IV S e n M.B.A. (Day)M Sem. M.B.A. (Evening) Examination, JulyIAugust 2006 (Updated Scheme) MANAGEMENT

4.1 : International Business

Time: 3 Hours Max. Marks: 75

SECTION - A

1. Answer any six from the following :

a) World Trade Organisations.

b) Explain the term 'Cultural Adoption'.

c) Strategic planning.

d) Spin-offbenefits.

e) Foreign direct investment.

f) International HR activities.

0 ) What are the major trading blocks ? b

h) Social responsibility.

i) Explain the significance of international business.

SECTION - B

Answer any four questions from the following :

2. Why is international business a crucial venture ?

3. Explain the process of strategic management.

4. Explain various benefits of International Markets.

5 . What are the advantages and disadvantages of flexible exchange rate system ?

6. Examine the important elements in market entry strategy.

7. Briefly explain the Dominance of MNCs in International Trade.

- P.T.O.

SECTION - C

Answer any three questions from the following :

8. Explain the comparative cost theory of international business. What are its assumptions and outcomes ?

9. Discuss the factors like political and cultural influencing in international business.

10. What is international SWOT analysis ? How it is applicable in global strategies ?

1 1. Explain the significance of export promotion zones and special economic zones.

12. Explain the role of India in WTO and WTO's role in Indian socio-economic development.

SECTION - D Read the following case and answer the questions given below : (2x6112=

CASE

Once PepsiCo 's venture was approved, Coca-Cola made an application to re-enter the Indian market through production within an export processing zone. Producing in this way would allow 25 percent of output to be sold within India rather than in export markets. Tlus proposal threatened PepsiCo because the Coca-Cola name was still well-remembered in India; cans of Coke were even smuggled in from Nepal. But after sixteen months, Coca-Cola's application was denied, leading a Coca-Cola official to say that India "doesn't follow its own rules".

In late 1989, a new Prime Minister, V.P. Singh, took power in a minority government. As finance minister in the mid-1980s he had promoted liberalizing FDI. However, after taking power, he almost immediately made conflicting statements about such investment. In early 1990, the PepsiCo venture began production of snack foods and announced that soft drink production would start up by summer. Prime Minister Singh announced the government would reexamine the PepsiCo agreement.

Several things then happened in quick succession. Because of India's strict FDI regulations, the U.S. government, without public reference to PepsiCo, threatened to impose trade sanctions against India under its Super 301 legislation. Indian governmental officials and the joint venture's management then met secretly. Subsequently, PepsiCo agreed to place a new logo, Lehar, above the Pepsi insignia. It also lobbied publicly against Super 301 sanctions against India. The U.S. government backed down. And India's Minister of Food Processing Industries announced tax breaks for food processors.

In 1991, P.V. Narasimha Rao was elected Prime Minister and launched broad economic changes, including a more welcome attitude toward FDI. A Foreign Investment Promotion Board was established, and ownership requirements were changed to allow 51-percent foreign ownership of companies. The new policies gave confidence to foreign investors, and both IBM and Coca-Cola re-entered the market. Coca-Cola announced its return in 1993 through a joint venture with Parle Exports and agreed to export three times the value of its imports; it also announced it would export plastic beverage cases to compensate for its imports of concentrate. Three years later, Indian authorities approved a $700 nzillion expansion by Coca-Cola.

However, in 1995 political opponents of FDI garnered enough strength to cause renegotiation of the Enron power project and to harass PepsiCo. A group of 400 militant protestors smashed Pepsi bottles and burned Pepsi posters. PepsiCo's first Kentucky Fried Chicken (KFC) restaurant in Bangalore had to be protected by police because of threats, and then it was closed temporarily because of allegations of using too much monosodium glutamate, and because the chicken industry diverts available land to meat instead of traditional food production. KFC's second restaurant in New D e h was closed for a month because two flies were found in its kitchen. Both PepsiCo's and Coca-Cola's sales were temporarily suspended because prices on bottles were smudged.

Questions : 1) What behavioral factors might affect negotiations involving managers and

government officials from the United States and India ?

2) Describe the impact of socio-political and economic factors in the development of beverage market in India.

J

AE - 1648 IV Semester M.B.A. (Day) M Semester M.B.A. (Evening) - Examination, JulyfAugust 2005

(Updated Scheme) MANAGEMENT (Paper. - 4.1)

International Business Time: 3 Hours Max. Marks : 75

SECTION -A

1. Answer any six from the following: (6x2=12)

a) What is the theory of absolute advantage ?

b) For what two main reasons do companies go international ?

c) How does ethnocentricity distort one's is view of other cultures ?

d) What is totalitarianism ? What are its different forms ? Give examples of countries where each form is in force.

e) Which principles of international law are more important for global business ?

f) What are strategic alliances ? Comprehensive alliances ? Functional alliances ?

g) What are the basic issues involved in hiring managers for foreign assignments ?

It" h) What is translation exposure ? How can this be minirnised ?

SECTION - B

Answer any four from the following:

2. What is political risk ? Identity the types of political risks. How does each affect international business ?

3. "International law is one of the environmental forces influencing international business." Identify four areas of concern for an MNC in its interface with international law.

4. You are the HR chief of a multi-million, and multiplant conglomerate. What ethical issues do you face ? How do you manage them ?

5,. Do you think that WTO has been pro-rich ? Yes or no-discuss.

6 . Do regional trading blocks help or hurt world trade ? Discuss.

7. How do MNCs manage their current assets ?

SECTION - C

Answer any three from the following: (3x10=

8. What is technology transfer ? How do host countries and home countries react to techrology transfers ?

9. Are the four ps of international marketing of equal importance to all MNCs ? What factors might cause some to be more or less important than others ?

10. State and explain the factors an MNC must consider while addressing the make or buy decision.

11. Explzin the following, highlighting their merits and demerits.

a) Geographic area structure

b) Product organisation

12. Describe how MNCs formulate and implement their strategies.

SECTION - D (1~13=

I 13. Read the following: case and answer the auestions amended to it.

I Asian Values Under Fire

Many cultures in Asia are in the midst of an identity crisis. In effect, they are being tom between two worlds. Pulling in one direction is a traditional value system derived from agriculture based communities and extended families - that is, elements of a culture in which relatives take care of one another and state-run welfare systems are unnecessary. Pulling from the opposite direction is a new set of values emerging from manufacturing-and finance-based economies-elements of a culture in which workers must often move to faraway cities to find work, sometimes leaving family members to fend for themselves.

For years, spectacular rates of economic growth elevated living standards in many Asian countries far beyond what was thought possible in a few short decades. Young people in countries like Malaysia and Thailand felt the lure of Western brands. Gucci handbags, Harley-Davidson motorcycles, and other global brand names became common symbols of success. Some parents even encouraged brand-consciousness among their teenage children because it signaled farnilywide success. Meanwhile, polls of young people showed them holding steadfast to traditional values such as respect for family and group harmony. Youth in Hong Kong, for example, overwhelmingly continued to believe that parents should have much to say about how hard they study, about how they treat family members and elders. and about their choice of friends.

But events took an unpleasant turn in the middle of 1997. The currencies of Thailand, Indonesia, Malaysia, South Korea, and other nations crumbled. Within weeks, currencies were worth about half as much as before and spending power was sharply reduced. Financial investments throughout Southeast Asia fled to safe havens in highly industrialized countries, and future investment plans were either scaled back or put on hold. Some Asians blame the West for the crippling economic crisis. Even more blame economic development and "westernization" for a decaying value system and declining morality. Many Asians, it seems, want modernization but also want to hold on to traditional beliefs and values. They do not want Western companies and governments imposing their ways of doing business on cultures that they might not fully comprehend. Nevertheless, following the crisis, Western companies are scooping up failing enterprises from Thailand to Japan and implementing Western business practices.

Prior to the financial crisis, Asians thought they had discovered an "Asian" way of doing business that was uniquely their own. Many respected analysts in Asia, Europe, and the United States discussed the virtues of the so-called "Asian model". But the crisis put an abrupt end to that discussion. Some observers say that talk of an "Asian" way of doing business was overstated and misplaced. They argue that belief in the importance of family became the practice of nepotism, belief in the importance of relationships became cronyism, belief in the building of consensus became corrupt politics, and belief in conservatism and respect for authority became rigidity and an inability to innovate. If Asian culture esteems family loyalty so highly, why was it necessary for Singapore to enact legislation requiring that children take care of elderly parents ?

Questions:

1. If your international firm were doing business in Asia, would you feel partly responsible for these social trends ? Is there anything that your company could do to ease the tensions being experienced by these cultures ? Be specific.

2. In your opinion, is globalization among the causes of the increasing incidence of divorce, crime, and drug abuse in Asia ? Why or why not ?

IV Semester M.B.A. Examination, October 2004 (Updated Scheme)

MANAGEMENT (Paper - 4.1) International Business

; Time : 3 Hours

SECTION -A

Max. Marks : 75

h; Answer anv six from the following : - . Give t,; lneaning of :

a) Barriers to trade.

@ -

b) Treaties and Converitions.

c) Core competencies'.

d) Two tiered pricing.

e) Transaction exposure.

f) Transfer pricing.

g) Tax haven.

h) Occupational culture.

SECTION - B

Answer any four from the following :

2. Bring out the arguments for protection of domestic firms.

" 3. How do MNCs assess political risks ? How do they manage such risks ? t". t". 4. Name the important legal systems prevailing around tht: wulid. Zring out the

implications of each on in~erliational business.

5. Bring out the reactions of llost countrjl md of home country to technology • transfers.

a 6. Why do ctratecgic alliances hi1 ? How do you manage them effectively ?

6 7. What are the rriost importar~t criteria nlultinationals should use when selecting expatriates ?

t

8

- 3 . ?

SECTION - C

Answer any tnree from the following :

8. Bring out the drivers of international business. 6 9. Bring out the advantages and disadvantages of employing PCNs, HCNs and - %

TCNs. ' C 10. Explain the main straregic issues in global operations management. '% 11. Bring out the arguments for and against social responsibility by MNCs. What

challenges does a n MNC face while undertaking social actions ?

12. Explain the dif'l'crent routes of globalisation.

SECTION - D (1x13=13) % Assuming yo11 are all international manager, offer your comments on the following h situations : 'Ci

It is argued that nations use trade policy to pressurise other countries to change certain policies. For example, countries have limited trade with Iraq to weaken its repres>i\-t. cii~tatorship; with India to protest its nuclear tests ; with Malaysia so that ~t will prohibit the abuse of child labour ; with Taiwan so that it will curtail trade i n enda11ge1-ed animals ; and with Brazil so that i t will restrict the cutting of Amazon fol-ests.

Acme Boots a~inounced it was moving out of the U.S: to gain tax advantages in Puerto Rico. The move stranded its U.S. employees, some of whom had 30 years of service with the company. Many critics of FDI argue that it is unethical for gavel-nments to lure companies away from existing locations by offerin? lucrative incentives and for companies to move.

3. A firm enters into a contract to sell drilling equipment to a Korean company. The ,ontract is closed while the Korean company president is visiting the

'c, U.S. plant. Aftei- closing, the Korean executive points out that all imports to % Korea musr be channelled through a registered "local agent". He quickly suggests that a wholly owned trading company tha.t he owns could handle all

'C of the paperwork - for a fee. h

I V Sem. MUA (Day) Degree Examination, Sept/Oct. 2003 I

MANAGEMENT (,Pager - 4.1.) - - . -

International Business 1 I )~L . t ki,;un Max. Marks: 50

SECTION - A

,':~!<;v~cr ~ 1 1 1 ~ lllrce clueslio~~s Froln-this Ssction. Encllquestion carries two marks. : ' ' (3x2 = 6)

. I ) %'hat a1.c expenses curve benefits ?

!I) V4har is internationill divisionstructure ?

. What is inlerna~ic.)nal operatiorls management ?

(1) What is technology transfer ? -4

C) W h a ~ is balance shcet approach to export co~npensation ?

SECTION -- B

:::-:\u- any three questions from this Section.Eacllquestion carries five marks. (3x5 = 15)

L. "Many international alliances end up in failure" Give your view point.

. Uring oul the impact of cross-culture on international business. . .

: *

4. Iiow 30 in~crnatioml business seek to minimise foreign ctchange risks ?: . .

. , . . . . , . . , ..

L>o regional Lrading blocks help or hurt world trzde ? , I ! I .

I . ' , 1 ', s

I , , Arc Lhc four P o f intcrnntional marketing of equal i ~ n i o h n c e ' l o all Arms.?

SECTION - C

Answer a n y two clueslions from this Section. Each question carries eight marks. (2x8 = 16)

7 Explain the international business environment.

Describe the i~iternational slrategic management process.

9. State and explain the strategic issues involved in international operations management.

1 . ' ~Yhy d o expor.t f;lilurcr: occbrs 7 How can such failures be rnininlised ?

SECTION -- D \

(-. 'ax: (1x13 = 13) 1)estination ~ India ? ~~ .

llldia is located in southcri~ Asia, with the Bay of Benga! on the east and the Arabian Sea on [lie west. One -sixth of thc world's population (approximately 1 billion people:; lives witllin t h e c i ) \ l ~ l t r ~ ' ~ 1.27 ~rlillion square miles. Over 80 percent of Uie populatiun are I.iind~is, a~lt l (11c ol'fici;tl I;lnguagc is I-lindi, nltliaugh many people :.lso !;peak English. L3ccacsc L ~ I C li[e~;tcy mtc is lcss lhzln 40 percent, radici and television a1.c tbc most influentid ,,ledia. 'rhc country ol)criiLcs as a dcmocra~ic repu ~ l i c , arid for the nl,i,s[ ;,an, onc party ha:; domi~iatcd the governl.nent since indepeudeuce in 1947.At :hat tir,::, India was born

+L,. -..A:+:-- , ..,, ,,, . ,,,,,. s f t?; f~r;;;zr Erkish Indian empire into the iiew coi int I t a uiirruia and Pakistan. f i s division has been a source of many problems through the years. For example, much to the dismay of the world community, both countries had nucle.ar tests in a cold war atmosphere. Also, many millions of Indians stilllive at the lowest level of subsistence, and de per-capita income is very low. In the pa t , doing business in India has been quite difficult. For example, i t took PcpsiCo 3 years just to set up a soft drink concentrate factory, and Gillerie, ~ h c U.S. razor !?:udc company, had to wait 8 years for its application to enter the marker to be acczpied. Additionally, many MNCs have complined that there are too many barriers to effective operations. In the mid-1970s, the country changed its rules and required that foreign partners hold no mare than 40 percent ownership in any business. As a rcsull, some MNCs left India. In recent years, the government has been relaxing its bureaucratic rules, pcmicularly those relating to foreign investments. From 198 1 to 199 1, total foreign dircct invcs~ment in Lndia increased by $250 million, and betvteen 1991 and 1993, itjumped by an additional $2.5 billion. In 2000foreign direct investment was over S3 billion and thc pace continues. Most of this new investment has come from the United States and nonresident ~ndinns. One reason for this change in the nation's policies toward business is that the government realizes many MNCs are making a critical choice: India or China ? Any morlies not invested in India may be lost to China forever. Additiunally, i l can be scen that toreign investments are having a very positive effect on the Tndian economy. After thc l i isr big

year of new investments (1991), India's annual GDP jumped to over 4 percenr. I n 2000 annual GDP increased by more than 5 percent. The relaxation of rules definitely has encouraged more foreign investment. Coca-Cola

. ~. was able-togetplission fora 100-percent-owncd unit in India in 8 wccks, and Mntorol3 received clearance in 2 days to add a new Froduct line - and did all of this via fax. Othcr companies that have reported rapid progress include DaimlerChry'sler, Procler & Ganihlc, and Whirlpool.At the same time, however, not everything is roses. Many MNCs are still reporting problems. Nevertheless, the Indian goven~ment's new approach is Ilclping a grcaL dcd. In addirion, there are other attractions that entice MNCs to India. These include: (1) a large number of highly educated people, especially in critically short supply areas such as in rncdicinc, engineering and compute~~science; (2) widespread use of English, long accepted as the international language of business; and (3) low wages &ld salaries, which often arc 10 to 30 percent of th,ose in the world's economic superpoivers.

Questions:

1. What is the climate for doing busines: in India ? Is i t supportive of foreign investmen! ?

2. How important is a highly educaled human resource pool for MNCs wanL!nC to invest in India ? Is it more important for some hnsiness than for ~ t h e r s ?

3. Given the low per-capita income of the country, why would you still argue Lor !>&a to be an excellent place to do business i n the coming years ?

- -- -- , --

El: " / /' < - C i . > CS . -

" -. -. ' - AE-2104 4

M.B.A. IV Semester (Day) Examination, September/October 2002 (Semester Scheme) a

MANAGEMENT C4 a 1) /

Internatiolial Business \

F Timc : 2 Hours Max. Marks : 50

e" ti3 SECTION - A

Answer any three cluc5tions from this Section. Each question carries two marks: (3x2=6)

1. a) What is cross-cultural management ? I

b) ~ l i a t is reverse culture shock ? !

c) What is transaction exposure ?

d) What is shared management agreement in a strategic alliance ?

e) What is tax-equalisation system ?

SECTION - B

Answcr any three questions from this section. Each question carries five marks. (3x5=15)

2 In what ways d&s domestic HRM differ from international HRM ?

p- -) 3. Why do MNCs engage in currency netting operations ?

pi 4. How does operations management offer competitive advantage to an MNC ?

u-2 5 . What are the advantages and disadvantages of different pricing policies ? Why do most

inlcrrlrltional firms use market pricing ?

6. Do nlanugcrs of intcrwtionnl firms need Lo approach organisation design differently kom their counter parts in domestic firms 7 Why or why not 7

SECTION - C

Answer any two questions from this Section. Each question carries eight marks. (2x8=16)

7. What are the rclative advantages and disadvantages ofjoint ventures compared to other typcs of strategic alliance?

8. How dc the theories of absolute advantage and comparative advantage differ from each other ?

P.T.O. - - -. - - . . . . . -

~ . . . -. . -- -

I

A E - 2104 -2-

9. l~,:hzt 2ze the h?cir reasons forthe recent growth of international business :~cl ivity ?

10. What &e the main advantages and disadvantages of the ethnocentl-ic. polycentric and geocentric approaches to staffing policy ? When is each zpproach appropriate ?

SECTION - D

CASE McDonald's Global HR

One of the bcst-known companies worldwide is McDonald's co~por.ation. 13::: f~7:-

food chain, with its symbol of thegolden arches, has spl.cacl from thc C!rlitccl S~LILCL, i : i r c - ,

9 I countries. With over 18,000 restaurants worldwide, McDonaltl's scrvcs 33 11;; i i i o n ~ )c~>plc c:lch d:ly. Intcrnationnl salcs arc an i~nportunt IX\I- I o f McDo~i;\Icl':; Ix~si~lc,\,. :1r i (1

over 50% of thc company's operating income rcsults rro~n salcs oucsitlc tllc I'!l~:ccl S tntes. ?i, generate these sales, McDonald's ernploys ovcr onc mill iol.1 pcol,lc, ;tn~! h y 2000, McDonald's had grown to over two million employees.

. . -- Operating 111~50 inany different countries mean that McDonald's has had to nda[>t its

prod~lcts, scrviccs and 1-11< prircriccs 10 Icgal, polirical, cconolnic alitl c~~ilur:\l I;~c.cc ) r 4 I 11

each one of those countries, few examples illustrate how adaptations have been made. In some countries, such as India, beef is not acceptable as a food to a major part o l the population so McDonald's uses lamb or mutton. 10 appeal Japxiese customsrs. McDonald's has dcvcloped teriyaki burgers. Separate dining rooms for men and \\ amen have been constructed in McDonald's restaurants in some Middle Easiekn coilntnes.

E-IR practices also have had to be adapted. Before beginning oper2qtion.s in a difiergnt country, HR professionals at Mc~onald ' s research the country and determine hou HI? iicrivities niust be adjusted. One method of obtaining inforrnatiorr is to contx: HR professionals from other U.S. firriis operating in the couritry and ask them quesiions about laws, political factors, and cultural issues. In addition, the fum conducts an anzljrsis using a detailed outline to ensure that all relevant information has been gathered. Data gathered might include what employment restrictions exist on ages 01 employees and hours of work, what benefits niust be offered to full-tiin,: and part-!imc cmp1oyct.s ( i f part-time work is allowed), and other operational requirements. For ir~s!ancc, in son~t ' o f the former communist countries in Eastern Europe, employers proviclc Inckt:r roonls. and showers for their employees. These facilities are ncccssary becausc shower f;~ci! I lies, and even consistent water supplies, are unavailable in many homes, particularly ;i. :;:,re rural areas around major cities. Also, public t r h n s p ~ ~ a tion must be e\.aluaied to e.1 I ire

that employees have adequate means to travel to work.

Once a decision has been madero begin operations in a new couctry, the emplo! ment process must begin. Often, McDonaid's is seen as a desirable employer, particu!arly when its first restaurant is being opened in a countly. For instance, in Kussia, 27.000 people initially applied to work at the first Moscow McDonald's, which currently has over 1,500 employees. Because customer service is so important to P~lcDc;;?~iiil's, recruiting and selection aclivities Ccrcus on obtaining cmployccs wilt.) custolnc:: ;;cr\.icc skills. Or warkcr positions such as cc~ll~~tcl. ~.cprcscrlt;rl i vc : ~ r ~ t l c:rsllicr., t i !c I c)ii.~.. I:, lo identify individuals who will be friendly, customer-sei-;.ice--oriented en.ipli,jy~c~. :? ..rri;:l" process whereby some applicants work for a few days 011 a contii~ionai basis :-I;,:!, bc used to ensure that thes? iildivitluals will represent McDo~lald's appi-opri;l!ely and will Work well with other employees.

For store k.nagers, thc: coln;xrlly uses a sclectiori profile ernpl~asizing leadership skil!s. Irigh work exvcc~.iiions, ;incl ~;iiiil;\gf;.m~nt abilities :!.~;prop!.iati: tn r! kist. ..;)aced reslaurint e~~vironmcnt. (3ilci.1 .ii;;:l!cc:;.I si:;-cening S ; I ~ int?r;i~xs htivc Sec;:~ c:,n~pie.ted, irldividua!~ are asked to uresk for cp to i: week in a restaurant. .During that h e . , bolh the applicants slid the comlmny rcprcscritativcs evali~alc one ar~olhcr to see if thcjob "fit", is nppropriatc. AI'lcr. thc Iirst groi1p ol'storc managers and &sist:ult nlarlagers are sclccted. h~ture !nanag:-rs and assistant 1nall:igcr:; are choscn using irlternal promotions bascd on job performance.

Once the rcstaurarrts arc stal'cccd. training bzcornes crncial to acquaint new employees , . with their jobs ; t ~ i c i the MclXXil.?i's ptiilosoptiy o f c u s t o m - e r n a n d cluality-------

Mcl)o~~;~lcl's 1 1 ~ s t:lkcrr ils I Ia~~il)irl.gc~. Univcrsily curric~~lum from [hc U~iitcd Strltes all(; ~r;irisI;~rctl i t inlo '22 tlifferenr languages to use iu mining centers througllout the world. ( ) I I L . C * I I . : I ~ I I I I ~ ; : 11;~s !)CCII ( 1 0 1 1 ~ ~ . < ) I L [ I ' ~ I ~ I I C V S iLIl(I lll~\ll:lgC~~S, [ I lCy 111~11 C ( > I ~ C ~ ~ I C [ trili~iirig !.Or aii e!!ipioyees st:lected LC work al McDonald's locations in the foreign counti-ies. .

. Questions :

1 . Identifjl cu1tur:~l factors that might be important in a & m g program for food handlers at McDonald's in Saudi Arabia.

2. Rati~cr than fc~cusing on ttie differences. what similarities do you expect exist among hlcDonald's casio1i1ers and err~ployees in both the United States and abroad ?

I IV Sem. M.B.A. (Day) & V I Sem. M.B.A. (Eve.) Examination, %pt./Oct. 2001 (Semester Scheme)

,e 4.1: INTERNATIONAL BUSINESS

Time: 2 Hours

SECTION - A

I

Answer any three questions. Each question carries 2 marks.

b 1. a) State the characteristics of a transnational corporation.

b) What is strategic alliance ?

c) State the barriers to international business. I p d) State the objectives of World Trade Organisation.

e) What is International Strategic Management ?

SECTION - B

Answer any three questions.

Max. Marks: 50

(3x2 = 6 )

. 2. Naine the routes of globalisation. Which is ideal ?

3. What is culture 7 Explain the impact of culture on global business.

4. Discuss the impact of informatian technology on global production operation.

5. Describe the process of international strategic management.

6. How might an MNC minimise its foreign exchange risk ?

SECTION - C

Answer any two questions.

b- 7. What are the drivers of international business ?

p, 8. How do the variations in foreign exchange rates affect global business transactions ?

h- 9. How docs international business differ from d~mes t i c business ? Who are the major

p- I players in global business ?

10. Evaluate international division structure and geographic area structure.

t- SECTION - D

Case ~ n a l ~ & s :

h- Organizational Change at U ~ l e v e r

Unilever is a very old multinational with worldwide operations in the detergent and food industries. For decades, Unilever managed its worldwide cietergenw activities in an arm's-length manner. A subsidiary was set up in each major k t ional market and allowed to operate largely autonomously, with each subsidiary carrying out tile fu!! range of value creation activities, including manufacturing, marketing, and R&D. The company had 17 autonomous national operaiions in Europe alone by the mid-1980s.

AE - 1985 In the 1990s, Unilever began to transform its worldwide detergents activities from a ioose confederation into a tightly managed business with a global strategy. The shift was prompted by Unilever's realization that its traditional way of doing business was no longer effective in an arena where it had become essential to realize substantial cost economies, to innovate, and to respond quickly to changing market trends.

The point was driven home in the 1980s when the company's archrival, Procter & Gamble, repeatedly stole the lead in bringing new products to market. Within Unilever, "persuading" the 17 European operations to adopt new products could take four to five years. In addition, Unilever was handicapped by a high-cost structure fr3m the duplication of manufacturing facilities from country to country'and by the company's inability to enjoy the same kind of scale economies as P&G. Unilever's high costs ruled out its use of competitive pricing.

To change this situation, Unilever established product divisions to coordinate regional operations. The 17 European companies now report directly to Lever Europe. Implicit in this new approach is a bargain: The 17 companies are relinquishing autonomy in their traditional markets in exchange for opportunities to help develop and execute a unified pan-European strategy.

As a consequence of these changes, manufacturing is now being rationalized, with detergent production for the European market concentrated in a few key locations. The nu~nber of European plants manufacturing soap has been cut from 10 to 2, and some new products will be manufactured at only one site. Pmduct sizing and packaging are being harmonized to cut purchasing costs and to pave the way for unified pan- European advertising. By taking these steps, Unilever estimates it may save as much as $400 million a year in its European operations.

Lever Europe is attempting to speed its development of new products and to synchronize the launch of new products throughout Europe. Its efforts seem to be paying off: A

I dishwasher detergent introduced in Germany in the early 1990s was available across Europe a year later - a distinct improvement.

I

But history still imposes constraints. Procter & Gamble's leading laundry detergent carries the same brand name across Europe, but Unilever sells its product under a variety of names. The company has no plans to change this. Having spent 100 years building these brand names, it believes it would be foolish to scrap them in the interest of pan- European standardization.

Case Discussion Questions

1. What strategy was Unilever pursuing before its early 1990s reorgmiztioc? What kind of structure did the compmy have ? Were Ucilever's strategy and structure consistent with each other ? What were the beneEcd of h i s strategy and structure ? What were the drawbacks ?

2. By the 1990s, was there still a fit between Unilevcr's strategy and structure and the operating environment in which it competed ? If not, why not ?

. 3. What kind of strategy and structure did Unilever adopt in the 1990s ? Is this appropriate gi-(en the environment in which Unilever now competes ? What are the becefits of this nrganizational and strategic shift ? What are the costs ?

hlax. Marks: 50

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r " -_ ._ , SE - 2636

t" i: 3 M.B.A. ILV Seme::ter Exanlination, Novernber/Decernber 200C)

r3 (New Scheme) 1 MANAGEMENrI'

I " 4.1 International Ijusiness

I ' ! 9 Time: 2Hours

SECTION - /\

Answer all the questions. Each q;lestion carrics 1 mark.

1, a) Ualnncc ol' Lrndc and bul:~rlcc or paynlcnl arc (one and the sanlc/diI'Fcscn~)

b) Elaborale the abbrevialiorl GKIT

c) Globalisation arid libcralisalion are

(one and sameldiffcrent)

d) Basic objective of Inlernationa! Monetary ~~~ Fund is . -. .. -- ..

e) E,thino-entric approacll tncans -- --

SECTION - D

ny three of the following not excceding 15 lines. EI:!.!, ;!:!.%stion carries ( 3 x 5 =15)

2. Wrilc t!le cornpolren~s oC inlcrrlaLio~lal busincss cnvison~ilc~ii.

3. Explain [hc signil'ic;lncc or !)alil~icc of paytncrll i n i~~~crnrltionnl business.

4. What al-e the objectives of WTO? How it is administered?

J 5 . How is erhino-en~~ic approach is u.cx:ful in inkrrlational sccruitmcnl of hurnau rcsourccs?

21 6. Write the impact of libcraiisation of Indian economy on internationaIisation of Indian

SI~<CTI ON - (2

Answer uny th1-w out oC wllich qucs~ion nunlhcr 11 is con~pulsory. Endl qucstiun carries ( 3 x 10 ~ 3 0 )

3 7. How d o cultural, cconomic ;ind political fncti>rs al'fccr Lhc cnviro!lmenl of :ntcrnaLional busir~c.ss'?

8. Wllal are the lasil'r arid nor1 lasil'l barriers for- an inlcrnalional busitlcss'? Why ilid non lariff bur-icrs bccalue rnorc irnporliu~t in rcccnt ycilrs?

3 9. Whar u c [he causes I'or foreign cxcha~gc risk? 1-low !c. over corn(! SI )C~~ ' I<? ;~S ' . ;

3 10. Criscaliy evaluntc any LCII t11co1-ics or i.ntcrnnr.iona1 Lr;!dc.

3 1 1 . I-low r~lill~inaiio~lal I'irnls c v a l ~ ~ a l ~ L ~ I C C O L I ~ U . ~ C . S Sol. dccidinp. to cn11-y into tI,,~sc col~nrrics'll*hc way or ll~cir cvi\l~iilt.io~~ i:p~)~-c.;p~.ia[(: ~ I I 111.c ir,!i:l.cs[ o!'~lcvclo~ir~g counuics.I'oin1 out L ~ C limi!atir;:ls ill the coi~r: l ry cval!:arion mr:!!i:)iI:; :~rIor)l~(f hv h f N r h

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