What is foreign corrupt practices act? Define common law and civil law.

Civil LawIt is the most prevalent and oldest surviving legal system in the world and is found in continental Europe,is based upon legal principles and codes usually rooted from the laws and legal system of the Roman Empire. Any updates to the legal code must be made through legislation or other lengthy processes. Therefore, judges must make rulings based only on these codes and statutes, only analyzing past judicial interpretations of the law for advice. This process allows for a stabler and more representative legal system. France, Germany, and Spain are modern examples of countries who use civil law. Common law has a legal system based primarily upon past judicial opinions. These judicial opinions are interpretations of legislation, which are considered more as a guide than as literal requirements such as under civil law. Thus, common law systems acquire their laws over time and may have their laws altered by single rulings. This practice allows for a more flexible and expeditious legal system bypassing the often reluctant and slow-moving legislative system. Because it was developed in England, modern examples of countries which use common law are typically former English colonies such as Australia, India, Canada, and the United States. Defne collectivism and individualism. Collectivism means the subjugation of the individual to a group -- whether to a race, class or state does not matter. Collectivism holds that man must be chained to collective action and collective thought for the sake of what is called 'the common good'. Collectivism holds that the group---the nation, the community, the proletariat, the race, etc.---is the primary unit of reality and the ultimate standard of value. Asian collectivist cultures like China (Hong Kong 37th rank), view other companies with less collectivistic philosophy as cold and not supportive. Collectivistic cultures have a great emphasize on groups and think more in terms of we. Harmony and loyalty within a company is very important and should always be maintained and confrontation should be avoided. "Individualism stands for a society in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family on. For example, Germany can be considered as individualistic with a relatively high score (67) on the scale of Hofstede compared to a country like Guatemala where they have strong collectivism (6 on the scale). Mention three anti dumping measures.In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. Selling same product at different prices, at home and abroad It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition. Objectives of dumping.Seasonal - when exporter has a bumper crop Cyclical - when exporter has a slump at home Predatory - intended to eliminate competitors Persistent - goes on and on. Types of dumping: Sporadic Dumping: Occasional sale of a commodity at below cost in order to unload an unforeseen and temporary surplus of the commodity without having to reduce domestic prices. Predatory Dumping: Temporary sale of a commodity at below cost or a lower price abroad in order to derive foreign producers out of business, after which prices are raised to take advantage

of the monopoly power abroad. Persistent Dumping: Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals). For international price discrimination to take place, conditions must be met: Domestic and foreign markets must be separated. Demand elasticity of the product must be different in two markets. The good can be sold with a lower price where the demand elasticity is high; and with a higher price where demand elasticity is low. What is social mobility? Social mobility or intergenerational mobility as economists prefer to call it measures the degree to which peoples social status changes between generations.Refers to the movement of individuals or groups in social position over time. It may refer to classes, ethnic groups, or entire nations, An obvious example would be the son or daughter of up unskilled worker who is successful at high school, goes to college, qualifies as a computer software engineer and make a success of his/her life and earns vastly more than his/her parents did.In the traditional caste system of India, social position is determined by the historical rank, or caste, of the family and can rarely be changed. Social mobility is very limited in areas with rigid social structures, as marriage is often forbidden or frowned upon between people with widely different social standing. what is multipoint competion? Multipoint competition exists when firms compete with each other (or could potentially compete with each other) in more than one market.Multipoint competition refers to situations in which firms meet the same rivals in many markets, which may lead to a reduction of competitive pressure. Indeed, a high number of multipoint contacts between two rivals provides many footholds in each others strategic territories called spheres of influence - increasing the deterrents to attack.,This situation is known under Mutual Forbearance (MF) Hypothesis, which proposes that firms wich are multipoint competitors will compete less intensively with one another.Multipoint competitors can develop a tacit agreement by which each firm recognises the most important territories of their competitors since all territories served by a firm do not necessarily have the same strategic character. What is eclectic paradigm? The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-Framework In order for a direct investment in a foreign country to be beneficial, the following advantages must be present: 1. Product or company specific advantages, such as a comparative advantage. 2. Location specific advantages - where the company derives greater benefit through a foreign establishment. 3. Market internalization - meaning, it is better for the company to exploit a foreign opportunity itself, rather than through an agreement with a foreign firm. Definition of 'Purchasing Power Parity - PPP' An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. The relative version of PPP is calculated as: Where: "S" represents exchange rate of currency 1 to currency 2 "P1" represents the cost of good "x" in currency 1 "P2" represents the cost of good "x" in currency 2

the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency. For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)

Regional trading blocks A trade bloc can be defined as a preferential trade agreement (PTA) between a subset of countries, designed to significantly reduce or remove trade barriers within member countries. The two principal characteristics of a trade bloc are that: (1) it implies a reduction or elimination of barriers to trade, and (2) this trade liberalisation is discriminatory, in the sense that it applies only to the member countries of the trade bloc, outside countries being discriminated against in their trade relations with trade bloc members. The main trade blocs are: the EU_European Union, NAFTA MERCOSUR, CACM, CARICOM CEAO, UEMOA, ASEAN, SAARC Advantages of regional trading blocks: 1.Transaction costs will be minimized. Eg.UK firms currently need about 1,5 billion a year buying and selling foreign currencies to do business in European union if it is not a member. Holidaying needs no change of money. 2. Price transparency: Since it is difficult to accurately compare the price of goods, services and resources because of exchange rate differences. Because price is a mechanism to allocate resources. 3. Uncertainty caused by exchange fluctuations can be eliminated. Single currency in a single market makes sense. 4. Rival to big league of other countries. 5. Could prevent war. an essential strategy to address the effects of conflicts and political instability that may affect the region. Useful tool to handle the social and economic challenges associated with globalization 6. Increased trade and reduced cost to firms. By exchange of products and services and easy exchange rates 7. Inflation is controlled because of greater coordination between central banks 8.Trade Creation: Member countries have (a) wider selection of goods and services not previously available; (b) acquire goods and services at a lower cost after trade barriers due to lowered tariffs or removal of tariffs (c) encourage more trade between member countries the balance of money spend from cheaper goods and services, can be used to buy more products and services 9. Employment Opportunities: As economic integration encourage trade liberation and lead to market expansion, more investment into the country and greater diffusion of technology, it create more employment opportunitie to find jobs at higher pay. 11. Preferential Trade Area (PTAs) exist when countries within a geographical region agree to reduce or eliminate tariff barriers on selected goods imported from other members of the area. This is often the first small step.

12.Customs Union;A customs union involves the removal of tariff barriers between members, plus the acceptance of a common (unified) external tariff against non-members. 14. Common Market is the first significant step towards full economic integration when all barriers to trade in goods, services, capital, and labour are removed leads to Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP) of the European Single Market (ESM Disadvantages: 1. Instability of the system. due to change in progress, productivity, local politics, of one country affects the other. 2. It would be impossible to maintain exchange rate stability within the system. 3. Overestimation of trade benefits. There is little to be gained as to fall in line with the other changes and rigidities of other countries. 4. National Sovereignty: Requires member countries to give up some degree of control over key policies like trade, monetary and fiscal policies. 5. Deflationary trends If a country is able to manufacture and produce goods at a price that is far cheaper than your local regional manufacturers. 6. The old saying .be local buy local? seems to have some merit in this example, even if the product may be a little more expensive. 7. No benefits for intra-industry trade. When countries form free trade agreements among themselves and exclude various other countries that might not offer similar benefits for intraindustry trade. 8. Regional businesses could suffer if there is no trade agreement with non trade block countries as their tax and tariff differ. This kind of disadvantage is found between Europe, Australia and New Zealand. Protectionism: the theory, practice, or system of fostering or developing domestic industries by protecting them from foreign competition through duties or quotas imposed on importations. Reasons for protection. 1.Infant industry argument by Alexander Hamilton, Anew industry having potential comparative advantage may not get started in a country unless it is given temporary protection against foreign competition. 2. Diversification argument A diversified industrial structure is necessary to maintain stability and acquire strengthened it needs protection. 3. Improving terms of trade. By imposing tariff the country expects to obtain a larger quantity of imports for a given amount of exports or conversely to part with lesser quantity of exports for a given amount of imports. 4. Improving balance of payments. Developing countries especially may have problem of foreign exchange shortage hence it is necessary to control imports. 5. Anti-dumping is a measure of protection otherwise the foreign firms will gain monopoly and suppress domestic industry. 6. Bargaining to lower duties on exports of other countries. 7. Employment argument to stimulat domestic economy and expand employment opportunities. 8. National defence Economic factors do not justify free trade. Defence and strategic reasons stress on protection.

9. key industry argument. Economy depends on developments of key industries and their output. 10. Keeping money at home. When we buy manufactured goods abroad we get goods and foreigners get money. 11. The pauper labour argument. If the home country wage level is substantially high compared to the foreign countries then the foreign producers will dominate the home market because the cheap labour will allow them to sell goods cheaper and it will affect domestic labour. 12. It will enlarge the market for agricultural products because agriculture derives large benefits from protective duties and from increase the purchasing power of the workers. 13. Equalisation of costs of production between domestic and foreign producers and neutralise the any advantage. 14.Strategic trade policy: which advocates protection and government cooperation to certain high-tech industries in developed countries. Increasing U.S. protectionism will further slow economic growth and cause more layoffs, not less. If the U.S. closes its borders, other countries will do the same. This could cause layoffs among the 12 million U.S. workers who owe their jobs to exports. International business refers to business activities that involve the transfer of resources, goods, services, knowledge, skills, or information across national boundries. International business is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more nations. turnkey project -- a project in which a builder/developer contracts to construct a completed facility that includes all items necessary for use and occupancy. All that is required of the buyer to begin using the facility is to turn a key in the new door lock and enter. Mercantilism: An economic philosophy of the 16th and 17th centuries that international commerce should primarily serve to increase a country's financial wealth, especially of gold and foreign currency. It emphasised limitation of imports from other nations in order to improve tax revenues by exporting more goods. A franchise is a method by which the owner of the business, the franchisor, confers on investors, the franchisees, the right to operate the business in an agreed manner and style in return for ongoing fees. The agreement is governed by a contract, the Franchise agreement, which runs for a defined period of time, generally renewable and ranging from five to 20 years. Economic exposure: Currency exchange rate fluctuations due to economic and political turmoils in a country like civil war affect a firm's competitive position, the value of its assets, and its operating cash flows. If a company strikes a business deal with a small foreign nation and that

nation becomes embroiled in a civil war there is then a high probability that the country will not honour its debt obligation to the business. Leontief paradox: Professor Wassily W. Leontief in 1954 reached a paradoxical conclusion that the USthe most capital abundant country in the world by any criterionexported laborintensive commodities and imported capital- intensive commodities. This result has come to be known as the Leontief Paradox. [para = contrary to, dox = opinion] customer mobility should be built on the assumption that consumers are mature citizens who freely choose products and services and should therefore take full responsibility for their actions. organizational structure is the pattern or arrangement of jobs and groups of jobs within an organization. This pattern pertains to both reporting and operational relationships, provided they have some degree of permanence. The individual elements of an organization structure typically include 1) departments or divisions; 2) management hierarchy; 3) rules, procedures, and goals; and 4) temporary building blocks such as task forces or committees. BOOT: (build, own, operate, transfer) is a public-private partnership (PPP) project model in which a private organization conducts a large development project under contract to a publicsector partner, such as a government agency. A BOOT project is often seen as a way to develop a large public infrastructure project with private funding The Culture shock is the trauma you experience when you move into a culture different from your home culture. A communication problem (verbal and nonverbal) of the new culture, it's customs and it's value systems cause frustrations that come with the lack of understanding; The differences that people may experience include lack of food, unacceptable standards of cleanliness, different bathroom facilities and fear of personal safety. Reverse Culture Shock (a.k.a. "Re-entry Shock", or "own culture shock" may take place returning to one's home culture after growing accustomed to a new one can produce the same effects of external culture shock. This results from the psychosomatic and psychological consequences of the readjustment process to the primary culture. The affected person often finds this more surprising and difficult to deal with than the original culture shock. Definition of acculturation- socialization: the adoption of the behaviour patterns of the surrounding culture; "the socialization of children to the norms of their culture" all the knowledge and values shared by a society. the process of assimilating new ideas into an existing cognitive structure. Cross cultural management: Is manage people across cultures. The effective interaction and understanding of people who represent different cultures. When person from one cultural background meets interacts with, understands and deals with person from other cultural background. That is cross-cultural management. Some people are in favour of the world is converging, all things are going to be same. They are right. Some people are arguing still the world has divergence. They are also right. we learn how to manage both the convergence and divergence Transaction risk: Exchange rate fluctuations affect a nation's trading relationships with other nations. A higher currency makes a country's exports more expensive and imports cheaper in

foreign markets; a lower currency makes a country's exports cheaper and its imports more expensive in foreign markets. Translation risk: Also called accounting Risk, the degree to which a firm's financial statements are exposed to exchange rate fluctuations. Exchange rates usually change between quarterly financial statements, causing significant variances between the reported figures. Turnkey project: It is a contract under which a firm agrees to fully design, construct and equip a manufacturing/ business/ service facility and turn the project over to the purchaser when it is ready for operation for a remuneration Tax haven: a country or independent region where taxes are low. Tax Haven or the place in which certain taxes are imposed either at a low rate or not at all is the best possible way out for those interested in reducing their tax rates. Bermuda is the first Tax Haven .Tax Haven in its truest sense was Switzerland. Technology Transfer Activities include: processing and evaluating invention disclosures; filing for patents; technology marketing; licensing; protecting intellectual property arising from research activity; and assisting in creating new businesses and promoting the success of existing firms. The result of these activities will be new products, more high-quality jobs, and an expanded economy. Commercialization is one effective method of transferring technologies. Establishing a technology's prospects for commercial success depends largely on five factors: 1.Technical Development 2.Regulatory Clearance: 3. Manufacturing Requirements: 4. Market Development: 5. Financial Feasibility: NAFTA: North American Free Trade Agreement. A 1994 agreement reached by the United States, Canada, and Mexico that instituted a schedule for the phasing out of tariffs and eliminated a variety of fees and other hindrances to encourage free trade between the three North American countries. over a period of about 14 years. Reasons For the Growth of MNCs : Expansion of market territory. Marketing superiorities. Financial Superiorities. Technological Superiorities. Product Innovations. Advantages of MNCs MNCs have become vehicles of technology to the developing countries. Eg: GE, Toyoto, Greater employment and career opportunities are provided by them MNCs make commendable contribution to inventions and innovations in the host country. MNCs bring better management practices to the host country, Varity of goods and services produced for local customers. Train local workforce with more sophisticated techniques. Raise the growth rate of host nation by introducing new investment. Promote subcontracts and ancillary industries. Contributions by way of taxation and providing the host country with foreign exchange that can be used to purchase vital imports. Disdvantages of MNCs MNCs

create monopolies in the market and eliminate local competitors. MNCs may create depletion of resources due to its continued usage of raw material. MNCs generally carry out their R&D in their home country and supply to the host country. Avoid tax by practicing transfer pricing. Advantages of regional trading blocks: 1.Transaction costs will be minimized. Eg.UK firms currently need about 1,5 billion a year buying and selling foreign currencies to do business in European union if it is not a member. Holidaying needs no change of money. 2. Price transparency: Since it is difficult to accurately compare the price of goods, services and resources because of exchange rate differences. Because price is a mechanism to allocate resources. 3. Uncertainty caused by exchange fluctuations can be eliminated. Single currency in a single market makes sense. 4. Rival to big league of other countries. 5. Could prevent war. an essential strategy to address the effects of conflicts and political instability that may affect the region. Useful tool to handle the social and economic challenges associated with globalization 6. Increased trade and reduced cost to firms. By exchange of products and services and easy exchange rates 7. Inflation is controlled because of greater coordination between central banks 8.Trade Creation: Member countries have (a) wider selection of goods and services not previously available; (b) acquire goods and services at a lower cost after trade barriers due to lowered tariffs or removal of tariffs (c) encourage more trade between member countries the balance of money spend from cheaper goods and services, can be used to buy more products and services 9. Employment Opportunities: As economic integration encourage trade liberation and lead to market expansion, more investment into the country and greater diffusion of technology, it create more employment opportunities.to find jobs at higher pay. 11. Preferential Trade Area (PTAs) exist when countries within a geographical region agree to reduce or eliminate tariff barriers on selected goods imported from other members of the area. This is often the first small step. 12.Customs Union;A customs union involves the removal of tariff barriers between members, plus the acceptance of a common (unified) external tariff against non-members. 14. Common Market is the first significant step towards full economic integration when all barriers to trade in goods, services, capital, and labour are removed leads to Common Agricultural Policy (CAP) and Common Fisheries Policy (CFP) of the European Single Market (ESM Disadvantages: 1. Instability of the system. due to change in progress, productivity, local politics, of one country affects the other. 2. It would be impossible to maintain exchange rate stability within the system. 3. Overestimation of trade benefits. There is little to be gained as to fall in line with the other changes and rigidities of other countries.

4. National Sovereignty: Requires member countries to give up some degree of control over key policies like trade, monetary and fiscal policies. 5. Deflationary trends If a country is able to manufacture and produce goods at a price that is far cheaper than your local regional manufacturers. 6. The old saying .be local buy local? seems to have some merit in this example, even if the product may be a little more expensive. 7. No benefits for intra-industry trade. When countries form free trade agreements among themselves and exclude various other countries that might not offer similar benefits for intraindustry trade. 8. Regional businesses could suffer if there is no trade agreement with non trade block countries as their tax and tariff differ. This kind of disadvantage is found between Europe, Australia and New Zealand. Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. NTBs have the effect of tariffs once they are enacted. Domestic Content Requirements regulations to restrict imports usually to stimulate the development of domestic industries, specify the percentage of a products total value that must be produced domestically in order for the product textiles, automobile, agriculture) to be sold in the domestic market. lengthy customs procedures, seasonal import restrictions, over valued currencyquota system, product classifications, export subsidies, rules of origin, quality packing rules, product standards, occupational safety and health, Under an import licensing scheme, importers of a commodity are required to obtain a license for each shipment they bring into the country.Import State Trading Enterprises (STEs) are government owned or sanctioned agencies that act as partial or pure single buyer importers of a commodity or set of commodities in world markets. They also often enjoy a partial or pure domestic monopoly over the sale of those commodities. Testing, Labelling and Certification requirements are insisted upon for ensuring quality of goods seeking an access into the domestic markets but many countries use them as protectionist measures. The While export subsidies tend to displace exports from other countries into the third country markets, the domestic support acts as a direct barrier against access to the domestic market. Anti-dumping and countervailing duties India has been benefited by IMF 1. Many times by the advice and economic aid of IMF. 2. It is one of the founder members of IMP. Finance minister is the ex-officio governor in the board of governors of IMF. RBI is the alternate governor. India is represented at the IMF by an executive director who represents three other countries, viz. Sri Lanka, Bangladesh and Bhutan. 3. India ranked 5th till 1970 among the countries which had the largest quota in IMF. At present India has lost her permanent membership because her quota in IMF ranks 11th which is less than the first five countries. India's current quota in IMF is SDR 415820 million. 4. During the year 2002-06 India has made purchases transaction of SDRs 493230 million and four repurchase transactions of SDRs 466474 Million.

5. On July 2004, India and IMF established a joint training programme in national banking management Institute at Pune. 6. India also donates money in Subsidy Account of IMF. India has paid 10 lakh dollar as 13th annual instalment in the Subsidy Account of Poverty Reduction Growth Facility (PRGF) during July 2006. India provided 205 million( dollar in two separate instalments of IMF as loan under Financial Transaction Plan in May and June 2003. Finally it may be said that IMF has strengthened the monetary discipline among its members by timely assisting them to tide over their balance of payments deficits.

Uruguay Round The Eighth Round of GATT , known as the Uruguay Round established the World Trade Organization The Uruguay Round Agreements greatly expanded the GATT Agreement on Trade in Goods by adding: General Agreement on Trade in Services (GATS) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) The GATT 1994 added three side agreements pertain to agriculture Agreement on Agriculture Agreement on Application of Sanitary and Phytosanitary Measures (SPS) Agreement on Technical Barriers to Trade (TNT) Dispute Settlement Understanding The Dispute Settlement Understanding (DSU) establishes a three tiered formal adjudication process to resolve trade disputes. Normally a complaining Member challenges the legality of a measure as violative to the WTO. An ad hoc Panel of 5 trade law experts, who are not nationals of the parties decides the factual & legal issues and makes a recommendation on the measure; The parties may appeal the Panels decision to the WTO Appellate Body, a permanent body of 7 trade law experts. The Appellate Body decision is then automatically adopted by the WTO Dispute Settlement Body (DSB) unless rejected by consensus of the WTO Members. The WTO DSU Procedures - 1. WTO Member seeks establishment of a panel after unsuccessful consultations. - 2 Director General establishes a panel - 3 Panel receives evidence and written arguments from parties - 4 Panel makes a recommendation with the WTO Dispute Settlement Body automatically adopts unless there is a unanimous consensus against adoption. - 5. Parties may appeal questions of law to the Appellate Body - 6. The DSB through the panel and Appellate Body oversee implementation Implementation of the ruling If the panel or Appellate Body finds a measure inconsistent with the GATT it shall recommend that the Member concerned bring the measure into conformity therewith.

 Within 30 days of adoption of the panel or Appellate Body report, the Member concerned shall inform the DSB of its intentions with respect to implementation of the recommendation. Agreement on Sanitary & Phytosanitary Measures (SPS) The SPS deals with: Food safety Animal health standards Plant health standards The SPS does not set the standards. It encourages members to use international standards, but allows them to set their own. THE GATT Underlying Principles of Charter non-discrimination reciprocity transparency GATT, WTO AND DEVELOPING COUNTRIES Diversity of views among developing countries Longstanding concerns regarding trade architecture asymmetries in rules (eg. international factor mobility; excluded sectors) asymmetries in application of rules (eg. intellectual property; anti-dumping) Limited benefits from Special and Differential treatment Increasing engagement of developing countries permits developing countries to retain higher levels of protection than would otherwise be the case Special and Differential Treatment Right to Access Generalised System of Preferences (GSP) offers exports from developing countries access to OECD markets on a preferential basis Right to Slower Adjustment - Uruguay Round transitional arrangements provides longer period for adoption of new disciplines and measures . Cultural environment and international business MNC managers must know the cultural differences exist in the countries they operate. International business success in various countries requires cross-cultural literacy. 1.In order to communicate effectively with customers, suppliers business associates, partners and foreign employees. 2. To conduct negotiations, nuances of bargaining postures. 3.To predict trends in social behaviour. 4.To understand ethical standards and concepts of CSR 5.Customers reactions to advertisement promotional forms. Culture is a set of beliefs, values, norms shared by the majority. Hofstede defined culture as the collective programming of the mind that distinguished members of one group /category from another.

Culture and nation: Nation states are political creations that can contain one or more cultures. Similarly a culture can embrace several nations. Values and culture are the evolutionary product of a number of factors at work in a society including, religion, politics, economics, philosophies, education, language and social culture. For example the values of found in communist North Korea toward freedom, justice and individual achievements are different from the that of US because each society operates according to different political and The elements of culture The major elements of culture are material culture, language, aesthetics, education, religion, attitudes and values and social organisation. Material culture Material culture refers to tools, artifacts and technology. All aspects of marketing are affected by material culture like sources of power for products, media availability and distribution. For example, refrigerated transport does not exist in many African countries. Material culture introductions into a country may bring about cultural changes which may or may not be desirable Until the early 1990s, Zimbabwe did not allow both alcoholic and non alcoholic beverages to be packed in cans. There were both economic and environmental reasons for this. Economically, Zimbabwe did not have the production facility for canning. Environ mentally, Zimbabwe had seen the litter in Botswana, caused by discarded empty cans. By putting a deposit on glass containers they ensured the empties were returned to the retailer, thus avoiding a litter problem. Language Language reflects the nature and values of society. There may be many sub-cultural languages like dialects which may have to be accounted for. Some countries have two or three languages. In India we have 22 scheduled languages. In certain countries linguistic groups have engaged in hostile activities. Language can cause communication problems - especially in the use of media or written material. Spoken Verbal cues ahh, ahh, OK got the nuts if you want to find out. tutututu yea,yea communicated in a social exchange by signs accompanying the words used in speech. Such cues include body language, tone, inflexion, and other elements of voice, dress, etc Facial expressions GesturesEye contact Language structures Unspoken Body language Aesthetics: Aesthetics refer to the ideas in a culture concerning beauty and good taste as expressed in the arts -music, art, drama and dancing and the particular appreciation of colour and form. Aesthetic differences affect design, colours, packaging, brand names and media messages. For example, unless explained, the brand name FAVCO (manufacturer of cranes, trawlers, Swedish co) would mean nothing to Western importers, in Zimbabwe most people would instantly recognise FAVCO as the brand of horticultural produce. Education: According to UNESCO for example it shows in Ethiopia only 12% of the viable age group enrol at secondary school, but the figure is 97% in the USA. Education levels, or lack of it, affect marketers in a number of ways: advertising programmes and labelling girls and women excluded from formal education (literacy rates) conducting market research complex products with instructions relations with distributors and, support sources - finance, advancing agencies etc.

Religion: Religion provides the best insight into a society's Religion can affect marketing in a number of ways: religious holidays - Ramadan cannot get access to consumers as shops are closed. consumption patterns - economic role of women - Islam caste systems - difficulty in getting to different costs for segmentation/niche marketing joint and extended families - Hinduism and organizational structures; institution of the church - Iran and its effect on advertising, "Western" images market segments - Maylasia - Malay, Chinese and Indian cultures making market segmentation. Sensitivity is needed to be alert to religious differences Geert Hofstede, Franke and Bond in their research entitled "Cultural Roots of Economic Performance". hypothesized that differences in cultural values, rather than in material and structural conditions (the private and state control) are ultimate determinants of human organization and behaviour, and thus of economic growth. They defined the "cultural variables". Of different countries as follows: "Power distance" - Power distance Index measures the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. For example, Germany has a 35 on Compared to Arab countries where the power distance is very high (80) and Austria where it very low (11), Germany have a strong belief in equality for each citizen. the power distance in the United States scores a 40 and exhibits a more unequal distribution of wealth compared to German society. "Individualism" - The tendency of individuals primarily to look after themselves and their immediate families and its inverse is the integration of people into cohesive groups "Masculinity" - Masculine traits include assertiveness, materialism/material success, selfcenteredness, power, strength, and individual achievements. For example, Germany has a masculine culture with a 66 on the scale (Netherlands 14). The United States scored a 62 Man has designed tricycles, bicycles, motorcycles, cars, buses, trucks, trailers, tractors, jet-skis, passenger ships, cargo ships, barges, tankers, aircraft carriers, battle ships, helicopters, fighter planes, airliners, and so forth. Each vessel is designed to fulfill a need. A woman lives in three worlds. The World of Children, the World of Women, and the World of Men. A woman's relationship to man at man's level is mostly superficial with few exceptions. . A woman has need for asking questions, and by nature she will do so Conversely, a man has the obligation to give sound answers to a woman. Woman is more easily guided, even controlled, by emotion. Man is more apt to be guided by reason "Uncertainty Avoidance" -peoples attitude towards the ambiguity and unpredictability of life. place greater emphasis on laws, rules and procedures. low uncertainty avoidance place appreciate flexibility and have a greater tolerance for differences for India 40, USA 46, Uruguay 100, Argentina 86, Mexico, 82, Brazil 76 Taps a feeling of discomfort in unstructured or unusual circumstances whilst the inverse show tolerance of new or ambiguous circumstances "Confucian Dynamism" - Is an acceptance of the legitimacy of hierarchy and the valuing of perseverance and thrift, all without undue emphasis on tradition and social obligations which could impede business initiative. Regarding himself, Confucius states in the Analects 2, 4:

At 15, I bent my mind on learning; at 30 I stood firm; at 40, I was free from doubts; at 50, I understood the way of Heaven; at 60, my ear was an obedient organ for the reception of truth; at 70, I could follow the desires of my heart without transgressing what was right. "Integration" - Degree of tolerance, harmony and friendship a society endorses, at the expense of competitiveness: it has a "broadly integrative, socially stabilizing emphasis" "Human Heartedness" - Open-hearted patience, courtesy and kindness. "Moral Discipline" - Rigid distancing from affairs of the world. Personal space German Appearance Business dress in Germany is very conservative. Businessmen wear dark suits; solid, conservative ties, and white shirts. Women also dress conservatively, in dark suits and white blouses. Chewing gum while talking to someone is considered rude. Don't be surprised if occasionally you see a fashion statement with white socks being worn with a dark

German Communications Approximately ninety-nine percent of the population speaks German. However, there are several different dialects in the various regions. Germans love to talk on the telephone. While important business decisions are not made over the phone, expect many follow up calls or faxes. Germans guard their private life, so do not phone a German executive at home without permission. Titles are very important to Germans. Do your best to address people by their full, correct title, no matter how extraordinarily long that title may seem to foreigners. This is also true when addressing a letter. American Society Dignity of Individuals Dignity of individuals Individuals work ethic Great individuals freedom Respect for rules open/transparent society Multi-cultural society excelling in creativity and versatility Individual decisions over Japanese Society In the same boat concept Human relation oriented Dependence on the group Lack of individuals freedom Low regard for rules close society Mono-cultural society An orderly and uniform society Dependence on consensus

consensus A society which pursue that ideal

A society which pursue harmony with reality

FDI:In recent years, FDI has been used more as a market entry strategy for investors, rather than an investment strategy. There are four main working pillars of FDI. They are financial collaborations, technical collaborations and joint ventures, capital markets via Euro issues, and private placements or preferential allotments. There are two types of FDI, one is inward FDI and second is outward FDI. Ongoing news suggests that largest retailer Wal-Mart has demanded for 51% of international dealings in FDI in Indian markets which had called nationwide strike. From positive and negative aspects FDI has its own advantages and disadvantages. Advantages Increase economic growth by dealing with different international products 1 million (1 Crore) employment will create in three years - UPA Government Billion dollars will be invested in Indian market Spread import and export business in different countries Agriculture related people will get good price of their goods Will affect 50 million merchants in India Profit distribution, investment ratios are not fixed An economically backward class person suffers from price raise Retailer faces loss in business Market places are situated too far which increases traveling expenses Workers safety and policies are not mentioned clearly Inflation may be increased Again India become slaves because of FDI in retail sector. Since foreign firms will bring new technologies and money with them which would result in lot of small businessman and domestic companies going out of business as foreign companies have advantage of scale of operations and also top talent with them. The proverb big fish eat little fish scenario may happen due to foreign direct investment.

Disadvantages

Since these companies will also have more technology and they will use capital intensive methods, it will affect the jobs of many people because eventually after some time they might not be needed. Chances of these foreign firms becoming monopolies due to their large size and then charging exorbitant rates from consumers cannot be ruled out and therefore government should ensure that they have proper policies and systems in place to keep a check on such practices.

Major sectors of the Indian economy which have benefited from FDI in India are Financial sector (Banking and Non-Banking). Insurance Telecommunication Hospitality and tourism Pharmaceuticals Software and Information Technology Ricardo's Theory of Comparative Advantage David Ricardo stated a theory that other things being equal a country tends to specialise in and exports those commodities in the production of which it has maximum comparative cost advantage or minimum comparative disadvantage. Similarly the country's imports will be of goods having relatively less comparative cost advantage or greater disadvantage. 1. Ricardo's Assumptions :Ricardo explains his theory with the help of following assumptions : There are two countries and two commodities. There is a perfect competition both in commodity and factor market. Cost of production is expressed in terms of labour i.e. value of a commodity is measured in terms of labour hours/days required to produce it. Commodities are also exchanged on the basis of labour content of each good. Labour is the only factor of production other than natural resources. Labour is homogeneous i.e. identical in efficiency, in a particular country. Labour is perfectly mobile within a country but perfectly immobile between countries. There is free trade i.e. the movement of goods between countries is not hindered by any restrictions. Production is subject to constant returns to scale. There is no technological change. Trade between two countries takes place on barter system. Full employment exists in both countries. There is no transport cost.

2. Ricardo's Example :- On the basis of above assumptions, Ricardo explained his comparative cost difference theory, by taking an example of England and Portugal as two countries & Wine and Cloth as two commodities. As pointed out in the assumptions, the cost is measured in terms of labour hour. The principle of comparative advantage expressed in labour hours by the following table.

Portugal requires less hours of labour for both wine and cloth. One unit of wine in Portugal is produced with the help of 80 labour hours as above 120 labour hours required in England. In the case of cloth too, Portugal requires less labour hours than England. From this it could be argued that there is no need for trade as Portugal produces both commodities at a lower cost. Ricardo however tried to prove that Portugal stands to gain by specialising in the commodity in which it has a greater comparative advantage. Comparative cost advantage of Portugal can be expressed in terms of cost ratio. The theory of comparative costs has been criticized on the following grounds: (i) Unrealistic nature of the labour immobility assumption: The theory assumes that labour is mobile within the country but immobile between countries. This is not a realistic assumption. The migration of labour from one country to another has an important bearing on the traded goods. (ii) Unrealistic assumptions of constant cost: The assumption of zero transport cost and constant cost is also not valid. It does not accord with facts. (iii) Unrealistic assumption of perfect competition: The theory assumes perfect competition. But in the actual world, it is imperfect competition which prevails. The theory thus has no practical utility. (iv) Labour differs in efficiency: The theory assumes that all labour is of the same quality. The fact, however, is that the efficiency of labour varies from person to person. (v) Based on labour theory of value: The theory of comparative cost was based in terms of labour theory of value; while in reality labour is only one element of total cost. (vi) Neglects the effects of elasticity of demand: The theory neglects the part played by demand in the determination of prices of trades goods. It takes only the supply conditions for explaining the prices cost differences of goods entering in international trade. The analysis of the cost theory is thus incomplete. (vii) Based on the assumption of static conditions: Bertil Ohlin has severely criticized the assumptions of the principle of comparative cost theory. He has regarded it as a static theory which has no relevance to the complex situations of the dynamic world.

Advantages and disadvantages ( or effect of) of single market and single currency within European Union. The Maastricht Treaty is the second attempt to bring about monetary union within the EC. Originally the Werner Report of 1970 advocated monetary union by 1980. But because of the world oil crisis, during which the price of oil quadrupled, and inflation and unemployment rose sharply, the focus shifted away from monetary union, and the plans were dropped. This time the EC is determined to succeed driven as much by the logic of federal integration, which led to the Maastricht Treaty, as by purely economic considerations. Advantage of 1. Transaction costs eliminated.For instance, UK firms currently spend about 1.5 billion a year buying and selling foreign currencies to do business in the EU With the EMU this is eliminated, so increasing profitability of EU firms. 2. Price transparencyEu firms and households often find it difficult to accurately compare the prices of goods, services and resources across the EU because of the distorting effects of exchange rate differences. This discourages trade. According to economic theory, prices should act as a mechanism to allocate resources in an optimal way, so as to improve economic efficiency. There is a far greater chance of this happening across an area where E.M.U exists 3,Uncertainty caused by Exchange rate fluctuations eliminated Many firms become wary when investing in other countries because of the uncertainty caused by the fluctuating currencies in the EU. Investment would rise in the EMU area as the currency is universal within the area, therefore the anxiety that was previously apparent is there no more. 4.Single currency in single market makes sense Trade and everything else should operate more effectively and efficiently with the Euro. Single currency in a single market seems to be the way forward. 5. Rival to the "Big Two".If we look out in the world today we can see strong currencies such as the Japanese Yen and The American $. America and Japan both have strong economies and have millions of inhabitants. A newly found monetary union and a new currency in Europe could be a rival to the "BIG TWO". EMU can be self-supporting and so they could survive without trading with anyone outside the EMU area. 6..Prevent warThe EMU is, and will be a political project. It's founding is a step towards European integration, to prevent war in the union. It's a well known fact that countries who trade effectively together don't wage war on each other and if EMU means more happy trade, then this means, peace throughout Europe and beyond 7.Increased Trade and reduced costs to firms There is also a political agenda to European bank (the European System of Central Banks ESCB), the complete removal of national control over monetary policy and the partial removal of control over fiscal policy. Individual nation states will lose sovereignty (i.e. the ability to

control their own affairs). It will be a considerble step down the road towards political union. There are many in the EU who faviour economica dn political union and they are very much in facour ot EMU. 8. The Political agendaThere is also a political agenda to European bank (the European System of Central Banks -ESCB), the complete removal of national control over monetary policy and the partial removal of control over fiscal policy. Individual nation states will lose sovereignty (i.e. the ability to control their own affairs). It will be a considerble step down the road towards political union. There are many in the EU who faviour economica dn political union and they are very much in facour ot EMU. 9. Inflation: From the mid-1980s onwards, there were a number of economists and politicians who argued that, for the UK at least, EMU provided the best way forward to achieve low inflation rates throughout the EU. During the first half of the 1980s high inflation countries, such as France and Italy were forced to adopt policies which reduced their inflation rates to something approximating the German inflation rates to something approximating the German inflation rate. 1. The instability of the system Throughout most of the 1980s the UK refused to join the ERM (Exchange rate mechanism). It argued that it would be impossible to maintain exchange rate stability within the ERM, especially in the early 1980s when the pound was a petro-currency and when the UK inflation rate was consistently above that of Germany 2.. Over estimation of Trade benefits. Some economists argue that the trade and cost advantages of EMU have been grossly over estimated. There is little to be gained from moving from the present system which has some stability built into it, to the rigidities which EMU would bring 3. Loss of Sovereignty On the political side, it is argued that an independent central bank is undemocratic. Governments must be able to control the actions of the central banks because Governments have been democratically elected by the people, whereas an independent central bank would be controlled by a non elected body. Moreover, there would be a considerable loss of sovereignty. Power would be transferred from London to Brussels. This would be highly undesirabel because national governments would lose the ability to control policy 4. Deflationary tendencies Perhaps the most important economic argument relates to the deflationary tendencies within the system. In the 1980s and 90's France succeeded in reducing her inflation rates to German levels, but at the cost of higher unemployent, For the UK, it can be aruged, that membership of the ERM between 1990 and 1992 prolonged unnecessarily the recessional period. This is because the adjustment mechanism acts rather like that of the gold standard. Higher inflation in one ERM country means that it is likely to generate current account deficits and put downward pressure on its currency.

regional strategy failed for the same reasons as the underlying national import-substitution policies2: (i) national markets were too small and too poor; (ii) high input costs adversely affected transformation and export, causing foreign exchange shortages and overvalued

currencies; (iii) domestic monopolies and trade protection contributed to powerful rentseeking and nationalistic lobbies, biased and organized against regional as well as global trade; (iv) nationalistic governments with spoken interest in regional cooperation gave token support to regional organizations, broke their regional commitments and implementation lapsed; and (v) there was excessive emphasis on joint public investments as opposed to creating a truly unified markets for private operators. Regional integration can be defined along three dimensions: (i) geographic scope illustrating the number of countries involved in an arrangement (variable geometry), (ii) the substantive coverage or width that is the sector or activity coverage (trade, labor mobility, macro-policies, sector policies, etc.), and (iii) the depth of integration to measure the degree of sovereignty a country is ready to surrender, that is from simple coordination or cooperation to deep integration. 1. Since a regional common market obviously provides a much larger market than that offered by the domestic market of a single country, economies of scale, both internal and external, become possible with the widened size of the market. 2. Secondly, the large market so created would permit a hight degree of sophistication and specialisation of products conducive to furtherance of modern industrial development. Moreover, the possibility of specialisation for regional trade would encourage the flow of investment into industries which have a comparative cost advantage, so that gains from international trade would rise. 3. Apart from an increase in the volume of total trade as a result of such an integration, a favourable change in the cost and price structure may also be effected along with, the desirable change in the structure and composition of foreign trade. 4. Furthermore, this may facilitate the realisation of the optimum allocation of resources, and thus, lead to an increase in efficiency in production. 5. Above all, the increased possibilities of competition in a regional common market would ensure that all benefits accruing to the producers from the existence of a large market would be passed on to the consumer. 6. In fine, thus, there can be an increase in the general welfare due to better production and enchanced consumption, and a rise in real income generated by the overall growth and development. 7. usually create institutions to streamline economic cooperation- is followed by political integration as well. For example, today's European Union is a product of the European Community, which itself was a product of the European Coal and Steel Community of 1954, a largely economic regime that eventually led to evolution towards political integration with the latter two. In short, thus, it has been conceived that, as a factor in the development of the less developed countries, a regional common market is economically far superior to the relatively small national market sheltered behind a protectionist tariff wall.

Disadvantages:1.Economic problems might affect participants unequally, such that some states will be net recipients of some form of aid while others will be net lenders of aid. One might look at NATO as an example of a multi-state institution where one major participant- the United States- is the primary donor of aid while most other states within NATO are recipients of that aid (principally economic and military). 2.Perhaps the most prominent collective goods problem may be regarded as the "free rider" problem: states, because inducements to cooperate or threats to punish may be low, fail to provide for the collective benefit, therefore essentially "passing the buck" to other states, and most frequently to the most economically powerful participants. Citizens of large states like France, Great Britain, and Germany frequently complain that smaller states are not paying their "fair share" of the costs of the European Union. Meanwhile, smaller states may complain that they are overlooked or even disregarded because of their economically weaker status. 3.Beyond economics, political integration might give rise to a whole new set of problems, including: 4.-Political integration is more problematic on some levels than economic integration, as it necessitates some form of coordination and uniformitization/standardization among states with disparate cultures and languages. It is frequently more advantageous that the participants are homogeneous, preferaby on economic as well as political-cultural levels. 5.If obtained, economic integration might streamline economic processes by employing the classical Ricardian notion of comparative advantage: states that are most efficient in certain processes can trade with those in which they are comparatively less efficient. This ensures that participants specialize principally in those goods and services where they are most efficient. This is not only advantageous within the zone of integration- as it helps lower costs to consumers- but also outside the zone. Participants can coordinate economic activity- at least in theory- as to promote gains for the zone abroad. 6.On many levels, for example, we consider the European Union as an independent, singular entity even though, of course, it consists of politically independent and sovereign units. Therefore, one must always keep in mind that, unlike an integrated "model" such as the United States, where the central authority is supreme by law, regional zones and institutions consist of participants who are not strictly bound by law. It is always a possibility that in the future a member will secede permanently. In this sense, one can view each state's participation as by treaty and not by law.