Master of Business Administration- MBA Semester 4 MB0053 International Business Management -4 Credits (Book ID:B1724) Assignment (60 marks)

Q1. Write a note on Globalization Answer: Globalization Globalization is a process where businesses are dealt in markets around the world, apart from the local and national markets. According to business terminologies, globalization is defined as the worldwide trend of business expanding beyond their domestic boundaries. It is advantageous for the economy of countries because it promotes prosperity in the countries that embrace globalization. In this section, we will understand globalization, this have benefits and challenges Benefits: Benefits of Globalization The merits and demerits of Globalization are highly debatable. While Globalization Creates employment opportunities in the host countries, it also exploits labor at a very Low cost compared to the home country. Let us consider the benefits and ill-effects of globalization. Some of the benefits of Globalization are as follows: 1. Promotes foreign trade and liberalization of economies. 2. Increases the living standards of people in several developing countries through capital investments in developing countries by developed countries. 3. Benefits customers as companies outsource to low wage countries. Outsourcing helps the companies to be competitive by keeping the cost low, with increased productivity. 4. Promotes better education and jobs. 5. Leads to free flow of information and wide acceptance of foreign products, ideas, ethics, best practices, and culture. 6. Provides better quality of products, customer services, and standardized delivery models across countries. 7. Gives better access to finance for corporate and sovereign borrowers. 8. Increases business travel, which in turn leads to a flourishing travel and hospitality industry across the world. 9. Increases sales as the availability of cutting edge technologies and production techniques decrease the cost of production. 10. Provides several platforms for international dispute resolutions in business, which facilitates international trade.

Some of the ill-effects of globalization are as follows: 1. Leads to exploitation of labor in several cases. 2. Causes unemployment in the developed countries due to outsourcing. 3. Leads to the misuse of IPR, copyrights and so on due to the easy availability of technology, digital communication, travel and so on. 4. Influences political decisions in foreign countries. The MNCs increasingly use their economic powers to influence political decisions. 5. Causes ecological damage as the companies set up polluting production plants in countries with limited or no regulations on pollution. 6. Harms the local businesses of a country due to dumping of cheaper foreign goods. 7. Leads to adverse health issues due to rapid expansion of fast food chains and increased consumption of junk food. 8. Causes destruction of ethnicity and culture of several regions worldwide in favor of more accepted western culture.

Q2 Why do nations trade? Discuss the relevance of Porters diamond model in todays business context.
Answer: Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need. Clear evidence of trading over long distances dates back at least 9,000 years, though long distance trade probably goes back much further to the domestication of pack animals and the invention of ships. Today, international trade is at the heart of the global economy and is responsible for much of the development and prosperity of the modern industrialized world. Goods and services are likely to be imported from abroad for several reasons. Imports may be cheaper, or of better quality. They may also be more easily available or simply more appealing than locally produced goods. In many instances, no local alternatives exist, and importing is essential. This is highlighted today in the case of Japan, which has no oil reserves of its own, yet it is the worlds fourth largest consumer of oil, and must import all it requires. Porters diamond model In 1990, Michael Porter analyzed the reason behind some nations success and others failure in international competition. His thesis outlined four broad attributes that shape the environment in which local firms compete and these attributes promote the creation of competitive advantage. They are explained as follows:

 Factor endowments - Characteristics of production were analysed in detail. Heirarchies are recognised, as is distinguishing between basic factors like natural resources, climate, location and so on and advanced factors like communications infrastructure, research facilities. Demand conditions - The role of home demand in improving competitive advantage is emphasised since firms are most sensitive about the needs of their closest customers. Example, the Japanese camera industry which caters to a sophisticated and knowledgeable local market. Relating and supporting industries - The presence of suppliers or related industries is advantageous since the benefits of investment in advanced factors of production spill over to these supporting industries. Successful industries within a country tend to be grouped into clusters of related industries. Example, Silicon Valley. Firm strategy, structure and rivalry Domestic rivalry creates pressure to innovate, improve quality, reduce costs which in turn helps create world-class competitors. He said that these four attributes constituted the diamond and he argued that firms are most likely to succeed in industries where the diamond is most favourable. He also stated that the diamond is a mutually reinforcing system and the effect of one attribute depends on the state of others. For example, favorable demand conditions will not result in a competitive advantage unless the state of rivalry is enough to elicit a response from the firms.