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
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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