lifecycle theory - The International product life cycle, which was
developed by the economist Raymond Vernon in 1966, is still a widely used
model in economics and marketing.
Products enter the market and gradually disappear again. According to
Raymond Vernon, each product has a certain life cycle that begins with its
development and ends with its decline.
According to Raymond Vernon there are four stages in a products life cycle:
introduction, growth, maturity and decline. The length of a stage varies
for different products, one stage of the product life cycle may last some weeks
while others even last decades. This shows that the product life cycle is very
similar to the diffusion of innovation model that was developed by Everett
Rogers in 1976. The life span of a product and how fast it goes through the
entire cycle depends on for instance market demand and how marketing
instruments are used.
There are three stages of product lifecycle -When an organization has
developed a product successfully, it will be introduced into the national (and
international) outlet. In order to create demand, investments are made with
respect to consumer awareness and promotion of the new product in order to
get sales going. At this stage, profits are low and there are only few
competitors. When more items of the product are sold, it will enter the next
stage automatically.
Growth
In this stage the demand for the product increases sales. As a result, the
production costs decrease and high profits are generated. The product
becomes widely known, and competitors will enter the market with their
own version of the product. Usually, they offer the product at a much lower
sales price. To attract as many consumers as possible, the company that
developed the original product will still increase its promotional spending.
When many potential new customers have bought the product, it will enter
the next stage
Maturity
In the maturity stage of the Product life cycle, the product is widely known
and is bought by many consumers. Competition is intense and a company
will do anything to remain a stable market leader. This is why the product is
sold at record low prices. Also, the company will start looking for other
commercial opportunities such as adaptations or innovations to the product
and the production of by-products. Furthermore, consumers will also be
encouraged to replace their current product with a new one. There is fear
of decline of the product and therefore all the stops will be pulled out in
order to boost sales. The marketing and promotion costs are therefore very
high in this stage.
decline
At some point, however, the market becomes saturated and the product is
no longer sold and becomes unpopular. This stage of the Product life cycle
can occur as a natural result but can also be stimulated by the introduction
of new and innovative products. Despite its decline in sales, companies
continue to offer the product as a service to their loyal customers so that
they will not be offended.
(v) infrastructure.
Porter also found that countries with factor disadvantages were forced to
innovate to overcome these problems, e.g.Japanese firms experienced high
energy costs and were forced to develop energy efficient products and
processes that were subsequently demanded worldwide.
Demand Conditions
There must be a strong home market demand for the product or service.
This determines how industries perceive and respond to buyer needs and
creates the pressure to innovate. A compliant domestic market is a
disadvantage because it does not force the industry to become innovative and
excellent.
Related and supporting industries
The success of an industry can be due to its suppliers and related industries.
Sweden's global superiority in its pulp and paper industries is supported by a
network of related industries including packaging, chemicals, woodprocessing, conveyor systems and truck manufacture. Many of these
supporting industries have also achieved leading global positions.
Firm strategy, structure and rivalry
Organisational goals can be determined by ownership structure. Unquoted
companies may have slightly longer time horizons to operate in because their
financial performance is subject to much less scrutiny than quoted companies.
They may also have different 'return on capital' requirements.
Porter found that domestic competition was vital as a spur to innovation and
also enhanced global competitive advantage. Conversely, where governments
have encouraged mergers to get the critical mass required to be a global
player, these national monopolies have not, on the whole, been successful in
establishing a global position.
Ques.2- Hofstede said Culture is more often a source of conflict than of
synergy. Discuss this statement and explain the five cultural dimensions.
Ans- Hofstede's cultural dimensions theory is a framework for crosscultural communication, developed by Geert Hofstede. It describes the effects
of a society's culture on the values of its members, and how these values
relate to behavior, using a structure derived from factor analysis.[1]
Answer 3:
Regional integration:
Regional integration is the process by which two or more nation-states agree
to co-operate and work closely together to achieve peace, stability and wealth.
It results in the creation and diversion of trade. It supports overall growth of
the region, coupled with efficient trading practices. Trade creation increases
production and income and also leads to new entrants in the market and,
therefore, results in tougher competition. The transfer of technology is also
faster.
It includes reduction on traffic and prohibitions. It spread goodwill among
member countries and also helps in reducing the chances of conflict.
Types of Regional Integration:
1. Preferential trading agreement: It gives preferential access to certain
products from the participating countries. This can be called as a limited or
sector based free trade area.
2. Free trade area: It includes the reciprocal removal of tariffs on member
countries goods. In an FTA, each member is free within the limits specified by
the
GATT/WTO system on deciding the level of external tariffs that will be applied
to
nonmembers. As there is flexibility on the interactions with the third countries,
the
members in an FTA are free to establish or join other FTAs.
3. Custom union: It is a type of agreement that include determination of the
common external tariff (CET), in addition to the elimination of the internal tariff
rates. Generally, determination of the CET is done through taking an average
of all partners before union tariff levels.
4. Common market: It is where there is free factor mobility capital,
investment and labor in addition to the customs union requirements that
determine free flows of goods and services. This integration requires
addition, a very small number of countries, notably the United States, also tax
their nonresident citizens on worldwide income.
The bases of international tax system are:
Tax neutrality- The neutrality of international tax system is important
because it must not affect the economic efficiency. If the tax is neutral then
it will not influence the locality of the investment or nationality of the
investor. The capital can shift from a nation with lesser return to a nation
with higher return. Therefore, resources will be allocated well, and the
gross world output in turn will be high.
Tax equity- The principle of tax equity states that all equally positioned tax
players contribute in the cost of operating the government according to the
equal rules. The idea of equity can be understood in two ways. The first
one states that the input of each tax player must be consistent with the
amount of public services as received. The second idea is that the
contribution of each tax player must be in terms of their ability to pay. The
ability to pay means the one with greater ability is likely to pay a larger
amount of tax.
Avoidance of double taxation- The avoidance of double income states
that one must not be taxed twice for the same income. However, if the
post-tax income is sent to the foreign countries then in that case the receiver
of such income is taxed again. This implies the same income is
subjected to double taxation. As an alternative, the requirements of foreign
tax credits may be formed in the domestic tax system. There also exist
some tax laws which prevent the tax through artificial transactions such as
transfer pricing. In addition, the corporate structures will help to reduce the
Ques-5 Strategic planning involves allocation of resources to firms to fulfil their
long term goals. What are the types of strategic planning? Compare Top-down
Vs Bottom-up planning.
Answer 5:
There are three main types of plans that a manager will use in his or her
pursuit
of company goals, which include
[A]Strategic : Strategic plans are designed with the entire organization in mind
and begin with an organization's mission. Top-level managers, such as CEOs
or
presidents, will design and execute strategic plans to paint a picture of the
desired future and long-term goals of the organization. Essentially, strategic
plans
look ahead to where the organization wants to be in three, five, even ten
years.
Strategic plans, provided by top-level managers, serve as the framework for
pizza or even considering ways to better map out delivery routes and drivers.
As
a tactical planner, Martha needs to create a set of calculated actions that take
a
shorter amount of time and are narrower in scope than the strategic plan is but
still help to bring the organization closer to the long-term goal.
Compare Top-down Vs Bottom-up planning?
1. Executive Decision Making
In a top down strategic management model, ownership or high-level
management personnel determine objectives and how the rest of the business
will work toward accomplishing those objectives. As a small business owner,
this
puts all the responsibility on you and your management team to come up with
how you will make your company successful and how each employee will
contribute to that success.
2. Advantages and Disadvantages
If you want to direct every aspect of how your business operates to
accomplish
its goals and objectives, a top down strategic management model can provide
you with the necessary level of control. This ensures your small business
operates exactly to your specifications. Problems can arise with this strategic
management model because your company's success rides directly on the
shoulder's of your business savvy.
3. Workforce Strategy Development
By contrast, a bottom up strategic management model seeks to develop ideas
using the brainpower of your entire workforce. You, as the small business
owner,
still determine the overall goals for your company along with the dates you'd
like
to see these goals accomplished, but your employees of all levels assist in
developing the mechanisms to reach those goals. Your management team
compiles all the ideas from group brainstorming sessions and departmental
meetings to allow you to select the strategies showing the most promise.
4. Benefits and Problems
Involving your entire workforce in a bottom up strategic management model
can
build morale and a sense of ownership of your company's direction among
employees of all levels. Your employees will be more actively engaged in the
work and strive harder to reach objectives. This strategic model can also
cause a
logjam of ideas on your desk and make it difficult to sort through the
information
to come up with an effective plan for reaching company goals
There are three main types of plans that a manager will use in his or her
pursuit
of company goals, which include
[A]Strategic : Strategic plans are designed with the entire organization in mind
and begin with an organization's mission. Top-level managers, such as CEOs
or
presidents, will design and execute strategic plans to paint a picture of the
desired future and long-term goals of the organization. Essentially, strategic
plans
look ahead to where the organization wants to be in three, five, even ten
years.
Strategic plans, provided by top-level managers, serve as the framework for
lower-level planning. Example is Tommy is a top-level manager for Nino's
Pizzeria. As a top-level manager, Tommy must use strategic planning to
ensure
the long-term goals of the organization are reached. For Tommy, that means
developing long-term strategies for achieving growth, improving productivity
and
profitability, boosting return on investments, improving customer service and
finding ways to give back to the community in which it operates.
[B]Operational: Operational plans sit at the bottom of the totem pole; they are
the plans that are made by front-line, or low-level, managers. All operational
plans are focused on the specific procedures and processes that occur within
the
lowest levels of the organization. Managers must plan the routine tasks of the
department using a high level of detail. Frank, the front-line manager at Nino's
Pizzeria, is responsible for operational planning. Operational planning
activities
for Frank would include things like scheduling employees each week;
assessing,
ordering and stocking inventory; creating a monthly budget; developing a
promotional advertisement for the quarter to increase the sales of a certain
product (such as the Hawaiian pizza) or outlining an employee's performance
goals for the year. Operational plans can be either single-use or ongoing
plans.
Single-use plans are those plans that are intended to be used only once. They
include activities that would not be repeated and often have an expiration.
Creating a monthly budget and developing a promotional advertisement for
the
quarter to increase the sales of a certain product are examples of how Frank
would utilize single-use planning.
[C]Tactical: Tactical plans support strategic plans by translating them into
specific plans relevant to a distinct area of the organization. Tactical plans are
concerned with the responsibility and functionality of lower-level departments
to
fulfill their parts of the strategic plan. For example, when Martha, the middlelevel
manager at Nino's, learns about Tommy's strategic plan for increasing
productivity, Martha immediately begins to think about possible tactical plans
to
ensure that happens. Tactical planning for Martha might include things like
testing
a new process in making pizzas that has been proven to shorten the amount
of
time it takes for prepping the pizza to be cooked or perhaps looking into
purchasing a better oven that can speed up the amount of time it takes to
cook a
pizza or even considering ways to better map out delivery routes and drivers.
As
a tactical planner, Martha needs to create a set of calculated actions that take
a
shorter amount of time and are narrower in scope than the strategic plan is but
still help to bring the organization closer to the long-term goal.
Compare Top-down Vs Bottom-up planning?
1. Executive Decision Making
In a top down strategic management model, ownership or high-level
management personnel determine objectives and how the rest of the business
will work toward accomplishing those objectives. As a small business owner,
this
puts all the responsibility on you and your management team to come up with
how you will make your company successful and how each employee will
contribute to that success.
2. Advantages and Disadvantages
If you want to direct every aspect of how your business operates to
accomplish
its goals and objectives, a top down strategic management model can provide
BOTTOM -UP
Flexibility
Team Work
Project is team driven
Lack of long -term vision.
High level of team motivation.
Employee feel valued.
TOP - DOWN
Goals are determined early in process
Inflexibility.
Lack of employee participation.
Process imposed by management.
Lack of motivation.
management---nature-scopeobjective_h86amp3f.html#sthash.QidSbg3I.dpuf