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GDIB TERM 3 – ASSIGNMENT 30 MARKS. USE THIS QUESTION FORM TO FILL IN YOUR ANSWERS. USE FONT CALIBRI /8 (PRESET) SAVE AS WORD.
EACH QUESTION 5 MARKS. IF TWO ANSWERS PAPERS ARE SIMILAR THE SECOND ASSESSED IS LIKELY TO GET LESS MARKS.
1. Explain the terms GDP, GDP-P and PPP. Bring in a correlation between the three through an example. (Max 5-7 lines)
GDP - Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country's borders in a specific
time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.
GDP – P - A country’s Gross Domestic Product (GDP) per person is obtained by dividing its GDP for a particular period by its average population for the year.
GDP refers to the total value of final (as opposed to interim, or work-in-progress) goods and services produced within a country’s borders during a specific
calendar period such as quarterly or annually. While GDP is the most widely used measure of a country’s economic activity, per capita GDP is a better indicator
of a nation’s living standards since it adjusts for population.
PPP - PPP or Purchasing Power Parity is an economic theory that compares different countries' currencies through a "basket of goods" approach.
GDP (Gross Domestic Product) is the total market value of all final goods and services produced in a country in a given period. Each country reports its data in its
own currency. To compare the data, each country's statistics must be converted into a common currency. The two most common methods to convert GDP into a
common currency are nominal and purchasing power parity (PPP).
GDP tells us the stats of a country where as PPP refers to the cost of anything at the residing country to the cost of the same product in another country since
there is a currency difference and tells us how much of the our currency we need in that country for that product.
Ex: if hair cut costs Rs 100 in india then as per conversion it would cost 3$ in USA.
2. What are the three key learnings from the study of the Airtel Africa case.(Max 5-7 lines)
The significant cultural, lingual and Regulatory issues, which were widely blamed as a deal-breaker in the Bharti MTN tasks are not seen as a major concern. But
legal disputes surrounding Zain's Nigerian unit, the biggest among its African assets, could potentially delay or disrupt a dal.
Airtel's success with Zain was hinge upon how fast it is able to grow the African operations, post acquisition. But this looks much more daunting This is because
nine out of Zain's 15 African markets are well penetrated with more than 33% subscriber population
Further, mobile penetration exceeds 45% in five markets. These include Ghana and Nigeria where Zain's operations are bleeding due to stiff competition from
MTN. Zain was also suffering losses in Uganda, again a territory with 35% penetration and has
MTN as the market leader With substantial market penetration and MTN as a bigger competitor, Blurt found it very tough to turn around Zain's low-making
operations. Zain's African operations had posted a loss of SI 11 million in nine months ended September 2009
A dispute over the ownership of Zain's crucial Nigerian unit as well as a legal offensive by a minority shareholder could complicate for this desk
The were issues with the government as it was corrupt and airtel had to invest a lot into infrastructure.
a.__ Korea & India _ and b._ Germany & Canada __. What are the three typical characteristics of these societies
High Context Low Context
Becoming well informed about facts before making Message is made explicit
decisions
Seek information from personal information networks Seek information from a research base ( reports, databases
etc )
Interpretation of messages rests on contextual cues Interpretation of messages rests on the written or spoken
word – focuses on content
4. Explain the term “Pure Economy”. What is good about such an economy additionally name a few pitfalls. (Max 5-7 lines)
A pure market economy is entirely composed of private firms and has absolutely no government involvement.
Pitfalls :
Difficulty enforcing property rights
Some people have few resources to sell
Some firms try to monopolize markets
No public Goods
Externalities
5. Why should India open it borders and businesses for International trade. How does it help the nation. What should India be mindful of as it opens to
the World for trade. (Max 5-7 lines
Trading across national boundaries is an “economic imperative of our times” and barriers to free trade should be dismantled. Despite India opening its borders
to international trade, there are still several hurdles to overcome when importing and exporting goods. Several layers of bureaucracy make it very challenging to
move goods efficiently, and companies must file a long list of documents before moving goods across borders. “It is in the larger interest of every country to
make sure that trade barriers are brought down to the extent it is possible, no country can manufacture all goods or specialise in rendering all services which are
needed by consumers wanting the best quality at the lowest prices. Therefore, the need for open trade. Nations across the world are now realising that
increased trade helps not just the global economy but also its own economy
India has to Curb smuggling and sign pacts with countries to get hold of passengers’ list in advance, so as to have a better profile of the travelers, economic
frauds need to be dealt with severely.
6. Name typical three modes of entry in International Business. Explain any two.
Exporting :
Exporting is a typically the easiest way to enter an international market, and therefore most firms begin their international expansion using this model of entry.
Exporting is the sale of products and services in foreign countries that are sourced from the home country. The advantage of this mode of entry is that firms
avoid the expense of establishing operations in the new country. Firms must, however, have a way to distribute and market their products in the new country,
which they typically do through contractual agreements with a local company or distributor. When exporting, the firm must give thought to labeling, packaging,
and pricing the offering appropriately for the market. In terms of marketing and promotion, the firm will need to let potential buyers know of its offerings, be it
through advertising, trade shows, or a local sales force. Among the disadvantages of exporting are the costs of transporting goods to the country, which can be
high and can have a negative impact on the environment. In addition, some countries impose tariffs on incoming goods, which will impact the firm’s profits. In
addition, firms that market and distribute products through a contractual agreement have less control over those operations and, naturally, must pay their
distribution partner a fee for those services.
8.
Acquisitions:
An acquisition is a transaction in which a firm gains control of another firm by purchasing its stock, exchanging the stock for its own, or, in the case of a private
firm, paying the owners a purchase price. In our increasingly flat world, cross-border acquisitions have risen dramatically. In recent years, cross-border
acquisitions have made up over 60 percent of all acquisitions completed worldwide. Acquisitions are appealing because they give the company quick,
established access to a new market. However, they are expensive, which in the past had put them out of reach as a strategy for companies in the undeveloped
world to pursue. What has changed over the years is the strength of different currencies. The higher interest rates in developing nations has strengthened their
currencies relative to the dollar or euro. If the acquiring firm is in a country with a strong currency, the acquisition is comparatively cheaper to make. Acquisition
is a good entry strategy to choose when scale is needed, which is particularly the case in certain industries (e.g., wireless telecommunications). Acquisition is also
a good strategy when an industry is consolidating. Nonetheless, acquisitions are risky.