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NMIMS
Master
of Business Administration - MBA Semester 3
International Business
Q1. In the
US-China Trade war, what are the trade control measures taken by both the
countries. How are the US & Chinese companies getting affected?
Answer.
The basic legal environment for conducting business is governed by state law,
domestic law or municipal law, and international law. This environment covers a
wide variety of topics, for instance, laws regulating business on production
and sale of goods, consumer and labour laws, tax and financial laws, settlement
of disputes at the national and international level and rules of business
ethics. It is important to have knowledge and understanding of the domestic
legal environment and the international legal framework. With the increasing
globalization, business organizations operate at an international level and
need to comply with legal rules from different sources and legal systems in
different jurisdictions. It is useful to know the international legal framework
and systems pertaining to world trade law for ensuring
Q2. Discuss
the effects of regional integration in terms of trade creation and trade
diversion. Prepare a list of Regional Trade Agreements of India.
Answer.
Regional economic integration has been justified both economically and legally.
Regional economic integration, it is argued, increases economic welfare of the
nations in the region through the liberalization of trade and capital movement.
Further, increased national incomes mean countries will boost their levels of
import. Thus, regional economic integration also enhances global economic
welfare. On the other hand, another viewpoint goes thus: member states
increasingly import goods and attract investments from fellow member states
rather than from outside countries due to lowered intra-regional barriers.
Therefore, regional economic integration may have harmful impacts on countries
outside the region and may diminish global economic welfare. The logic goes as
investment-diversion effects, and then regional economic integration can be
justified in purely economic terms.
The pattern of growth of RTAs does not lead to any
concrete deductions. While on one hand, this phenomenal extent of trading
within the regional agreements could never have been imagined by the founders
Q3. Read
the passage and answer the questions mentioned below the passage. Corona virus
has put a spotlight on the economic decoupling of China and some developed
countries. With factories shuttered and consumption stalled, multinational
companies have been forced to shift production elsewhere. Apple has warned
investors that its revenues will take a hit as a result of the outbreak. A
gradual decoupling of global economies has been under way for a few years. The
South Korean electronics group Samsung, for example, has been closing Chinese
plants and opening others in Vietnam. Mexico has benefited from some US
corporations moving their supply chains closer to home. But decoupling will
undoubtedly speed up as Beijing’s opacity in handling the corona virus epidemic
highlights the risks of doing business in China. There are marked similarities
between the virus and decoupling itself. There is what you see on the surface
(masks and panic or supply chain shifts and profit warnings) and then there is
what you can’t know: how many victims the outbreak will claim or what the world
will look like economically and politically in five to 10 years, as
globalization dissolves and divides deepen. Still, it is the job of a columnist
to go out on a limb, so let me make a few predictions about what may lurk
around the corner if the decoupling continues. An increased risk of violence in
Taiwan, the inability of Europe to defend its own liberal democratic values,
and a world in which smart devices can no longer speak to each other across
borders are distinct possibilities. And all of these things could fundamentally
reshape the global economy and geopolitics. The most pressing issue in the
short term is Taiwan, whose firms make most of the world’s semiconductors. The
majority are produced by Taiwan Semiconductor Manufacturing Company, a contract
chipmaker that supplies US companies, including Apple, and a number of Chinese
firms. Semiconductors are a key area in which the Chinese are not yet
technologically self-sufficient. In hardware (from routers to switches to
handsets), areas of software and high-tech services, the Chinese have already
largely decoupled from the US. Consider the success of home-grown firms such as
the Smartphone maker Xiao. Or the telecoms group Hawaii’s efforts to build
bespoke Chinese operating systems. Or the fact that many of the most innovative
new mobile apps are developed in China. But semiconductors require huge amounts
of capital investment and research effort. It could be a decade before China
can fully develop its own industry. In the meantime, it will be dependent on
Taiwan, which not only supplies US companies, but where support for democracy
is growing. This begs the question of whether, or perhaps when, Taiwan’s
semiconductor industry might become a political hot potato, as both China and
the US try to build their own independent high-tech sectors. It is hard to
imagine that Taiwan will be able to operate in both orbits indefinitely. As one
telecoms analyst put it to me recently, “What’s happened in Hong Kong is
fascinating and disturbing in part because it raises the question, what happens
if the same thing occurs in Taiwan?” Imagine a world in which cross-border
banking, online shopping and data sharing becomes bifurcated between two
systems. That is a reality we may be heading towards. Apple and other tech
companies would certainly take a valuation hit in such a future. But so would
many others in industries beyond technology. As with corona virus, the effects
of decoupling will be both unpredictable and exponential. (Accessed from
https://www.ft.com/ on 27th February, 2020)
a. Do you
think that globalization is under threat? Are transnational firms going to
become extinct? Give your comments with reference to the passage.
b. With
your knowledge of International Business, explain how different political
systems across nations may create risks for the conduct of business.
Answer.
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