1Assignment Set 2 MB0052 Q1.What is meant by Business Continuity Plan (BCP)? Discuss the steps involved in BCP. Answer: - According to the Business Continuity Institute, a Business Continuity Plan (BCP) is defined as: A document containing the recovery timeline methodology, test-validated documentation, procedures, and action instructions developed specifically for use in restoring organisation operations in the event of a declared disaster. To be effective, most Business Continuity Plans also require testing, skilled personnel, access to vital records, and alternate recovery resources including facilities. BCP is a collection of procedures which is developed, recorded and maintained in readiness for use in the event of an emergency or disaster. Steps in Business Continuity Plan The BCPs senior management committee is responsible for the initiation, planning, approval, testing and audit of the BCP. The BCPs senior management committee also implements the BCP, coordinates its activities, supervises its creation and reviews the results of quality assurance activities. These steps are discussed below: Initiation Business impact analysis Disaster readiness strategies Develop and implement the plan Maintenance and testing 1 Initiation: - The senior management initiates the project and conducts the meeting to review the following: Establish a business continuity planning committee The senior management identifies a team and discusses the business continuity planning project with them. The management forms a team and clearly defines the roles of project team members. Draw up business continuity policies The team establishes the basic principles and framework necessary to ensure emergency response for resumption and recovery, restoration and permanent recovery of the organisational operations and business activities during a business interruption event. 2 Business impact analysis (BIA): - BIA is the most important element of the continuity plan. BIA reveals the financial and operational impact of a major disruption. BIA report describes the potential risks specific to the organisation. It will provide the organization with the following details: The identification of time sensitive business operations and services. An analysis of the organisations financial status and operational impacts. The time-frames in which the time-sensitive processes, operations and functions must resume. An estimation of the resources necessary for successful resumption, recovery and restoration. The BIA will provide a basis and cost justification for risk management, response, recovery and restoration. 3 Disaster readiness strategies: - The disaster readiness strategies include the following activities: Define business continuity alternatives Using the information from BIA, the project team should assess the alternative strategies that are available to the organisation and identify two or three strategies that are more credible.

2Estimate cost of business continuity alternatives Based on these strategies, the organisation develops the budgetary plan. The resumption timeframe plays an important role in examining which elements may require pre-positioning. Recommend disaster readiness strategy - Based on the needs of the business and evaluation of alternatives, the project team should develop recommendations of strategies to provide funds for implementation. Prepare a formal report based on the findings of the BIA for the strategy alternatives that were developed and analysed Take approval from senior management to proceed with the project. 4 Develop and implement the plan: - Develop and implement the plan includes the following activities: Emergency response and operations It establishes a crisis management process to respond to these incidents. Develop and implement a business continuity plan The plan describes specifically how to deal with the incidents. It should focus on the priorities of overall business continuity strategy. Apply business unit plans for each department Describe the roles that each department has to perform in the event of an emergency. Example It should detail the actions that the IT department will have to carry out if IT services are lost. 5 Maintenance and testing: - Maintenance and testing includes the following activities: Establish a plan exercise program BCP should develop and schedule the exercises to achieve and maintain high levels of competence and readiness. Document the objectives of each exercise and it should include the measurement criteria. Evaluate the results of each exercise against pre-stated values and document the results along with proposed plan enhancement. Awareness and training plans It should ensure that the personnel is aware of the importance of business continuity plan and can operate effectively in case of an event .Review the effectiveness of awareness training and identify the need for further training. Sample emergency response exercises Emergency response exercises should be ongoing. The exercises can be repeated using alternate setup and it should involve whole organisation within a particular facility that may be affected by a system disaster. Audit and update the plans regularly It should regularly audit the plans to check if it meets the needs of the organisation and ensures that the documentation remains accurate and reflects any changes inside or outside the business. Q2. What is meant by Business plan? Describe the strategies to create a business plan. Answer: - A business plan is a complete internal document that summarises the operational and financial objectives of a business. It also contains the detailed plans which show how the objectives are being accomplished. An accurately made business plan helps to allocate resources properly, to handle unforeseen complications like financial crisis and to make good business decisions. Strategies for creating a business plan This section describes the strategies for creating a business plan. Every entrepreneur creates a business plan and its completion will determine the feasibility of the plan. The strategies for creating a business plan are as follows: Define your business vision You must clear the following queries while defining the business vision: Who is the customer? What business are you in? What do you sell (product/service)?

3 What is your plan for growth? What is your primary competitive advantage? Make a list of your goals You must create a list of goals after proper research. In case of a start up business, more effort must be put on the short-term goals. Certain things must be kept clear before setting up your goal. They are listed below: What do you want to achieve? How much growth you want to achieve? Describe the quality and quantity of the service and the customer satisfaction levels? How would you describe your primary competitive advantages? Understanding the customer Understanding the customer is essential for a perfect business plan. You must understand the customer in terms of the following factors: Needs The following customer requirements should be understood clearly: o What unmet needs do your customers have? o How does your business meet those needs? Problems Customers buy things to solve their specific problems. Always be specific about the advantages of the product/services of your business which resolve the customers problems. Perceptions Always try to know the perception of the customer. Clarify the doubts of the customer regarding your profession and the products/services of your business. Learn from your competitors You can learn a lot about the business and the customers by looking at the business of your competitors. Always get the answers of the following questions which will assist you in learning from your competitor and focusing on your customer. What do you know about your target market? What competitors do you have? How are competitors approaching the market? What are the competitors weaknesses and strengths? How can you improve upon the competitions approach? Resolving financial matters Several questions might arise when we need to make financial decisions. They are as follows: How will you make money? What is the profit potential of your business? You can resolve the financial issues by taking smart strategic investment decisions. Identify your marketing strategy Identifying the marketing strategy is another essential skill which you must have. The following are the four steps to create a marketing strategy for your business: Identify all the target markets Qualify the best target markets Identify the tools, strategies and methods Test the marketing strategy and tools

Q3. What are the benefits of MNCs? Answer: - MNCs have certain unique advantages in their operations that are not benefited by domestic oriented companies. The international success of MNCs is mainly because of the ability to capitalise the advantages. The advantages widely depend on the nature of individual corporations and the type of their business. Benefits are 1 To the company Superior technical knowledge The most important advantage of MNCs is the patented technical knowledge which enables them to compete internationally. Large MNCs have access to advanced levels of technology which are either developed or

4acquired by the corporation. These technologies are patented. It can be in the areas of management, services or production. Extensive application of these technologies gives a competitive advantage to the MNC in international market, as it results in efficient, low-priced, hi-tech products and services that dominate a large international market. This results in efficient production and services like that of IBM or Microsoft. Large size of economy Generally, MNCs are large like Wal-Mart and ExxonMobil which has sales larger than the gross national products of many countries. The large size gives the advantage of significant economic growth to the MNCs. The higher volume of production leads to lower fixed costs per-unit for the companys products. Competitors, whose volume of production of goods is smaller, must raise the price to recover the higher fixed costs. This situation implies to capital-intensive industries like steel, automobiles etc., in which fixed costs form a major proportion of total costs. Example MNC like Nippon Steel of Japan can sell its products at lower prices than those of companies with smaller plants. Lower input costs due to large size The production levels of MNCs are large and thus the purchase of inputs is in large volumes. Bulk purchases of inputs enable the corporation to bargain for lower input costs and obtain considerable amount of discount. Lower input costs means less expensive and more competitive products. Example Nestle, which buys huge quantities of coffee from the market, can bargain for lower prices than small buyers can. Wal-Mart sells products at lower prices relative to its competitors due to bulk purchasing and efficient inventory control. By identifying which product sell effectively, Wal-Mart combines low-cost purchasing with efficient inventor to achieve competitive advantage in retail market. Ability to access raw materials overseas By accessing raw materials in foreign countries, many MNCs lower the input and production costs. In many cases, MNCs supply the technology to extract raw materials. Such access can give MNCs monopolistic control over raw materials because they supply technology in exchange for monopolistic control. This control enables them to supply or deny raw materials to their competitors. Ability to shift production overseas Another advantage of MNCs is the ability to shift the production overseas. MNCs relocate their production facilities to take advantage of lower labour costs, raw materials and other incentives offered by the host countries. They take advantage of the lower costs by exporting lower-cost goods to foreign markets. Many MNCs have set up factories in low-cost areas like China, India, Mexico, etc. Brand image and goodwill advantage Most of the MNCs possess product lines that have created a good reputation for quality, value and service. This reputation spread to other countries through exports and promotion and adds to the goodwill or brand image of the company. MNCs are able to influence this brand image by standardizing their product lines in different countries. Example Sony PlayStations do not have any modifications for different countries and the parent factory produces standardised products for the world market. Brand names like Sony help the company to charge premium prices for its products, because the customers are ready to buy quality products at premium prices. Information advantage MNCs have a global market view with which it collects, analyses, and processes the in-depth knowledge of worldwide markets. This knowledge is used to create new products for potential market niches and expand the market coverage of their products. The MNCs have good information gathering capabilities in all aspects of their operations. Through this information network, the MNC is able to forecast government controls and gather commercial information. The network also helps in providing important information about economic conditions, changing market trends, social and cultural changes that affect the business of MNCs

5in different countries. With these information MNCs can position themselves appropriately to contingencies. Managerial experience and expertise The MNCs function in large number in different countries simultaneously. This enables them to integrate wealth for valuable managerial experience. This experience helps them in dealing with different business situations around the globe. Example An MNC located in Japan can attain knowledge of Japanese management techniques and apply them successfully in a different location. 2 To the nations where it operates (domestic nations) : - MNCs bring advantage to the countries in which they operate. The benefits of MNCs to the nations where it operate are: Economic growth and employment An MNC comes to a country with more amount of money to invest than any local company. The countries from where the MNCs operate are also called host countries. It brings inward investment to the host countries. This helps in boosting the national economy. Example Constructing new plants requires resources like land, capital and labour. It provides employment to a large number of people which helps in dealing with the unemployment problem in the host countries. The inward investment can help in generating wealth in the local economy because it increases the spending ability of the people by providing them employment. As the MNCs provide employment to the people, they pay taxes to the local government. The people have more money to spend which provides market for local companies to sell their goods. The MNCs also attracts other smaller firms to the area where it is located. These firms provide different services to the MNCs. Skills, techniques and quality human capital The MNCs bring with them new ideas and new techniques to improve the quality of production. This helps in improving the quality of human capital in the host country. The MNCs employ local labour and train them in new skills to improve productivity and efficiency. Example Sunderland is one of the most productive car manufacturing plants in Europe. The workers had to get used to different ways of working that were used in other British firms. This can be a challenge and can also lead to improvement in productivity. The skills that the workers build up can be passed on the other workers which help in improving the supply of skilled labour in that area. Availability of quality goods and services Generally, production in a host country is aimed at the export market. However, in some cases, the inward investment can gain access to the host country market to avoid trade barriers. Availability of quality goods leads to improved quality in other related industries. Example The UK has access to high quality vehicles at cheaper price; this competition has led to improvement in prices, working practices and quality in other related industries. Improvement in infrastructure The MNCs invest in a country for production and distribution facilities. In addition to this, the company might also invest in additional infrastructure facilities like road, port and communication facilities. This can benefit the entire country. Q4. Define the term Strategic Alliance. Differentiate between Joint ventures and Mergers. Answer: - Strategic alliance is the process of mutual agreement between the organisations to achieve objectives of common interest. They are obtained by the co-operation between the companies. Strategic alliance involves the individual organisations to modify its basic business activities and join in agreement with similar organisations to reduce duplication of manufacturing products and improve performance. It is stronger when the organizations involved have balancing strengths. Strategic alliances contribute in successful implementation of strategic plan because it is strategic in nature. It provides relationship

6between organisations to plan various strategies in achieving a common goal. The various characteristics of strategic alliances are: The two independent organisations involving in agreement have a similar idea of achieving objectives with respect to alliances. The organisations share the advantages and organise the management of alliance until the agreement lasts. To develop more areas in alliances, the organisations contribute their own resources like technology, production, R&D, marketing etc to increase the performance. According to Faulkner (1995) Strategic alliance is the interorganisational relationship in which the partners make substantial investment in developing a long-term collaborative effort, and obtain common orientation. In Joint Ventures or JVs two or more companies come together and form a new entity to pursue some business activity. It may be uneconomical for a company to pursue a business activity all alone. This is why it may go in for a JV. In a JV, the two companies can combine their capabilities and strengths and share the business risks. This way they can overcome all difficulties and hurdles effectively. Merger Strategy : - A merger takes place two or more companies join together to form a single company. Types of Mergers: Horizontal Mergers: The combining companies are of the same business. Vertical Mergers: The joining companies are at different stages of the production process of the same product. Concentric Mergers: The Joining companies are from similar businesses. They however, have no buyer seller relationship. Conglomerate Mergers: In Conglomerate Mergers the combining companies are from unrelated or completely different businesses. Reverse Merger: When profit making company merges with the financially weaker company. Q5. What do you mean by innovation? What are the types of innovation? Innovation Innovation is the production or implementation of ideas. Innovation can be described as an action or implementation which results in an improvement; a gain, or a profit. The National Innovation Initiative (NII) defines innovation as "The intersection of invention and insight, leading to the creation of social and economic value." 1 Components of innovation: - Innovation involves the whole process from opportunity identification, invention to development, prototyping, production, marketing and sales, while entrepreneurship only needs to involve commercialisation. The components of innovations are as follows: Implementation Creativity Implementation It is to put ideas into practice. Implementation is made up of three aspects; idea selection, development and commercialisation. Organisations need processes, procedures and frameworks for achieving implementation. Some organisations in spite of having all right processes, procedures and frameworks, are yet to be innovative. Creativity Creativity is less straight forward than implementation. Creativity is not about establishing a new process or structure. People think differently to be creative and behave differently to be innovative. Types of innovation Innovation is defined as using new ideas to apply current thinking in different ways that results in a significant change. The types of innovation are as follows:

7 Architectural innovation This innovation defines the basic configuration of the product and the process. It will establish the technical and marketing agendas that will guide subsequent developments. Market niche innovation This innovation involves development of new marketing methods for the existing products. It provides the scope for improvement in product design, product promotion, and pricing. Regular innovation This innovation involves the change that is applied on established technical and production competence of the existing markets and customers. The effect of these changes is to develop the existing skills and resources. Revolutionary innovation This innovation disrupts and renders established technical and production competence that out of date, yet it is applied to existing markets and customers.

Q6. Describe Corporate Social Responsibility. Answer: - Corporate Social Responsibilities (CSR) Corporate Social Responsibility (CSR) is the continuing obligation of a business to behave ethically and contribute to the economic development of the organisation. It improves the quality of life of the organisation. The meaning of CSR has two folds. On one hand, it exhibits the ethical behaviour that an organisation exhibit towards its internal and external stakeholders. And on the other hand, it denotes the responsibility of an organisation towards the environment and society in which it operates. Thus CSR makes a significant contribution towards sustainability and competitiveness of the organisation. CSR is effective in number of areas such as human rights, safety at work, consumer protection, climate protection, caring for the environment, sustainable management of natural resources, and such other issues. CSR also provides health and safety measures, preserves employee rights and discourages discrimination at workplace. CSR activities include commitment to product quality, fair pricing policies, providing correct information to the consumers, resorting to legal assistance in case of unresolved business problems, so on. Example TATA implemented social welfare provisions for its employees since 1945. Features of CSR CSR improves the customer satisfaction through its products and services. It also assists in environmental protection and contributes towards social activities. The following are the features of CSR: Improves the quality of an organisation in terms of economic, legal and ethical factors CSR improves the economic features of an organization by earning profits for the owners. It also improves the legal and ethical features by fulfilling the law and implementing ethical standards. Builds an improved management system CSR improves the management system by providing products which meets the essential customer needs. It develops relevant regulations through the utilization of innovative technologies in the organisation Contributes to countries by improving the quality of management CSR contributes high quality product, environment conservation and occupational health safety to various regions and countries. Enhances information security systems and implementing effective security measures CSR enhances the information security measures by establishing improved information security system and distributing them to overseas business sites. The information system has improved by enhancing better responses to complex security accidents. Creates a new value in transportation CSR creates a new value in transportation for the greater safety of pedestrians and automobiles. This is done by utilising

8information and technology for automobiles. The information and technology helps in establishing a safety driving assistance system. Creates awareness towards environmental issues CSR serves in preventing global warming by reducing the harmful gases emitted into the atmosphere during the process of business activities. Roles played in terms of ethical conduct: - CSR plays a significant role in maintaining ethical conduct in an organisation. The following are the roles played by CSR: Improves the relationships with the investment community and develops better access to capital and risks Enhances ability to recruit, develop and retain staff Improves the reputation and branding of the organisation Improves innovation, competitiveness and market positioning Improves the ability to attract and build effective and efficient supply chain relationships Improves relationships with regulators Reduces the costs through re-cycling process Enhances stronger financial performance and profitability through operational efficiency gains

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ASSIGNMENT- Set 2 MB0053 Q1.Write a note on strategic objectives. Answer: -Strategic objectives: -Strategic objectives assist in the implementation process of the organisations objectives or goals. While implementing an international strategy, an organisation has to identify the opportunities present in these countries, explore the various resources available, their strengths and capabilities and plan to work on their core competencies. The objective should be formed in a way that it is not deficient or immeasurable. The strategic objectives must help the organisation to achieve their mission and vision. Most of strategic objectives focus on producing greater profits and returns for the business owners; others focus on customers or society at large. The strategic objectives are as follows: Measurable To measure progress against fulfilling the objective there must be at least one indicator. Specific A clear message as to what needs to be achieved is provided. Appropriate With the given vision and mission of the organisation, objectives must be consistent. Realistic Objectives must be an achievable target given the organisations abilities and opportunities in the environment. This means that objectives must be challenging and attainable. Timely To accomplish the objective there need to be a time frame. When strategic objectives are thoroughly implemented, it will result in strategic competitiveness that improves the performance and innovation of these organisations. When objectives fulfil the above conditions, there are many profits for the organisation. The profits are: First, they help guide employees throughout the organisation towards achieving the common goals. This aids the organisation to concentrate and conserve valuable resources and to work together in a timely manner. Second, challenging objectives help encourage and inspire employees throughout the organisation to higher levels of commitment and effort. A research has supported the concept that individuals work harder when they are motivated toward specific goals, instead of being asked simply to do their best. Third, for different parts of an organisation there is always the potential to follow their own goals rather than the overall company goals. Though these intentions are good, these may work at cross purposes to the organisation as a whole. Thus, meaningful objectives help resolve divergence when they occur. Finally, appropriate objectives offer a standard for rewards and incentives. They not only result in higher levels of motivation by employees but they will also help ensure a greater sense of equity or fairness when rewards are allocated. There are other objectives that are even more specific. These are commonly referred to as short-term objectives that are essential components of action plans. They are critical in implementing an organisations chosen strategy. 2. Discuss in brief the role of WTO in promoting international business. Answer: - WTO: - WTO was established on 1st January 1995. In April 1994, the Final Act was signed at a meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April

101994 was formed to strengthen the world economy that would lead to better investment, trade, income growth and employment throughout the world. The WTO is the successor to the General Agreement of Tariffs and Trade (GATT). India is one of the founder members of WTO. WTO represents the latest attempts to create an organisational focal point for liberal trade management and to consolidate a global organizational structure to govern world affairs. WTO has attempted to create various organisational attentions for regulation of international trade. WTO created a qualitative change in international trade. It is the only international body that deals with the rules of trades between nations. Objectives and functions: -The key objective of WTO is to promote and ensure international trade in developing countries. The other major functions include: Helping trade flows by encouraging nations to adopt discriminatory trade policies. Promoting employment, expanding productions and trade and raising standard of living and income and utilising the worlds resources. Ensuring that developing countries secure a better share of growth in world trade. Providing forum for trade negotiations. Resolving trade disputes. The important functions of the WTO as stated in the WTO agreement are the following: Developing transitional economies Majority of the WTO members belong to developing countries. The developing countries such as India, China, Mexico, Brazil and others have an important role in the organisation. The WTO helps in solving the problems of developing economies. The developing states are provided with trade and tariff data. This depends on the countrys individual export interest and their participation in WTO-bodies. The new members benefit hugely from these services. Providing help for export promotion The WTO provides specialized help for export promotion to its members. The export promotion is done through the International Trade Center established by the GATT in 1964. It is operated by the WTO and the United Nations. The center accepts requests from member countries, usually developing countries for support in formulating and implementing export promotion programmes. The center provides information on export market and marketing techniques. The center also provides assistance in establishing export promotion and marketing services. Through this WTO proves its commitment in the upliftment of the world economy. Cooperating in global economic policy-making The main function of the WTO is to cooperate in global economic policy-making. In the Marrakesh Ministerial Meeting in April 1994, a separate declaration was adopted to achieve this objective. The declaration specifies the responsibility of WTO as, to improve and maintain the cooperation with international organisations such as the World Bank, International Monetary Fund (IMF) that are involved in monetary and financial matters. WTO analyses the impact of liberalisation on the growth and development of national economies which is the important factor in the success of the economy. Monitoring implementation of the agreement The WTO administers sixty different agreements that have the statue of international legal documents. The membergovernments sign and confirm all WTO agreements on attainment. Providing forum for negotiations The WTO provides a permanent forum for negotiations among members. The negotiations can be on matters already in the WTO agreements or matters not addressed in the WTO law. Administrating dispute settlement The important function of WTO is the administration of the WTO dispute settlement system. It helps in settling multilateral trading dispute. A dispute arises when a member country adopts a trade policy and other fellow members consider it as a violation of WTO agreements. The Dispute Settlement Body (DSB) is responsible for the settlement of disputes. The dispute settlement system is prohibited from adding or deleting the rights and obligations provided in the WTO agreements. The WTO dispute settlement system helps to: Preserve the rights and responsibilities of the members.

11 Clarify the current provisions of the agreements.

Q3. Write a note on various export promotion schemes by GOI. Answer : -Export Promotion Schemes: - Export promotion schemes are the incentive programs that are developed to attract more firms into exporting. It helps in identification of the product and market. This also helps in pre-shipment and post-shipment financing, training, payment guarantee schemes, trade fairs, trade visits, and foreign representation and so on. India being a developing economy, export promotion schemes are needed to give a boost for our economy. The needs of the export promotion scheme are explained as follows: As the economy of the country is progressing with the increase in terms of population, there is a need for more number of imports. We need to have surplus exports to pay our imports. It is not wise to depend on the other external assistances for financing essential imports, rather exportable surplus needs to be created. In any country, there are some capital goods, machinery and raw materials that cannot be produced for some more time and it has to be imported from the other countries. In order to pay for such imports, the country needs to have sufficient funds so that the country has to promote for its exports. The earning of the exports need to be raised to create the purchasing power in order to import the essential goods. We need to explore the foreign markets in order to expand the capacities of the existing units and find market for the new units. To tap our export potentials completely, we need to focus on our strengths like, price stability, low wages and the industrial bases to increase its exports. The deficits of payments in Indian economy can be resolved through funds received through the foreign assistance. We need to create the repaying capacity with the help of exports. The figure 13.2 shows the three main categories that are associated with the export promotion measures.

Figure 13.2: Export Promotion Measures The export promotion measures are explained as follows: Export production - For gearing up the production, we need to sharpen the competitive edge and upgrade the technology to get a better quality. Liberalisation - The policies like the trade and industrial licensing are oriented towards exports. Supply of raw materials - There are some license free import goods such as the raw materials, intermediates, components, consumables, spares, part accessories and other items that are not regulated by negative list of imports. There are many export promotion schemes and Export Promotion Capital Goods (EPCG) is one of the export promotion schemes.

12Export Promotion Capital Goods (EPCG) scheme : - This scheme allows import of the capital goods at the reduced rate of 15percent customs duty. The goods can be both new and second hand goods and to the Services sector. This scheme has even extended to the services sector. These are explained as follows: Import of second hand capital goods The import of second hand goods that have the minimum residual life of five years are allowed free of licence but is subjected to actual user conditions. Duty exemption scheme - This scheme aims at import of duty free goods. The goods that can be imported by this way include raw materials, components, consumables, accessories, computer software. They can be imported under various schemes. Investment in plant and equipment - The investments beyond 75 lakhs is permitted for the small scale industrial sectors. Processing zones for export - The establishment of the Export Processing Zones (EPZ), Export Oriented Units (EOU), Electronic Hardware Technology Parks (EHTP) and Software Technology Parks (STP) helps in facilitating the export production in non-traditional sectors. Quality - The central government helps in modernising and upgrading the test houses and laboratories in order to bring the standards so that the certifications from such test houses are very well recognised within and outside the country. DETAILS OF EXPORT PROMOTION SCHEMES Date : 26 Jul 2005 Location : New Delhi Details of schemes in operation are: I. Duty Exemption and Remission Schemes 1. Advance Licence Scheme to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage) with a specific export obligation in terms of value and quantity. 2. Export Promotion Capital Goods (EPCG) Scheme to allow import of capital goods for pre-production, production and post-production (including CKD/SKD thereof as well as computer software systems) at 5% customs duty subject to an export obligation equivalent to 8 times of duty saved on capital goods imported under the Scheme to be fulfilled over a period 8 years reckoned from the date of issuance of licence. Relaxation in export obligation has been allowed for specific categories such as Units pertaining to agro, SSI, BIFR etc. 3. Duty Free Replenishment Certificate (DFRC) is issued for import of inputs used in the manufacture of goods without payment of basic customs duty after completion of exports. 4. Duty Entitlement Passbook (DEPB) Scheme to neutralise the incidence of customs duty on the import content of the export product and the exporter is entitled for a duty credit as a specified percentage of FOB value of exports, made in freely convertible currency. 5. Schemes related to Gems & Jewellery sector such as Replenishment Licence, Advance Licence, Diamond Imprest Licence etc.

136. Deemed Export Duty Drawback and Terminal Excise Duty Refund Scheme for those transactions in which the goods supplied to specific categories of beneficiary, do not leave the country and the payment for such supplies is received either in Indian Rupees or in Free Foreign Exchange. II. Special Economic Zone is a specifically delinked duty free enclave and are deemed to be foreign territory for the purposes of Trade Operations and duties and tariffs wherein these units can import/procure from the DTA all types of goods and services without payment of duty. Export Oriented Unit (EOU) Scheme, Electronics Hardware Technology Park (EHTP) Scheme, Software Technology Park Scheme or Bio-Technology Park Scheme to operate under duty-free regime for import/procurement of all types of goods including capital goods without payment of duty for manufacture of goods for export. Free Trade and Warehousing Zone (FTWZ) Scheme to create trade related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transaction in free currency. Served from India Scheme to allow duty free import of capital goods including spares, office equipment and professional equipment, office furniture and consumables related to the main line of business against exports of services. Target Plus Scheme for the status certificate holder to allow duty free credit based on incremental exports to import any inputs, capital goods including spares, office equipment, professional equipment and office furniture. Vishesh Krishi Upaj Yojana Scheme to allow duty free import of inputs or goods including capital goods (as notified) against export of certain agricultural and their value added products. Assistance to States for Infrastructure Development of Exports to encourage the state government to participate in promoting exports from their respective states for developing infrastructure etc. The Market Access Initiative (MAI) Scheme to provide financial assistance for a whole range of activities as a Medium Term Export Promotion efforts with a sharp focus on a country and product. The Marketing Development Assistance (MDA) Scheme to provide financial assistance for a range of export promotion activities such as participation in trade fairs and buyer seller needs abroad or in India, export promotion seminars etc Other schemes to promote activities such as Brand Promotion and Quality Improvement etc.

III.

IV. V. VI. VII. VIII. IX. X. XI.

Q4. What do you understand by regional integration? List its types. Answer : -Regional integration can be defined as the unification of countries into a larger whole. Regional integration also reflects a countrys willingness to share or unify into a larger whole. The level of integration of a country with other countries is determined by what it shares and how it shares. Regional integration requires some compromise on the part of countries. It should aim to improve the general quality of life for the citizens of those countries. In recent years, we have seen more and more countries moving towards regional integration to strengthen their ties and relationship with other countries. This tendency towards integration was activated by the European Union (EU) market integration. This trend has influenced both developed and developing countries to form customs unions and Free Trade Areas (FTA). The World Trade Organisation (WTO) terms these agreements of integration as Regional Trade Agreements (RTA). Types of Integration

14A whole range of regional integrations exist today. Different types of regional integration are discussed in this section. 1. Preferential trading agreement : -Preferential trading agreement is a trade pact between countries. It is the weakest type of economic integration and aims to reduce the taxes on few products to the countries who sign the pact. The tariffs are not abolished completely but are lower than the tariffs charged to countries not party to the agreement. India is in PTA with countries like Afghanistan, Chile and South Common Market (MERCOSUR). The introduction of PTA has generated an increase in the market size, and resulted in the availability and variety of new products. 2. Free trade area: -Free Trade Area (FTA) is a type of trade bloc and can be considered as a second stage of economic integration. It is made up of all the countries that are willing to or agree to reduce preferences, tariffs and quotas on most of the services and goods traded between them. Countries choose this kind of economic integration if their economical structures are similar. If the countries compete among themselves, they are likely to choose customs union. The importers must obtain product information from all the suppliers within the supply chain, in order to determine the eligibility for a Free Trade Agreement (FTA). After receiving the supplier documentation, the importer must evaluate the eligibility of the product depending on the rules surrounding the products. The importers product is qualified individually by the FTA. The basis on which the product will be qualified is that the finished product should have a minimum percentage of local content. 3. Common market: -Common market is a group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members. European community is an example of common market. Common markets levy common external tariff on imports from non-member countries. A single market is a type of trade bloc, comprising a free trade area with common policies on product regulation, and freedom of movement of goods, capital, labour and services, which are known as the four factors of production. This agreement aims at making the movement of four factors of production between the member countries easier. The technical, fiscal and physical barriers among the member countries are eliminated considerably as these barriers hinder the freedom of movement of the four factors of production. The member countries must come forward to eliminate the barriers, have a political will and formulate common economic policies. A common market is a first step towards a single market. It may be initially limited to a FTA with moderate free movement of capital and services, but it is not capable of removing rest of the trade barriers. Benefits and costs: -A single market has many advantages. The freedom of movement of goods, capital, labour and services between the member countries, results in the efficient allocation of these production factors and increases productivity. A single market presents a challenging environment for businesses as well as for customers, making the existence of monopolies difficult. This affects the inefficient companies and hence, results in a loss of market share and the companies may have to close down. However, efficient companies can gain from the increased competitiveness, economies of scale and lower costs. Single market also benefits the consumers in a way that the competitive environment provides them with inexpensive products, more efficient providers of products and increased variety of products. A country changing over to a single market may experience some short term negative effects on the national economy due to increased international competition. The national companies that earlier benefited from market protection and subsidies, may find it difficult to cope with their efficient peers. If the companies fail to improve their methods, they may have to close down leading to migration and unemployment. 4. Economic union: - Economic union is a type of trade bloc and is instituted through a trade pact. It comprises of a common market with a customs union. The countries that are part of an economic union have common policies on the freedom of movement of four

15factors of production, common product regulations and a common external trade policy. The purpose of an economic union is to promote closer cultural and political ties, while increasing the economic efficiency between the member countries. Economic unions are established by means of a formal intergovernmental legal agreement, among independent countries with the intention of fostering greater economic integration. The members of an economic union share some elements associated with their national economic jurisdictions. These include the free movements of: Goods and services within the union along with a common taxing method for imports from non-member countries. Capital within the economic union. Persons within the economic union. Some form of cooperation usually exists when framing fiscal and monetary policies. 5. Political union: - A political union is a type of country, which consists of smaller countries/nations. Here, the individual nations share a common government and the union is acknowledged internationally as a single political entity. A political union can also be termed as a legislative union or state union. Q5. What are the challenges faced by Indian businesses in global market? Answer: - India is a developing country and every developing country has its own organisational problems. In the past decade, some Indian companies have made remarkable progress by reaching the international platform in short time. India has transformed from being primarily domestic players into confident global corporations. The TATA Jaguar deal was one prominent example of an Indian global power house to acquire an internationally reputed automotive company 1. Brand India: -Brand India is a phrase that describes the campaign which projects India as an emerging destination for business in various fields such as information technology, manufacturing, infrastructure, service sector and so on. Country names can amount to brand names and assist consumers in evaluating the products before purchasing them. Brand India is receiving a positive response. However, Brand India is weak in many ways. In developed countries, people are yet to associate India with world-class standards. The initial market entry strategy of a company from a developing country is to offer cheaper products of acceptable quality, example, China and Korea. The customers of developed countries buy those products only on the basis of price. Brand India is comprised of a large number of sub-brands that are relatively established. It reflects the economic reforms and liberalisation process that Indian economy has undergone. The famous brands from India are Indian information technology (IT) companies such as Infosys, Wipro and Tata. The positive image of these companies help in changing consumer perceptions and also help in re-branding India as a leading manufacturing and service hub by improving Indias brand equity. Brand equity is the worth derived from the goodwill and name recognition acquired over a period of time. It improves sales volume and profit margins. The India Brand Equity Foundation (IBEF) was established to promote brand India. 2. Government and bureaucracy: - The political environment of a country influences the business to a large extent. The political environment includes political stability in the country, nature and extent of bureaucracy, ideology of government, party in power and so on. Another challenge that influences business is bureaucracy. Industrial incentives are administered by an elaborate and expensive bureaucracy. The relationship of government to international business is based on the concept of sovereignty. The concept identifies that the nation has complete control over the international affairs. The infrastructure such as airport, road or port upgradation takes years for completion or are stalled for many years. This affects the business in India negatively. Government policy and procedures in India are very complex and confusing. Government policy and bureaucratic culture in India do not

16encourage international business. Unnecessary government interference can hinder globalisation. Government support is essential to encourage globalisation. Government support is extended in the form of policy reforms, development of infrastructure, financial market, R&D support and so on. Changes in government and political instability disrupt business. Good business thrives on predictability which is lacking in India. 3. Corporate governance: - Corporate governance is a process of promoting corporate transparency and accountability. It is set of policies that affect the way a company is administered and controlled. Quality corporate governance is a tool for socioeconomic development. Corporate governance deals with power and accountability for the safety of assets and resources entrusted to the operating team of the firm. The objective of the corporate governance is to attain highest standards of procedures and practices that are followed by the corporate world. The new emerging corporate India needs guiding principles for corporate governance. The common aspects for the failure of corporate governance are misuse of power, frauds, misappropriation of funds and so on. Good corporate governance promotes accountability in relation to public satisfaction and responsive delivery of service. In India, corporate governance initiatives are undertaken by Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI). Ethics: -Corporate governance is about ethical conduct of the business. Ethics is related to the code of values and principles that helps a person to choose between right or wrong. Managers make decisions based on a set of values and principles that are influenced by the culture of the organisation. Ethical leadership is important for the business to be conducted by meeting the expectations of all the stakeholders. Corporate governance is the ethical framework under which corporate decisions are taken. Ethics is a generalised value system avoiding discrimination in recruitment and adopting fair business practices. Business ethics provide a general guidelines within which a management can operate. An organisation has to be ethical because it has to exist in the competitive world. The varying ethical norms and social values make international business environment complex. The ethical norms vary from country to country. Labour practices: - Ethical concerns are at the core of dispute regarding the labour practices. The multinational enterprises are charged of unjust treatment of workers in developing nations. The labour law enforcement is weak. The laws that force firms to obtain permission from the government prior to retrenchment are not enforced properly. Hiring labors to contractor and subcontracting non-core activities to other companies provides flexibility to the firms that seek to manage their labour force in volatile context. Child labour is used in the manufacture of exports from the developing countries is criticised by people in the developed countries. For example, in India the carpet industry uses child labour and social activists in developed nations demand ban on the import goods embodying child labour. Consumers tend to boycott such goods and this in turn adversely affects the business. 4. Managing diversity: - Most of the international businesses face problems in managing multicultural diversity. Previously, MNCs had a country specific business strategy but now it is moving towards a global one. Managing diversity is a process of establishing workforce to perform in an unbiased environment where no member has an advantage or disadvantage. For an international manager, managing diversity is a challenge. The challenge is to create a work environment where every person performs to his full potential and compete for rewards and promotions that based on merits. The success of an MNC is determined by its ability to manage diversity. In an international organisation, the workforce consists of variety of cultures. Today, a typical firm is a combination of diverse workforce in terms of gender, race and so on. Most companies encourage exchange programs where employees from one country come and interact with employees of other countries. There are some practical steps taken by managers to manage diversity. They are:

17 Focusing on bringing in best talent. Establishing programmes among employees of same and different race. Developing an age, gender and race profile of the workforce. Promoting minorities and other sections to decision-making positions. Providing extended leaves, flexible time, and job sharing opportunities.

Q6. Discuss the various e- business models. Answer: - The business model describes the manner in which an organisation creates, delivers and captures the value. The values can be social, economic forms of value. The design of the business model is part of the business strategy. 1. Business to business model: - The business to business (B2B) model describes the transactions between the buyers, suppliers, manufactures, resellers, distributors, and trading partners. This involves the transactions that involve the products, services, and the information. Internet based e-business is carried out through the industry sponsored marketplaces and private exchanges that are conducted by the large companies. The B2B model is shown in the figure 11.2.

Figure 11.2: Business to Business Model The above diagram indicates direct business to business model. In this direct business, the selling enterprise includes wholesaler, retailer or manufacturers who sell to the buyers of other business. The main reason behind introducing this B2B model is to overcome the problems met by industry sponsored marketplaces in approaching buyers and sellers. Most of the companies do not want to get customised designs through marketplaces as they do not want to expose proprietary information on a site that is shared by competitors. Therefore, companies use such marketplaces mainly to purchase products, manage their supply chains, and conduct indirect procurement transactions, as these are not related to their core business. B2B e-commerce differs from business-to-consumer e-commerce in many ways. Business to consumer merchants sells on a first-come, first-serve basis. Most B2B transactions are done through negotiated contracts that allow the seller to think and plan for how much the buyer is likely to purchase. In most of the cases, B2B model mainly focus on maintaining relationship with the business partners. 2. Business to consumer model: - The activities that serve the business customers with the products and services are described in the business to consumer model. The best example we can give for the business to consumer (B2C) transaction is the person buying a pair of shoes from the retailer. The manufacture of the shoes performs many transactions such as the purchase of leather, laces, rubber and other raw materials. There are two models of implementation related to the business to consumer. They are described as follows: Generic B2C model - The generic model is mainly designed for the small and medium enterprises. The third party e-market place is used to help the enterprises for selling the products online. Dedicated B2C model - Many of the large enterprises use the dedicated B2C model. The enterprise itself owns the e-market place to sell service and support the customers online. As the name indicates this model is fully dedicated to the

18customers and is almost equivalent to the customer relationship management. There are some e-commerce constituents with the B2C model. These constituents are explained as follows: Commerce - This involves the process like the catalog, compare, products and a service, advertisements, order status and also enables the online payment. Personalisation - This involves the activities like profile matching that matches the web content to specific profiles and gets the feedback from the customers and deals with the events, calendaring, and registration. Community services - These include the services that are dealt for the whole community. The community services can be chat, message boards, email services, subscriptions, and newsletters. Customer services - This process involves the services that are helpful for the customers. These include the activities such as the product support, online support like the call centers and telephony integration. The products that are browsed and mostly sold over the internet are explained as follows: Computer hardware and software - Most of the people buy software products online. The major online retailers of computer hardware and software are Dell and Gateway. Consumer electronics - The second largest product category sold online is electronics. Some of the electronics items shopped or purchased online are digital cameras, printers, scanners, and wireless devices like mobile phones, pen drives and so on. For example, www.ebay.com Sporting goods - Sports related items like cricket bats, tennis bats, golf accessories like clubs, golf balls are some of the sporting goods which are sold online. Examples for this include sites like www. summitonline.com, www.dicksportinggoods.com and so on. Office supplies - Business to consumer sales of office supplies are increasing all over the world. For example, www.officedepot.com alone reached over 10,000 crores in 2002. 3. Consumer to consumer model : - The consumer to consumer (C2C) model involves the transaction between the customers through the third party. This can be explained by taking the example of online auction where the customer posts an item for sale and other customer purchases the product. But in between the third party charges a commission for the sale. C2C is also called as Peer to Peer (P2P) exchanges. The C2C transaction includes the classifieds, music and file sharing, and also the personal services. There will be million consumers those who want to sell their products in the e-business field. Equally on the other side there are million people who want to purchase the products and services. Finding each other are beneficial for both the retailer and the consumers and this can happen many times only with the help of third party that act as the intermediaries. The intermediaries in the C2Cbusiness model charge the sellers. The intermediaries charge because they bring the customers and sellers to one marketplace. C2C e-business has created a new dimension in online shopping business. C2C e-business gives many small business owners a way to sell their products without running a highly profit draining bricksand-mortar store. The efficient C2C businesses involve items like handmade gifts, personal artwork, clothing design, and collectables. 4. Consumer to business model: - A consumer to business (C2B) model is the electronic business model, in which the consumers offer products and services to the enterprises. This is called as the inverted business model since the process operates completely in the opposite direction of the traditional e-business model, in which the organisations offer the goods and services to the consumers. The C2B model involves consumers themselves presenting as a group and provides the goods and services to the enterprise. For example, www.speakout.com. This site provides consumers market

19strategies and businesses and it also makes them familiar with the requirements of the various businesses. A concrete example of this is when competing airlines gives a traveler best travel and ticket offers in response to the travelers post. This C2B model is advantageous because of the following reasons. The model helps: In connecting large group of people by the bidirectional network. Many of the traditional media is of unidirectional but the internet is the bidirectional media. Individuals to access the technologies that were once available only for the large companies.