Examination Paper of Foreign Trade management
IIBM Institute of Business Management 1
IIBM
Institute of Business Management
Examination
Paper MM.100
Indian
Foreign Trade
Section
A: Objective Type (30 Marks)
• This section consists of Multiple Choice Questions and Short Questions
• Answer all the questions
• Part one carry 1 mark each and Part Two
questions carry 5 marks each.
Part
One:
1. Which of the following is NOT an initiative for attracting a higher
Quantum of FDI?
a. Further Liberalization of Foreign Trade Policy
b. Rationalisation of Labour Policy
c. Development of Infrastructure
d. Increase in Joint ventures
2. ECB stands for ______________________________
3. The textile and garment exports have been affected due to
__________________
4. _____ is a popular export inductive scheme.
5. To overcome many of the problems associated with the advance
licensing system this scheme
was introduced
a. Passbook Scheme
b. EPGC Scheme
c. Post Export Duty Exemption Scheme
d. Duty Drawback Scheme
6. Which of the following is a potential Export product
a. Automobile Products c. Agricultural Products
b. Leather Products d. Engineering Products
7. To give a special trust for export of computer software which of
the following scheme was
developed
a. DEPB Scheme c. EOU/EPI Scheme
b. EPCG Scheme d. Duty Exemption scheme
8. It is a bilateral agreement between two countries to purchase
specific amounts of each other’s
products over a specified period of time
a. Swap c. Clearing
b. Switch d. Evidence Accounts
Examination Paper of Foreign Trade management
IIBM Institute of Business Management 2
9. TRIPS stands for ____________________________
10. Foreign Investment Promotion Board does not consist which of the
following member
a. Secretary Minister of External Affairs
b. Industry Secretary - Chairman
c. Foreign Investment Minister
d. Finance Secretary
Part
Two:
1. Write a short note on ‘Globalisation’?
2. Differentiate between Current Account Convertibility and Capital
Account Convertibility?
3. Define ‘Deemed Exports’?
4. Discus the measures announced in the Union Budget 1990 – 00 for
Trade Policy Reforms?
Section
B: Caselets (40 Marks)
• This section consists of Caselets
• Answer all the questions
• Each Caselet carries 20 marks each.
• Detailed information should form the part of your answer (Word limit
150 to 200 Words)
Caselet
1
An American World Wide Corporation has decided to expand aggressively
in Asia. It plans to source
much of its raw materials and subcontracting there and manufacture and
market throughout Asia, from
Japan in the north to New Zealand in the South.
You were appointed to organize and direct this major new effort and
one question was where to locate
the regional headquarters for the Asian Division (ADR). After
considerable study, you selected the island
nation of Luau.
Luau’s advantages are several. It is about equidistant between New
Zealand and Japan. It was a British
Colony, so the main language is English. It has a relatively efficient
telephone and telegraph system and
good air service to all the major Asian destinations in which you are
interested and to the United states,
as well.
Not least important, the Luau government is delighted to have your
company locate and invest there. It
has made very attractive tax concessions to the company and to its
personnel who will move there.
END OF
SECTION A
Examination Paper of Foreign Trade management
IIBM Institute of Business Management 3
The company moves in, leases one large building and puts out
invitations to bid on the construction of a
large building which will be its permanent headquarters. Now as you
begin to work much more with the
private banking and business people of luau and less with government
officials, you begin to be more
aware of luau characteristics about which you had not thought much
previously. Almost all of the
middle and upper management personnel in the business and finance
sector are of Chinese extraction.
The native population of luau, which is the majority, is a Micronesian
race.
On enquiry why the Chinese are dominant in banking and business; while
the Micronesians stay with
farming, fishing, government and manual labor, you are told that this
is the way it developed
historically. The Chinese enjoy and are good at banking and business;
while the native Luauans do not
like those activities and have stayed with their traditional pastimes.
The two groups buy and sell from
and to each other, but there are almost no social relations and very
little business or professional
overlap between the groups. Occasionally, some of the Micronesians
study abroad and some work
abroad for periods; when they return they frequently go to work in a
bank or business or take a
government position.
You must staff your headquarters with middle and lower management
people and with clerical help.
You find that the only applicants for the jobs are Chinese, and you
select the best available. They are
quite satisfactory, and the operation gets off to a good start.
Then as the months pass, you notice a gradual change of attitude
towards you and the company among
the government officials and among the people in general. They have
become less friendly, more
evasive, and less co-operative. You ask your Chinese staff about it,
but they have noticed nothing
unusual.
Required
Q. Give some suggestions to improve the Government and Public
Relations?
Caselet
2
Vertex, the tenth largest bank in the world has promoted world – class
institutions in India. A few of
such institutions built by Vertex are National Stock Exchange, The
National Securities Depository
Services Limited, Stock Holding Corporation of India etc. vertex is a
strategic investor in a plethora of
institutions, which have revolutionized the Indian Financial Markets.
Vertex promoted Vertex Bank to
make the formal foray of the Vertex group into commercial banking. The
birth of Vertex Bank took place
after RBI issued guidelines to for the entry of new private sector
banks in January 19, 1993.
Subsequently, Vertex as promoters sought permission to establish a
commercial bank and retained
KPMG a management consultant of international repute to prepare the
groundwork for establishing a
commercial Bank.
Vertex successfully completed its public issue in February 1999, which
led to its paid – up capital
expanding to Rs. 1400 million. The promoters holding consequent to
this public issue stood reduced to
71% with Vertex holding 57% and SIDBI 14% of the paid –up capital of
Vertex Bank. This was in line with
the requirement of RBI which stipulated that eventually the promoters
holding should be bought down
Examination Paper of Foreign Trade management
IIBM Institute of Business Management 4
to 40%. Banking as a whole was undergoing a change in India. With the
retail – banking sector expected
to grow at a rate of 30%, players were focusing more and more on the
retail sector.
In 2000, there was a corporate shift in the emphasis of Vertex bank
from corporate banking to retail
Banking. This shift was mainly initiated due to the change in the top
management at corporate office
and also due to a paradigm shift in the global banking industry from
corporate banking to retail Banking.
The bank felt the need to provide its retail clients with complete
banking solutions under one roof top
penetrate the retail sector. In line with the change in emphasis,
Vertex Bank decided to divide the
functions of Rajendra Pillai who was earlier looking after both
corporate and retail services, by
appointing a young and dynamic management graduate Sanjay Singh to
head the retail banking
segment. The following were some of the measures adopted by the bank
for promoting its retail
products.
Product: The bank introduced a wide array of
retail banking products in order to penetrate the retail –
banking segment. Earlier, the bank had concentrated on big retail
clients. Only clients having a minimum
balance of Rs. 25,000 were allowed to open a savings account. However,
the minimum balance
requirement was lowered to Rs. 5,000. The first category consisted of
clients having an average
quarterly balance of Rs 5 lakh and above, and the second category
consisted of customers having an
average quarterly balance of Rs. 25 lakh and above. These preferred
customers were provided special
facilities like home delivery of demand drafts. The facilities were
higher in the first category of clients.
State – of –the – art technology was used in the banking services by
introducing ATMs, Internet banking,
demat services, International debit cards with multiple currency
facility options available globally etc.
• Direct Tax Payments: The Reserve Bank of India has authorized Vertex
bank to conduct all government
transactions pertaining to the Central and State Government ministries
and non – civil ministers e.g.
Indian Railways Income tax etc.
• Investment Options: Bank helped clients to invest in government bonds,
relief bonds, Suvidha bonds,
insurance policies etc.
• ATMs: Vertex bank had set up 7 ATMs in Indore at prominent locations
to facilitate better customer
service. The cost of availing an ATM card facility entailed an annual
charge of Rs. 99. From their
inception, ATMs were being used merely as cash dispensing machines.
Just four years back, people were
apprehensive of using ATMs for cheque/cash deposit. They feared the
loss/ misuse of their
cheques/cash, if they deposited it in the ATMs.
• Demat Account: The bank offer the demat account dealing in physical
securities. The demat account
took care of all customers worries involved in portfolio management
which was facilitated electronically.
• Debit Cards: All the account holders of the bank were issued debit
cards. These cards could be used
for ATM transactions and for payment of the purchase made at several
retail outlets. The bank did not
provide any Credit Card facilities.
• World Currency Card: This card was exclusively designed for
international travelers’ needs. From a
single card, customers can make payments/withdrawls in five foreign
currencies.
• Gift Cards: This card was issued to Vertex saving Account holders and
had a minimum limit of Rs.
51,000. The card enabled clients to make payment at various gift
stores throughout the country.
• Home Loans: The bank offered home loans at a competitive interest
rates for purchase, construction,
refinance, extension etc.
Examination Paper of Foreign Trade management
IIBM Institute of Business Management 5
• Phone Banking and Mobile Phone
Banking: Banking services such as updated balance, details of last
five transactions, request for cheque book etc, were
offered free of cost.
• Internet Banking: All banking
solutions were offered on the Vertex Website www.vertexbank.com. The
bank believed in providing anywhere anytime banking to its
customers.
Promotion: The corporate office was promoting the retail products through
nationwide ad campaigns.
These campaigns used billboards and hoardings mounted on
kiosks. These campaigns were highly
innovative using animals for promoting major themes of
customized services. The bank was, however,
not using any electronic media for advertising and used
sales promotion for selling some of the products
like gift cards.
Initially, the branch was allowed a promotional budget of
Rs. 2 – 3 lacs in order to establish itself in the
market.
Distribution: In order to support Sanjay Singh, a marketing team was appointed
which consisted of two
young sales managers and 20 marketing executives who
operated in the field. These marketing
representatives engaged in direct marketing included
personal selling. The sales force was totally target
– oriented and various incentives were provided to the
star performers.
HR Policies: In order to develop and motivate the sales force the bank had
come up with key result
areas like budgets, star performance incentives etc. under
this activity each employee’s performance
was appraised through a unique five – tier performance
appraisal system. The employee was also given
a certificate of appreciation for his excellent
performance. For creating a sense of belongingness, the
birthdays of employees were celebrated by flashing their
name and birthday greetings on the Intranet.
The employee was also presented with a bouquet.
The bank had been able to increase its retail customers
from 20,000 to 40,000 in Indore. The
contribution of retail services to the annual profits had
increased from Rs. 73 Crores to Rs. 123 Crores
nationwide and from 1.50 Crores to 3.5 Crores for the
Indore branch. Vertex bank as a whole had the
lowest Non Performing Assets (NPA) amongst private banks
namely 0.2% and was known for its
efficiency. The Indore branch had established itself as
number one private banks in terms of overall
profitability. In the present scenario, Sanjay Singh
wondered whether the strategies adopted for
penetrating the retail market were sufficient to retain
current customers and attract new ones. With
aggressive promotional strategies followed by other banks
and the proposed entry of Citicorp, he
pondered on whether the current strategies would continue
to be effective in the long run.
Questions
Q 1. Discuss the measures adopted by the bank for
promoting its retail products?
Q2. Evaluate the impact of strategies on financial
performance of the firm?
END OF SECTION B
Examination Paper of Foreign Trade management
IIBM Institute of Business Management 6
Section
C: Applied Theory (30 Marks)
• This section consists of Long Questions
• Answer all the questions
• Each question carries 10 marks each.
• Detailed information should form the part of your answer (Word limit
200 to 250 Words
1. What are the major features of EXIM policy 1992 - 97?
2. Discuss the elements of the Capital Account?
3. Describe the state’s role in Export Promotion?
END OF
SECTION C
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