M.B.A. II (Semester III) (CBCS) Examination, 2018
Gr.C. International Busines
Paper XIX International Business Environment (Paper
Day and Date Friday, 14-12-2018 Total Marks 70
Time 10.30 a.m. to 1.00 p.m.
Instructions n Question No. Q. Q. 3 and Q. 5 are compulsory.
n Attempt any one question from Q. 4.
n All questions carry equal marks.
1. Choose appropriate answer 14
Integrating the domestic economy with world economy is called
Privatization Globalization
Nationalization None of the above
IMF stands for
International Monetary Fund International Money Fund
International Monetary Finance Indian Monetary Fund
Economic integration schemes are also referred to as
Regional Trade Adjustment Rural Trade Agreement
Rural Trade Association Regional Trade Agreement
Euro, the common currency of
SAARC NAFTA
European Union WTO
NAFTA stands for
North American Free Trade Agreement
North African Free Trade Agreement
North American Fixed Trade Agreement
North American Free Trade Association
The main objective of commodity agreement is
Commodity stabilization Price stabilization
Price fluctuation Price exchange
IMF was established in
1945 1965 1946 1948
P.T.O.
Set P
SDR stands for
Special Drawing Ratio Specific Drawing Right
Special Deposit Right Special Drawing Right
The major problem of Asian Development Bank is
Surplus of funds Additional funds
Shortage of funds Excess of funds
10) The causes of disequilibrium in the balance of payments are economic
factors, political factors and
Psychological factors Sociological factors
Technological factors Political factors
11) GDP stands for
Gross Domestic Product General Domestic Product
Gross Domestic Preference Gross Domestic Position
12) publishing a Global Competitiveness Report.
Wide Economic Forum World Economic Formation
World Economic Forum World Emotional Forum
13) Global competitiveness is often a must for
Failure Breakdown
Collapse Success
14) Turnkey contract is common in case of
Medium projects Large projects
Minor projects Small projects
2. Short note 14
International Monetary Fund.
Global recruitment and selection process.
3. Short note 14
SAARC
International economic environment.
4. What is international business Discuss in detail the market entry strategies. 14
OR
Explain the trends in India's balance of payments position. What are the
reasons for disequilibrium in the balance of payments 14
SLR-CL 35 *SLRCL35*
Set P
5. Analyse the case 14
In July 1987, Mr. Roberto Gonzales, Managing Director of Fine Home
Furnishings, Manila, faced problems in quality control in the production of
home furnishings for export markets. This problem was compounded by
unexpected fluctuations in demand. He thought of establishing an export unit
with a separate staff, but the type of home furnishing exported by the company
had a fluctuating demand pattern but justifying such an investment.
Company background
Fine Home Furnishings Company was one of the largest exporters
of fashionable home furnishings in the Philippines. The company's product
mix included pillow cases, bedspreds, curtains, sofa and chair covers, and
wall coverings. The products were being sold under the company's own
brand name in the local market but under private labels in the United
States and EEC. The company had an annual production capacity in 1987 of
10 million pesos. Fine Home furnishings employed a full time workforce of 200.
The Company participated regularly in trade fairs and had built up a good
image for their products at home and abroad.
Specific Interest Areas
The company was experiencing a variety of labor problems, but the most
immediate problem facing the director was how to maintain high quality
standards in its export business. The quality control issue was complicated
by the absence of many cutting, stitching and finishing details not required by
the domestic buyer, but insisted upon by the foreign buyer. Further, the close
relationship abroad, between the demand for home furnishings and the
economic climate in the construction industry had made the demand
pattern for home furnishings very cyclical. Seasonality of export demand was
another factor due to the tendency by the consumers to spend more on home
furnishings in the fall and winter seasons rather than in the spring and summer.
The above factors caused spurts of accelerated activity, leading to many
labor-management disputes due to a much higher rejection rate for those
products geared for export markets. The presence of a piece rate pay
system led to a considerable drop in morale among workers with a higher than
normal rate of absenteeism when export business was in process. Mr. Gonzales
*SLRCL35* SLR-CL 35
Set P
realized that he had a number of alternative solutions to choose from. He could
consider dividing the workforce into two groups; one exclusively for export
business to which one could "graduate" from the domestic workforce when
certain performance standards had been met. He considered eliminating the
piece rate pay system for the export business workers in favor of a weekly
salary system. He also thought of maintaining one labor force exclusively for
the export business and channels all domestic business to subcontractors.
Another alternative was substitute more sophisticated machinery for labor. He
had read of auto-controlled cutting, sewing and stitching machinery equipped
with electric eyes and other electronic sensors. The last solution would
allow him to reduce his labor force, increase the rate of output and maintain
similar high quality for both the domestic and foreign markets. The required
investment, however, would be considerable. The last idea which had been
put into his mind this morning by his secretary was that all workers could
produce high quality standards. She said that the problem was psychological
caused by switching on and off the higher quality standards only required for
exports. Only, one standard should be made the norm, both for domestic and
foreign demand, i.e., the export standard.
Specific issues/problems
Mr. Gonzales was anxious to make a decision. Various constraints made the
selection of one clear solution difficult.
It was a practice in the Philippines to hire workers for up to six months as
"Trainees' after which social security and other cost/benefits had to be paid.
Producing under the private label of a foreign buyer caused considerable pressure
on the profit margin. The only way to make a profit was by squeezing
labor costs, as most of the materials were imported at high cost from China
(Taiwan Province) or were provided by the foreign buyer. Labor unions were
becoming increasingly militant, demanding more job security for their numbers
along with higher pay.
Questions
What are the principal and secondary problems faced by Mr. Gonzales
Why is the business of home furnishings a cyclical and a seasonal
business How can Mr. Gonzales solve them, "cause" of the problem
Is cash flow a problem in the home furnishing business and would the lack
of it affect the company's ability to pay higher salaries and wages
Consider each alternative proposed by Mr. Gonzales to solve his labor
problem. Do you feel that other alternative solutions have not been
mentioned What probability of success would you assign to each alternative
Are Mr. Gonzales' problems generic to all exporters in developing countries