Examination Paper: International Business Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
International Business Management
Section A: Objective Type (30 marks)
•This section consists of multiple choice questions and short answer type questions.
•Answer all the questions.
•Part One carries 1 mark each and Part Two question carries 5 marks each.
Part One:
Multiple choices:
1. What is the series consideration for strategy implementation?
a. Strategic orientation
b. Location
c. Dimensions
d. Both (a) & (b)
2. The major activity in global marketing is:
a. Pricing policies
b. Product lines
c. Market assessment
d. All of the above
3. The third ‘P’ in the international marketing mix is:
a. Product
b. Price
c. Promotion
d. Place
4. The European Economic Community was established in:
a. 1958
b. 1975
c. 1967
d. 1957
5. Environment Protection Act:
a. 1986
b. 1967
c. 1990
d. None of the above
6. People’s attitude toward time depend on:
a. Language
b. Relationship
c. Culture
Examination Paper: International Business Management
2
IIBM Institute of Business Management
d. All of the above
7. Culture necessitates adaption of :
a. Product
b. Price
c. Promotion
d. Place
8. The legal term for brand is:
a. Symbol
b. Name
c. Trade mark
d. All of the above
9. FDI flows are often a reflection of rivalry among firms in:
a. Global market
b. Indian market
c. International market
d. None of the above
10. ISO certification is:
a. Expensive process
b. Elaborate process
c. Evaluative Process
d. Both (a) & (b)
Part Two:
1. What do you understand by ‘Inward-oriented Policies’?
2. What is ‘Factor Endowments Theory’?
3. Explain the term ‘Totalitarianism’.
4. Write about ‘Persistent Dumping’.
END OF SECTION A
Examination Paper: International Business Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU’s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU’s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe’s labour markets for goods and services. A shortage of risk capital for advanced
technological development and high cost and inefficiency of Europe’s financial services were also
highlighted by the report. For one reason or another, European industries generally lag behind in
technology industries. If measured by the number of inventions patented in at least two countries, the
USA is well ahead of most European countries, as well as Japan. Despite these shortcomings, the
report’s authors focus attention on flexible markets, market liberalisation, and the creation of a
competitive business environment rather than on targeted intervention by the EU or national
authorities
Questions:
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU’s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
Caselet 2
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Examination Paper: International Business Management
4
IIBM Institute of Business Management
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner’ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
Questions:
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Imagine that you are the director of a major international lending institution supported by funds
from member countries. What one area in newly industrialized and developing economics would
be your priority for receiving development aid? Do you suspect that any member country will be
politically opposed to aid in this area? Why or Why not?
2. The principle problem in analyzing different forms of export financing is the distribution of risks
between the exporter and the importer. Analyze the following export financing instruments in this
respect:
(a) Letter of Credit
(b) Cash in advance
(c) Draft
(d) Consignment
(e) Open Account
END OF SECTION C
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
International Business Management
Section A: Objective Type (30 marks)
•This section consists of multiple choice questions and short answer type questions.
•Answer all the questions.
•Part One carries 1 mark each and Part Two question carries 5 marks each.
Part One:
Multiple choices:
1. What is the series consideration for strategy implementation?
a. Strategic orientation
b. Location
c. Dimensions
d. Both (a) & (b)
2. The major activity in global marketing is:
a. Pricing policies
b. Product lines
c. Market assessment
d. All of the above
3. The third ‘P’ in the international marketing mix is:
a. Product
b. Price
c. Promotion
d. Place
4. The European Economic Community was established in:
a. 1958
b. 1975
c. 1967
d. 1957
5. Environment Protection Act:
a. 1986
b. 1967
c. 1990
d. None of the above
6. People’s attitude toward time depend on:
a. Language
b. Relationship
c. Culture
Examination Paper: International Business Management
2
IIBM Institute of Business Management
d. All of the above
7. Culture necessitates adaption of :
a. Product
b. Price
c. Promotion
d. Place
8. The legal term for brand is:
a. Symbol
b. Name
c. Trade mark
d. All of the above
9. FDI flows are often a reflection of rivalry among firms in:
a. Global market
b. Indian market
c. International market
d. None of the above
10. ISO certification is:
a. Expensive process
b. Elaborate process
c. Evaluative Process
d. Both (a) & (b)
Part Two:
1. What do you understand by ‘Inward-oriented Policies’?
2. What is ‘Factor Endowments Theory’?
3. Explain the term ‘Totalitarianism’.
4. Write about ‘Persistent Dumping’.
END OF SECTION A
Examination Paper: International Business Management
3
IIBM Institute of Business Management
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
THE EU’S LAGGING COMPETITIVENESS
In a report produced for the European Commission, published in November 1998, it was argued that
the EU lags behind the USA and Japan on most measures of international competitiveness. Gross
domestic product per capita, sometimes used as an indicator of international competitiveness at the
country level, was 33 per cent lower in the EU as a whole than in the USA and 13 per cent lower
than in Japan. The EU’s poor record in creating employment was singled out for particular criticism.
As this appeared to apply across the board in most industrial sectors, it suggested that the EU’s poor
performance related to the business environment in general and, in particular, to the inflexibility of
Europe’s labour markets for goods and services. A shortage of risk capital for advanced
technological development and high cost and inefficiency of Europe’s financial services were also
highlighted by the report. For one reason or another, European industries generally lag behind in
technology industries. If measured by the number of inventions patented in at least two countries, the
USA is well ahead of most European countries, as well as Japan. Despite these shortcomings, the
report’s authors focus attention on flexible markets, market liberalisation, and the creation of a
competitive business environment rather than on targeted intervention by the EU or national
authorities
Questions:
1. Is gross domestic product per capita a useful indicator of International competitiveness in the EU?
2. Is it fair to point the blame for the EU’s poor international competitiveness at inflexible labour
markets, regulated goods and services markets, and a general lack of competition? What
alternative explanations might be suggested?
Caselet 2
PERU
Peru is located on the west coast of South America. It is the third largest nation of the continent (after
Brazil and Argentina), and covers almost 500,000 square miles (about 14 per cent of the size of the
United States). The land has enormous contrasts, with a desert (drier than the Sahara), the towering
snow-capped Andes mountains, sparkling grass-covered plateaus, and thick rain forests. Peru has
approximately 27 million people, of which about 20 per cent live in Lima, the capital. More Indians
(one half of the population) live in Peru than in any other country in the western hemisphere. The
ancestors of Peru’s Indians were the famous Incas, who built a great empire. The rest of the
population is mixed and a small percentage is white. The economy depends heavily on agriculture,
fishing, mining, and services. GDP is approximately $115 billion and per capita income in recent
years has been around $4,300. In recent years the economy has gained some relative strength and
multinationals are now beginning to consider investing in the country. One of these potential
investors is a large New York based that is considering a $25 million loan to the owner of a Peruvian
fishing fleet. The owner wants to refurbish the fleet and add one more ship. During the 1970s, the
Examination Paper: International Business Management
4
IIBM Institute of Business Management
Peruvian government nationalised a number of industries and factories and began running them for
the profit of the state. In most cases, these state-run ventures became disasters. In the late 1970s, the
fishing fleet owner was given back his ships and are getting old and he needs an influx of capital to
make repairs and add new technology. As he explained it to the NEW YORK banker: “fishing is no
longer just un art. There is a great deal of technology involved. And to keep costs low and be
competitive on the world market , you have to have the latest equipment for both locating as well
as catching and then loading and unloading the fish.”Having reviewed the fleet owner’ operation, the
large multinational bank believes that the loan is justified. The financial institution is concerned ,
however , that the Peruvian government might step in during the next couple of years and again
take over the business . If this were to happen, it might take an additional decade, for the loan to be
repaid. If the government were to allow the fleet owner to operate the fleet the way he has over the
last decade, the loan could be rapid within seven years. Right now, the bank is deciding on the
specific terms of the agreement. Once these have been worked out , either a loan officer will fly
down to lima and close the deal or the owner will be asked to come to NEW YORK for the signing.
Whichever approach is used, the bank realize that final adjustments in the agreement will have
to be made on the spot. Therefore, if the bank sends a representative to Lima, the individual will have
to the authority to commit the bank to specific terms. These final matters should be worked out within
the next ten days.
Questions:
1. What are some current issues Facing Peru? What is the climate for doing business in Peru today?
2. Would the bank be better off negotiating the loan in New York or in Lima? Why?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part of your answer (Word limit 200 to 250 words).
1. Imagine that you are the director of a major international lending institution supported by funds
from member countries. What one area in newly industrialized and developing economics would
be your priority for receiving development aid? Do you suspect that any member country will be
politically opposed to aid in this area? Why or Why not?
2. The principle problem in analyzing different forms of export financing is the distribution of risks
between the exporter and the importer. Analyze the following export financing instruments in this
respect:
(a) Letter of Credit
(b) Cash in advance
(c) Draft
(d) Consignment
(e) Open Account
END OF SECTION C
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