INTERNATIONAL BUSINESS

No: 1

BPO BANE OR BOON ?

1. Which of the theories of international trade can help Indian services providers gain competitive edge
over their competitors?

1. Suggested Theory to gain dynamism and competitiveness in Operation

A. Developing executive leadership at their level stops team, The personal development of individual executives as
leaders and The Chief Executive Officer (CEO)
b. Success Brand Development and Brand Strategy : An Effective Brand strategy will create a unique identity that
will differentiate from the competition. That is why its often deemed as the heart of a competitive strategy
C. Strategies for working L: Work avoidance is one of the major paradoxes, making a complete plan to work,
setting a quota for a week or month and making them to execute will increase the overall growth.
D. Achieve learning through knowledge management : Knowledge management efforts typically focus on
organizational objectives such as improved performance, competitive adavantage,innovation,the sharing of lessons
learned ,integration and continuous improvement of the organization. Knowledge management efforts overlap with
organizational learning, and may be distinguished from that by a greater focus on the management of knowledge
as a strategic asset and a focus on encouraging the sharing of knowledge.
E. Achieve supply chain excellence: The basis of competition for winning companies in todays economy is supply
chain superiority .These companies understand the value chain performance translates to productivity and market
share leadership. They also understand that supply chain leadership means more than just low costs and
efficiency; it requires superior ability to shape and respond to shifts in demand with innovative products and
services.
2. Productivity for intonation trade competitiveness:
The rapid changes in the context of the process of economic re3form, globalization and liberalization have created
greater compulsions for India to be productive and competitive than ever before. With rapid advancement in
technology as well as management .Theory and practice, the concept & techniques of productivity have undergone
a change over time, thereby creating a need for devising fresh approaches, coining new message and adopting a
new idiom to spread the message to the stakeholders.
There is an urgent need to redefine and re-structure the productivity movement in such a way that it becomes a self
perpetuating process, more so, because the general environment earlier was not very congenial for the desired
productivity growth as lots of non
-productive barriers and protective walls surrounded our economic system for a very long time. All these protective
walls have come crashing down and now competition is the name of the game.

2. Pick up some Indian services providers. With the help of Michael Porters diamond, analyze their
strengths and weaknesses as active players in BPO.
The Diamond Model of Michael Porter for the competitive advantage of Nations offers
amodel that can help understand the comparative position of a nation in globalcompetition. The model can also be
used for major
geographic regions
Traditional country advantages :
Traditionally, economic theory mentions the following factors for comparative advantage for regions or countries:
1.Land
2.Location
3.Natural resources (minerals, energy)
4.Labor, and5.Local population size. Because these
5 factors can hardly be influenced, this fits in a rather passive (inherited)view regarding national economic
Opportunity.Porter says that sustained industrial growth has hardly ever been built on abovementioned basic
inherited factors. Abundance of such factors may actually
underminecompetitive advantage! He introduces a concept called "clusters" or groups of interconnected firms,
suppliers, related industries, and institutions that arise in certain locations.
Porter Diamond Nations:
According to Porter, as a rule competitive advantage of nations is the outcome of 4interlinked advanced factors and
activities in and between companies in these clusters.These can be influenced in a pro-
active way by government.PORTER argued
that a nation can create new advanced factor endowments such asskilled labor, a strong
technology and knowledge base, government support, and
culture. PORTER used a diamond shaped diagram as a basis of a framework toillustrate the determinants of nation
al advantage. Thediamond represents the national playing field that the countries establish for their industries.
he points of the diamond are described as follows
FACTOR CONDITIONS:
a country creates its own important factors such as skilled resources andtechnological base.
these factors are upgraded / deployed over time to meet the demand.
local disadvantges force innovations. new methods and hence comparativeadvantage.
DEMAND CONDITIONS:
a more demanding local market leads to national advantage.
a strong trend setting local market helps local firms anticipate global trends.
RELATED AND SUPPORTING INDUSTRIES:
local competition creates innovations and cost effectiveness.
this also puts pressure on local suppliers to lift their game.
FIRM STRATEGY , STRUCTURE AND RIVALRY.
local conditions affect firm strategy.
local rivalry forces firm to move beyond basic advantages.
THE DIAMOND AS A SYSTEM
the effect of one point depends on the others.
it is a self-reinforcing system.
THE ROLE OF THE GOVERNMENT IN THIS MODEL
to encourage
to stimulate
to help to create
growth in industries.
In Terms and Conditions Let us take the organization TCS'1. BPO/ KPO Business
 BPO is established and is on development stage.KPO is on Threshold of Growth The Passive Analysis of The
Active/Proactive Analysis of
FACTOR CONDITIONS:
TCS has created its own important
factors such as skilled resources andtechnological base for expanding BPOs / KPOs
TCS is upgrading / deploying resources over time to meet the demand.
New innovations. A new method has given the local industry the comparativeadvantage.
DEMAND CONDITIONS:
a more demanding local/ global market has given 'TCS' the international /national advantage.
a strong trend setting local market has helped local firms anticipate globaltrends.
RELATED AND SUPPORTING INDUSTRIES:
local competition has created innovations and cost effectiveness for the TCS.
this has also put the pressure on local suppliers to lift their game.
FIRM STRATEGY, STRUCTURE AND RIVALRY:
local conditions have affected TCS various strategy.
local rivalries have forced TCS to move beyond basic advantages.
THE ROLE OF THE INDIAN GOVERNMENT IN THIS MODEL:
INDIAN GOVERNMENT is encouraging more TCS.
INDIAN GOVERNMENT is stimulating with paperwork reforms.
INDIAN GOVERNMENT is helping to create more skilled labors.
I N D I A N G O V E R N M E N T i s p r o v i d i n g i n f r a s t r u c t u r e s t o a t t r a c t m o r e industries.

3. Compare this case with the case given at the beginning of this chapter. What similarities and
dissimilarities do you notice? Your analysis should be based on the theories explained.

If youre not faster than your competitor, youre in a tenuous position, and if youre only half as fast, youre terminal.

The idea is to concentrate our strength against our competitors relative weakness.

The opportunities and threats existing in any situation always exceed theresources needed to exploit the
opportunities or avoid the threats. Thus, strategy is essentially a problem of allocating resources. If strategy is to be
successful, it must allocate superior resources against a decisive opportunity.

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

Organizations pursue strategies that will disrupt the normal course of industry events and forge new industry

No: 2

PERU

1.What are some current issues facing Peru? What is the climate for doing business in Peru today?

The principal environmental issues in Peru are water pollution, soil erosion and deforestation. Although these
issues are problematic and equally destructive, the Peruvian Environmental ministry has been developing
regulation and laws to decrease the amount of pollution created in major cities and have been making policies in
order to decrease the present deforestation rate.
One problem in Peru is their economy and how unstable it is because of the dependence on only a few major
industries: minerals and fishing. If these things are unable to produce a profit for Peru, their economy and their
people are in great danger.
Another major issue in Peru is drug production and trafficking. Up until 1996 Peru was the world's leading producer
of Coca leaf, which is used to make cocaine. Most of the coca leaf produced in Peru is transported to neighbouring
Columbia to be turned into cocaine and then distributed. Peru is also emerging as a major producer of opium.
With respect to climate in Peru the suitable business can be-
> Fishing > Coca leaf
> Mining > Agriculture

2.What type of political risks does this fishing company need to evaluate? Identify and describe them.

i) Political risks
ii) Government Regulations
iii) Government Policies
iv) Political Instability
v) External Environment

3.What types of integrative and protective and defensive techniques can the bank use?

Bank should enter in to a contract with the fishing company by defining some clauses, regarding the repayment,
what the bank can do:-
1) Take a controlling stake in the company
2) Negotiate with the Peruvian government regarding the security of funds, if government takes over the company
3) Collaboration with the political groups, Bank can involve themselves in activities which can benefit the govt.,
bank and the fishing company.
4) Bank can also hire a company or firm to look upon the political instability and to derive an action plan as if the
investment is worth risk or not.

4. Would the bank be better off negotiating the loan in New York or in Lima? Why?

This decision depends on the rules and laws of both the countries, According to the case Lima will be the better
place for the bank to pursue the contract as it will carry out all the studies of political policies, the rules and
regulations top abide by...which in case of newyork will not work in this country, Instead a local Peruvian law
person will help in negotiating and giving a more transparent picture, as if the decision is to be made or not.
 No: 3

RED BECOMING THICKER

1. Why is that Coke has not been able to make profit in its Indian operations?

In the initial period of setting the business in india,

the COKE was not able to make profit from
the indian operation. This is due to a number of
factors.

-the local population is not accustomed to drinking

cola drinks.
-the market needs to be developed.
-the initial bottleneck was the lack of adequate
network of distributors.
-product distribution was weak.
-the poor distribution created negative impact
on the market growth.
-volume was low.
-overheads were growing.
-the operation profit were negligible.

2. Do you think that Coke should continue to stay in India? If yes, why?

THE COKE should continue to stay in india,

for a number of reasons.
-the country has a large potential.
-the age group of [ 10 - 35] is the largest in the world.
-the per capita income is growing.
-the lifestyle is changing.
-the demand for cola is growing.
-the distribution is growing fast.
-the infrastructure is growing fast.
-the retail sales points are available.
-more schools/ units are being set up
-the local tourist industry is growing leap /bound.
ALL THESE CHANGES SHOWS THE
DEMAND FOR COLA.

3. What cultural adaptations would you suggest to the US expatriate managers regarding their
management style?
The us expatriate managers should closely
follow the contemporary management style.

EMPLOYEE REQUIREMENTS
contemporary management
Relevant educational
background and experience
matching task requirements

traditional management

Family relation and caste

memberships of employees have to
be considered
-----------------------------------------
LEADERSHIP STYLE
contemporary management
Increasingly participative
management style where
subordinates' opinions and input
are solicited. Personal
relationship between
management and employees
reduced

traditional management
Organizational leaders display a
high level of personal involvement
with their subordinates. Leaders
provide nurturance contingent upon
the subordinate's task
accomplishment
-------------------------------------------
MOTIVATIONAL ASPECTS AND REWARDS
contemporary management
Elements such as job rotation,
enrichment, autonomy, team
work and competitive salaries
are increasingly considered to
motivate employees

traditional management

Work is viewed as a means to an

end i.e. for the sake of satisfying
family needs. Little demand for
changing work tasks, only the
compensation is relevant

-------------------------------------------------
HUMAN RESOURCE MANAGEMENT
PRACTICES
contemporary management
Objective selection criteria.
Training programs and
performance related
compensation applied

traditional management
Nepotism and caste considerations
affect selection and compensation.
Training less emphasized

NO. 5.

CHINESE EVOLVING ACCOUNTING SYSTEM

1. What factors have shaped the accounting system currently in use in China?

Accounting in China has traditionally been rooted in information gathering and compliance reporting designed to
measure the government's production and tax goals. The Chinese system was based on the old Soviet system,
which had little to do with profit. Although the system is changing rapidly, many problems associated with the old
system still remain.

2. What problem does the accounting system, currently in use in China, present to foreign investors in
joint ventures with Chinese companies?

One problem for investors is a severe shortage of accountants, financial managers, and auditors in China,
especially those experienced with market economy transactions and international accounting practices.
Chinese enterprises, including equity and cooperative joint ventures with foreign firms, must be audited by Chinese
accounting firms, which are regulated by the state. Traditionally, many experienced au-ditors have audited only
state-owned enterprises, working through the local province or city authorities and the state audit bureau to report
to the government entity overseeing the audited firm.
The current lack of experienced auditors in China raises questions about the accuracy of the financial statements
of Chinese companies.

3. If the evolving Chinese system does not adhere to IASC standards, but instead to standards that the
Chinese governments deem appropriate to Chinas Special situation, how might this affect foreign firms
with operations in China ?
If the Chinese system does not conform with IASB standards,
-there is a perception of unreliability with the financial information.
-this affects the market price of the shares.