27/11/2014

i. What

JIMMA UNVRISTY COLLAGE OF BUSSSINESS

AND ECONOMICES
MBA WEEKEND PROGRAM

G R O U P A N A S S I G N M EN T O N
I N T E R N A TI O N A L B U S I N E S S ( M B A 7 2 1 )
PREPARED BY:
1)
NEGERA AKUMA
2)
SIMBO ABEBE
3)
YOSEF ASSEFA
4)
DEREJE YOHANNES (SUMMER)
5)
SOLOMO ESHETE

is meant by globalization of business

operations? What is/are the baseline argument on
globalization?
Ans#i

Globalization of business Operation - it is the

situation in which the top management and staff
are involved in planning of world wide
manufacturing facilities, marketing policies,
financial flow, and logistical systems
Companies that have adopt a global outlook stop
thinking of themselves as national marketers who
venture abroad and start thinking of themselves as
global marketers.

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ii. While some see globalization as the avenue to the

development of poor nations, others see it intensifying misery
and inequalities. Argue for/against the above statement in
todays business context.

Argue for because globalization is a phenomenon of global

economic integration
Enhance socioeconomic devt
The increased flow of goods, services, and capital even labor
Economic improvement in many countries
Globalization promised devt for poor nations most of the
poor nations made reform after their system compatible to the
global tune.
degree of benefit may vary but the fruit is for all. IT makes the
cost of doing business everywhere cheaper, innovation like
internet ICT make distance a weaker barrier, transportation
facilities and infrastructures make possible managing a truly
global business in different parts of the globe more than even
in the history of mankind

iii. Is/are the duties/responsibilities of business manager

similar in international business management and global
business management?

Answer
No, because Executives are trained in world wide
operations not just domestic or international.
Management is recruited from many counties. The global
operating units report directly to the chief executive or
executive committee, not just to domestic or
international.
For example, the manager of Toyota, which
has
operations in several parts of the world , do not think or
act as if the company were divided between Japanese
and overseas operation. Indeed, the very word overseas
has no place in TOYOTAs vocabulary because the
corporation sees itself as equidistant from all its key
customers.

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What roles and responsibilities are being played by international

organizations {GAAT (Lately WTO), IMF, WB, UN, and AU} in
international business? Explain their evolution and character in this
regard.

Do

you

recommend

Ethiopia

to

join

WTO?

Role of WTO in Globalization

Justify.

Ans#2
The World Trade Organization (WTO) is an
international organization that establishes rules for
international trade through consensus among its
member states
its aims are to increase international trade by
promoting lower trade barriers and providing a
platform for the negotiation of trade and to their
business.

Responsible for policing the world trade and make

sure that nation-state adhere to rules laid down in
trade treaties signed by WTO members
Promote lower barriers to trade and envestment
Facilitating the implementation, administration and
operation and furthering the objectives of the
agreement
Providing the forum for negotiations among its
Members concerning their multilateral trade
relations in matters

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United Nation (UN)

Administering the Understanding on Rules and
Procedures Governing the Settlement of Disputes or
the Dispute Settlement Understanding.
Administering the Trade Policy Review Mechanism.
Cooperating as appropriate with the International
Monetary Fund and the International Bank for
Reconstruction and Development with a view to
achieving greater coherence in global economic
policy making.

The United Nations was committed to preserving

peace through international cooperation and
collective security. Today nearly every nation in the
world belongs to the United Nations.
four purposes: to maintain international peace
and security,
to develop friendly relations among nations,
to cooperate in solving international problems and in
promoting respect for human rights, and
to be a center for harmonizing the actions of nations

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International Monetary Fund-IMF

The IMF was established to maintain order in the
international monetary system
to managed, regulate and oversee the international
monetary system.

World Bank
The World Bank is also called the International Bank
for Reconstruction and Development (IBRD)
World Bank was set up to promote economic
development
It has focused on making low-interest loans to cashstrapped governments in poor nations that wish to
undertake significant infrastructure investments.

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African Union
The African Union is a multi-dimensional intergovernmental
organisation of the Africa Continent integration .
Its former iteration, the Organisation of African Unity (OAU),
gave greater credence to the liberation of the Continent from
colonialism and other forms of domination, and internal
affairs of member states.
its ability to be responsive to the needs of Africans,
It is predicated upon addressing Africas challenges by
focussing on democratic governance,
human rights, peace and security, development, enhanced
integration, greater participation of African peoples,
Established in 1963.

Do you recommend Ethiopia to join WTO? Justify.

Justification by being member of WTO
The multilateral trading system has been in existence for nearly 60
years now.
WTO responsible for overseeing the implementation of the various
multilateral trade agreements
In todays globalization, joining this rules-based multilateral trading
system is considered by many to be an effective lever to promote trade
access to the world market will result in higher exports.
desire to attract more foreign direct investment (FDI),
using WTO membership as a seal of approval, which is recognized by
the international business community

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3.Are there any basic differences between Chinese and American work
cultures, particularly in relation to human resource management
practices? Explain what can Ethiopian learn from such cultures and
practices?

individualism and collectivism are the two issues

These broad cultural features manifest themselves in the
work place
America, considered by many as an iconic example of
individualism, china in many aspects considered to
represent collectivism.
Individualism as the American way is about the degree
we value independence and personal uniqueness value
for personal freedom, self-sufficiency, control on their
own lives, appreciation of that unique quality that
distinguish an individual from others

..Contd
collectivism, is about the degree to which one values
his/her duty to groups to which he/she belongs, and
the harmony he/she shows in it (the group).
individualism assertiveness, competitiveness, and
materialism
(generally
high
achievement
orientation) credited for creating American dream
and helped to sustain the countries global position
From HR perspective managing business firms
through the deeply shared values of individualism so
as to promote enterprise

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..Contd
The collectivist model, which China represents the
nurturing
orientation-encourages
cooperative
orientation in the work place stressing human
interaction and group identification.
From the HR perspective encouraging people who
identify themselves through working hard and
achieving together is exercised broadly.

..Contd
What Ethiopia can learn from them? The work
culture
lacks
philosophy-the
performance
orientation that distinguish an American man when
he achieve, and the Chinese woman when she
accomplish and stands among her peers-pride in
doing the job.
Therefore, to conclude, Ethiopia among many things
should learn two things sense of direction and
discipline

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4.Take the case of your organization or an organization you know very

well to explain how factors/forces in international business environment
variables (Remote variables, Industry variables and operating variables)
separately/jointly influence (positive/negative) the international business
operation?

Coffee Exporting organization in Ethiopia

1.Remote factors
Political factor-The tariff rate imposed by government

policy has direct impact on the operation of coffee

exporting company if there is high tariff imposed on
coffee the price of exported coffee will be high then
will be difficult to compete with others coffee
countries having lower price in international market.

..Contd
Economic factors: - in this case having the
consideration of inflation rate
Social factors: - in the case of coffee exporting
companies in Ethiopia most of the population is
known as the drunker of coffee
Technological factors: - the technology plays a
great job in the increment of the production of coffee
to be exported that enables the increment of
production of coffee to meet the demand of the
coffee in the international market

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..Contd

..Contd

Industrial factors:
Economies of scale: - there will be good conditions
to the exporters if they achieve the economies of
scale in the production of coffee,
Product differentiation: - in case of product
differentiation the taste of coffee produced in
Ethiopia differs from the taste of Brazil
Competition: -Coffee exporting countries of the
world join in the world market. Each countys coffee
differs in terms of quality, quantity and type

Operating factors:
Geographic: - the geographic area of the production of
coffee is the very important factor.
The coffee producer must select the favorable areas to
produce coffee in order to get maximum production so that
he/ she can export excess supply to international market.

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5.CompareHeckscher-Bertil Ohlin and Leontief international

trade models. Examine the two models in the light of
contemporary global trade situations. Which trade model can be
replicated in Ethiopian Contemporary business context? Justify.
5#ANSWER

i. Eli Heckscher and Bertil Ohlin, Swedish economists

Model based on two concepts:
1.Factor endowmentsthe quantities of productive
resources possessed by a country
2.Factor intensity(capital)the amount of labor per
unit of capital used in production of a product

The Leontief Paradox

He found out that U.S.A exports labor intensive goods and
imports capital intensive goods, but U.S.A being a capital
abundant country must export capital intensive goods and
import labor intensive goods than to produce them at
home.
This situation is called Leontief Paradox which negates H-O
Theory.

The model says that countries will export products that

use their abundant and cheap factor(s) of production
and import products that use the countries' scarce
factor(s).

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Which trade model can be replicated in Ethiopian

Contemporary business context? Justify
However, what remains clear is that international
trade is complex and is impacted by numerous and
often-changing factors.
Trade cannot be explained neatly by one single
theory, and more importantly, our understanding of
international trade theories continues to evolve.
As a result, its not clear that any one theory is
dominant around the world

The nations differ in that one is relatively labor

abundant while the other is relatively capital
abundant, which is Compare Heckscher Bertil
Ohlin trade models .
In the contemporary business context Ethiopia
exports labor intensive product (cheap) such as
Coffee and other products where as imports capital
intensive
(factor intensity) products which
replicates Heckscher Bertil Ohlin trade
models .

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6.According to Hofstede and Hall, Asians are (a)

more group oriented

7. What is the differential arguments neo - classical

school and neo - liberal school proponents
propagate in free trade promotion?

6(a) #answer
Hofstede and hall are more concerned with the relationship
between culture and working condition
According to Hofstede "Culture is the collective programming of
the mind that distinguishes the members of one group or
category of people from others".
It is always a collective phenomenon, but it can be connected to
different collectives.
According to Hofstede, Confucian dynamism captures attitudes
toward time, persistence, ordering by status, protection of
face, respect for tradition, and reciprocation of gifts and
favors.
As might be expected, East Asian countries such as Japan, Hong
Kong, and Thailand scored high on Confucian dynamism,
while nations such as the United States and Canada scored
low.

Answer#7
The Neo-classical model
The classical comparative advantage theory of free
trade is a static model based strictly on a one
variable factor labor cost, complete specialization
approach to demonstrating the gains from trade
Neoclassicism emphasizes the dynamics of supply and
demand
market is self-regulating

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Neoliberalism
Neoliberalism considers the market to be the best and
perhaps the only avenue through which human beings
can realize their full potential.
The market not only provides humans with a means of
maximizing health, prosperity, and fulfillment, but also
has the power to ingest less-than admirable
individual entrepreneurial freedoms and skills within an
institutional framework characterized by strong private
property rights, free markets and free trade.
The role of the state is to create and preserve an
institutional framework appropriate to such practices

Which model do you think fits to the contemporary

Ethiopian market place mechanization?

Ethiopia follows neither of the two above. But Ethiopia

takes certain amount of characteristics from both
theories, i.e. there is a portion in which the government
is intervening in the economic sector where as there are
some portions in which the government is not completely
intervening in the economy.
Initially the government establishes state-owned model
factories in a number of industries and after these were
privatized, the state subsidized their operations.
The state was heavily involved in infrastructure
development. Infant industries were protected by tariff
and legal issues

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8.Identify and discuss the international market

entry process/steps.
International Marketing Entry:
The five steps are :
Country Identification,
Preliminary Screening,
In-Depth Screening,
Final Selection and
Direct Experience.

Reasons for entering international market

Growth
Profitability
Achieving economies of scale
Risk spreading:
Access to imported inputs

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Modes of entering international market

Firms can enter foreign market through
1. Exporting
2. Turnkey projects
3. Licensing
4. Franchising
5. Joint ventures
6. Wholly owned subsidiaries
Each mode has advantages and disadvantages

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HSBC is a bank named as Hong Kong and Shanghai

Banking corporation

The better way for HSBC bank to expand in the east

Africa and Ethiopia is through different ways;
These are in order to expand in east Africa in the
countries that allows foreign companies to enter in
the banking sector unlike Ethiopia the best way is by
the acquisition of the existing privately held bank in
that country
But when we come to the case of Ethiopia since the
operation of banking sector is only open to the
citizens only and prohibited to the foreign companies

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