International Business Management Section A Part 1 1a 2. d 3.

Answer d Place 4a 1958 5 a 1986 6 c Culture 7 a Product 8 c Trade Mark 9 c International Market 10 c Evaluative

Part 2 1. Inward-oriented policies are those that encourage an economy through self sufficiency. It does not seek growth by encouraging exports, which can make an economy dependent on foreign markets. It may or may not include tariffs to assist local markets, but it does foster internal markets to meet local needs. 2. The factor endowments theory (a.k.a. Heckscher-Ohlin theory, and the Modern Theory of International Trade) is a modern extension of the classical approach and attempts to explain the pattern of comparative advantage. The theory does this by hypothesizing that comparative advantage is ultimately due to international differences in relative factor endowments. Done for 4 reasons: 1. Natural extension of the classical theory which sees international factor immobility as the basis for trade. 2. Can define factor broadly. 3. Seems important in practice. 4. Very useful theoretically for linking trade to internal income distribution, growth, factor movements, and so on. The basic vehicle for developing this theory is the Heckscher-Ohlin-Samuelson model, a twocountry version of the standard two-sector neoclassical model.

3. Totalitarianism (or totalitarian rule) is a political system where the state recognizes no limits to its authority and strives to regulate every aspect of public and private life wherever feasibleTotalitarian regimes stay in political power through an all-encompassing propaganda campaign, which is disseminated through the state-controlled mass media, a single party that is often marked by political repression, personality cultism, control over the economy, regulation and restriction of speech, mass surveillance, and widespread use of terror. 4. Persistent Dumping Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals). For international price discrimination to take place, conditions must be met: Domestic and foreign markets must be separated. Demand elasticity of the product must be different in two markets. The good can be sold with a lower price where the demand elasticity is high; and with a higher price where demand elasticity is low.

Caselet 1 Answer 1) I would argue that it is not. The major reason for this is that the sizes of domestic markets in the EU vary so widely that it is possible for a country to have a decent GDP per capita even if it is not particularly competitive internationally.For example, France's domestic market is much larger than that of the Eastern European countries that have joined the EU. This means that French companies have had an advantage over Eastern European ones as they have been able to grow without having to export. Right now, France has a higher GDP per capita, but the Eastern European countries are often more competitive internationally because of their low wages.

So, I would argue that countries can become rich without being internationally competitive and poor countries can have advantages in international competition. GDP and other indicators, like consumer prices and exchange rates, are all only general indicators that provide only a rough approximation of competitiveness. Tracking indicators like GDP show only "changes in relative competiveness" (Mattine Durand and Claude Giorno). Therefore, GDP per capita is not a major indicator of international competitiveness among EU countries. Answer 2) The EUs poor record in creating employment was singled out for particular criticism. As this appeared to apply across the board in most industrial sectors, it suggested that the EUs poor performance related to the business environment in general and, in particular, to the inflexibility of Europes labour markets and excessive regulation In markets for goods and services. A shortage of risk capital for advanced

technological development and high cost and inefficiency of Europes financial services can also be pertinent cause for this problem. For one reason or another, European industries generally lag behind in technology industries, if measured by the number of inventions patented in at least two countries, the USA is well ahead of most European countries, as well as Japan. Hence, focusing on flexible markets, market liberalization and the creation of a competitive business environment rather than technical products cannot be supported. Hence, labour is not the only problem that has impacted the growth of the region. It is also the level of technical education and the spirit of research and development that needs to be developed within the country. The problem according to some are also the language barrier that foreigners face in countries such as France and Germany. Case 2 Answer 1 The major issue that Peru faces today is the dominance and influence of Maoists which has impacted the life of the common people. It has also influenced the business environment of the country as the countrys economy and industry to a great extent is now influenced by the socialist ideologies. The government from time to time takes control of the various industries of the country by nationalizing them. Once these industries are nationalized they generally lose an interest in making money hence ends up losing large sum of tax payers money. On the other hand government on its sole discretion can convert any business into nationalized business and take over the assets of the business. This has lead to a highly unstable and uncertain environment for running the businesses. Thus it can be said that due to the reversible nature of policies which govern the nation it can be safely concluded that running a business in Peru is not easy. Equally risky is the business of lending money to the businessman based in the country. Answer 2 If given a choice the bank should try and enter into contract in New York and not Lima. I believe that in Lima the government is not matured enough to create policies that are irreversible in nature. This has been proven again and again over the years. Case in the point is the arbitrary nature of the governments in nationalizing sectors across industries and its irrepairrable damage to the entreprenues who have taken the onus of investing in these sectors so as to earn a livelihood through opportunities. Many a time these businesses end uop having their assets acquired by the government machineries. This leads to fear and panic across businesses irrespective of the sector the cgovernment has carried out its nationalization policies. On the other hand policies in the US are more clear and irreversible. Hence the recourse to these kinds of loans would also be an easy opportunity. Thus, if given a choice any investor would prefer to invest in country where the laws are clear and irreversible. However, the banker can invest if it is protected by

laws of a country which has its policies as clear and irreversible as the US. Hence, investion through US would be the most logical thing for the banker to do.

Section C