1. 2008
Q 1) What is Globalization? How do global organizations emerge to enjoy global leadership in their
Business? Give relevant illustrations from Global Organization?
Ans: Globalisation is the “strategy of optimizing” the resources available in various countries and
catering to customers throughout the world with internationally standardised products, at competitive
prices. It advocates that the nation or a company or product involved should be global. A global man is
one who is born in India, studies in the UK, wears Reid & Taylor, shops in Marks & Spencer, drives a
Lexus, acquires a steel plant in Kazakhstan and ships his hot rolled coil to China. Thus, he becomes a part
of globalisation process.
SOME LESSONS FROM GLOBAL COMPANIES
Toyota is a good example of a highly globalised company. At the end of 1995 one -third of Toyota’s
global output came from wholly or partially owned affiliates located in twenty-five foreign countries
spread over North and South America, Europe and Asia.
Furthermore, Toyota exported 38 percent of its domestic production from Japan to foreign markets and
engaged in significant intro-firm flows among its affiliates. Within its South East Asian regional network
Toyota exported diesel engines from Thailand, transmissions from the Philippines, steering gears from
Malaysia and engines from Indonesia. In effect units were set up by Toyota in the whole of South East
Asia, to assemble different automobile parts, depending on the competency and resources of the
country. Key indicators of the globalisation of a company are international dispersion of its sales
revenue and asset base, intra-firm trade in intermediate and finished goods, and intra-firm flows of
technology. These all lead to its physical presence, scattered investments, global image, brand
promotion and building borderless customer patronage.
STAGES OF GLOBAL ORGANISATIONS
Globalization process does not take place instantly. It is a deliberate and cautious move for several
companies. Nike and Addidas took more than a decade to move to other countries from their origin.
Apple, HP and Dell are fast globalizing their operations due to technology advantages. if they are not
quick then technology obsolescence will crop up and finally they have to lose their current status to
their competitors. However, in the normal process, a complete globalization has to pass through several
stages as described in the following table:
Stages
Purpose
Action
End Result
Stage # 1
Make the presence feel – Physically export and establish One market established.
the move for product or one strong contact overseas
Trial and errors are
service
overcome, confidence is
built
Stage # 2
Study the whole nation and Find out a right partner. Jointly Awareness is created in
explore the avenues for
promote the product/s.
one territory. The demand
production
establish brand in one market. level is known for the
production.
Stage # 3
Set up production facility Identify location or develop a Becoming close to the
with a local or alone
complete network. Reduce the customer at a reduced cost
cost and service the mark
and part of the local
Stage # 4
Expanding to neighboring Take the products from the
The whole region is aware.
areas through production
unit and spread in nearby
Loyalty is built. The network
countries and build brand
members become patrons
name
Stage # 5
Review all the pitfalls and Analyse the potential in
Comparing and selection

2. gear up to other regions
Stage # 6
Emerging as global
enterprise
various regions. Evaluate
the partners, investment
climate and Socio-Cultural
background
Produce, distribute, invest
and build corporate image
and face competition
of right locations, right
partners and right markets
Global production
Global investments
Global brand name
Status of global company
Q 2) Why do companies & the countries enter into International business, when the opportunities
exist in the domestic business?
Ans: A mode of entry into an international market is the channel which your organization employs to
gain entry to a new international market. This lesson considers a number of key alternatives, but
recognizes that alternatives are many and diverse. Here you will be consider m odes of entry into
international markets such as the Internet, Exporting, Licensing, International Agents, International
Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales
Subsidiaries. Finally we consider the Stages of Internationalization.
It is worth noting that not all authorities on international marketing agree as to which mode of
entry sits where. For example, some see franchising as a stand alone mode, whilst others see
franchising as part of licensing. In reality, the most important point is that you consider all useful
modes of entry into international markets - over and above which pigeon-hole it fits into. If in
doubt, always clarify your tutor's preferred view.
The International Marketing Entry Evaluation Process is a five stage process, and its purpose is
to gauge which international market or markets offer the best opportunities for our products or
services to succeed. The five steps are Country Identification, Preliminary Screening, In -Depth
Screening, Final Selection and Direct Experience.
There are two types of indicators / variables that most companies consider when deciding
where to operate abroad i.e. Opportunities & Risks
A)
Opportunities
i.
Market Size
Expectation of a large market and sales growth is probably a potential location’s major
attraction. This depends on the economic variables. Some of the main things to
consider when examining economic variables are :
a)
b)
c)
d)
e)
Obsolescence and leapfrogging of products
Prices
Income elasticity
Substitution
Income inequality

3. f)
g)
ii.
Cultural factors and taste
Existing of trading blocs
Ease and Compatibility of Operations:
Companies are highly attracted to countries that
Are located nearby
Share the same language
Have market conditions similar to those in their home countries
Companies often pare down proposals to those countries that
Offer size, technology and other advantages familiar to company personnel.
Allow an acceptable percentage of ownership.
Have resources they need.
iii. Costs and Resource availability :
Cost – especially labour costs – are an important factor in companies’ production
location decisions.
Ease and cost of transporting goods depends on
Infrastructure
Absence of trade restrictions
Companies should consider different ways to produce the same product.
iv. Red Tapes and Corruptions
Red tape and corruption add to operating costs.
Q 3) Write short notes on
A) Foreign exchange risks
Foreign exchange risk is defined as, ‘ the variance of the real domestic currency value of assets, liabilities
or operating income attributed to unanticipated changes in exchange rates’. In other words, risk is a
measure of the extent of variability in the values of assets etc. due to unanticipated changes in exchange
rates.All forex exposures need not necessarily lead to forex risk, because compensating movements in
exchange rates with different currencies might offset loss in deal from gain in the other. Further to
qualify as forex risk, only the effect of unanticipated changes in exchange rates on the domestic
currency values of assets, liabilities, etc is to be considered.
Types of Forex Risks
Forex risks are of three types. These are:
i Accounting or Translation Risk
ii Transaction risk
iii Operating risk.

4. i. TRANSLATION OR ACCOUNTING RISK
Translation risk is a measure of variation of home currency value of assets and liabilities appearing in
balance sheet denominated in foreign currency. It is also called as balance sheet or accounting risk. It is
also referred to as accounting risk. It arises while consolidation of accounts (financial statements)
involving foreign currency denominated assets and liabilities is prepared. Firms having foreign
subsidiaries, require preparing the groups financial statements.
ii. TRANSACTION RISK
Transaction Risk is the measure of variation of home currency value of receivables and payables
denominated’ in foreign currencies due to unanticipated changes in exchange rate. Transactions which
give rise to forex receivables or payables in future create transaction exposure. A US firm has exported
to UK, goods valued at 1 million n UK pound, payable 3 months from now. In the three months period,
fluctuations in US Dollar value of UK Pound exposes the US firm to transaction exposure.
iii. OPERATING OR ECONOMIC RISK
In the case of transaction risk the operations pertaining to cash flow are all executed. Only the financial
exchange has to be given effect. In operating risk, the manufacturing trading and financial transactions
activities- are to fulfill an export of obligation. The prices of inputs might exchange. Operational
uncertainties in production may take place. Yet the export price and obligation which are already freed
cannot be changed, even if there is cost escalation. All these change the cost side of the operation. The
revenue side of the operation, which is the amount of export earnings receivable, is also subject to
change in exchange value. The expected home currency value of profit from the particular operation
changes.
B) Trade barriers
A trade barrier is defined as “any hurdle, impediment or road block that hampers the smooth flow of
goods, services and payments from one destination to another”. They arise from the rules and regulations
governing trade either from home country or host country or intermediary. Trade barriers are man-made
obstacles to the free movement of goods between different countries, and impose artificial restrictions on
trading activities between countries. Despite the fact that all international organisations such as GATT,
WTO and UNCTAD advocate reduction or elimination of barriers, they still continue in different forms.
Objectives of trade barriers:
1. To protect domestic industries from foreign goods.
2. To promote new industries and research and development activities by providing a home market for
domestic industries.
3. To maintain favorable balance of payment, by restricting imports from foreign countries.
4. To conserve foreign exchange reserves of the country by restricting imports from fore ign countries.
5. To protect the national economy from dumping by other countries with surplus production.
6. To mobilize additional revenue by imposing heavy duties on imports. This also restricts conspicuous
consumption within the country.
7. To counteract trade barriers imposed by other countries.
8. To encourage domestic production in the domestic market and thereby make the country strong and
self-sufficient.
Since trade barriers are harmful for the growth of free trade, efforts were made to reduce su ch trade
barriers, and international organisations initiated collective efforts of all countries involved in trade.

5. Types of trade barriers:
Broadly, Trade barriers are classified as tariff barriers and non-tariff barriers. A country may use both tariff
and non-tariff barriers order to restrict the entry of foreign goods.
Tariff Barriers
A tariff is a special tax on imported goods (and sometimes, imported products), raising their price.
To try to overcome this price handicap, the foreign exporter may try several different approaches.
It may use marginal cost pricing.
It may try to get a more favorable tariff classification with a lower duty.
It may ship unassembled products.
If none of these is sufficient, the firm may produce in the local market to get behind the
tariff wall
Non-tariff Barriers
o
o
o
o
o
•
•
•
• Specific Limitations on Trade:
Quotas - specific quantitative restrictions - much more rigid than tariffs and give the foreign exporter
fewer options. It can accept the limited sales available under the quota, or it can choose to produce
inside the country.
Import Licensing requirements
Proportion restrictions of foreign to domestic goods (local content requirements)
Minimum import price limits
Embargoes
• Customs and Administrative Entry Procedures:
o Valuation systems
o Antidumping practices
o Tariff classifications
o Documentation requirements
o Fees
Standards:
o Standard disparities
o Intergovernmental acceptances of testing methods and standards
o Packaging, labeling, marking and safety standards
Government Participation in Trade:
o Government procurement policies
o Export subsidies
o Countervailing duties
o Domestic assistance programs
Charges on imports:
o Prior import deposit subsidies

6. o Administrative fees
o Special supplementary duties
o Import credit discriminations
o Variable levies
o Border taxes
• Others:
o Voluntary export restraints
o Orderly marketing agreements
Monetary Barriers
•
•
•
•
This is the most extensive tool of trade regulation because it involves restrictions on both trade and
foreign exchange.
It is practiced especially by former communist and developing countries.
The international firm may have difficulty getting exchange to import products and supplies or
components.
It usually has greater difficulty getting exchange to remit profits. It is tempted to use transfer pricing to
avoid these negative effects.
C) Intellectual Property Rights
The term Intellectual Property Rights (IPR) is often shortened further to Intellectual Property (IP).
Intellectual property is a series of legal rights that afford, in most cases temporary prot ection for
different types of inventions, designs, brand names or original creations. The legal rights given are the
rights to prevent unauthorized use of the invention, design, brand name or creation for the period of
protection. The right given can be an absolute monopoly right or simply a right to prevent reproduction.
Components of IPR in current context
Patents: New and inventive technical innovations can enjoy an absolute monopoly for twenty years.
Supplementary Protection Certificate: This is an extension of up to five years on the absolute monopoly
given by a patent, where the invention consists of a medicinal product for which approval by the
relevant authority has yet to be given.
Trademarks: The owner of a trademark has an absolute monopoly for ten years. The legal protection of
any brand name has the title of trademark and it is shown on any product as TM.
Designs: This is an absolute monopoly for twenty-five years, given for a new design of a manufactured
article.
Unregistered Design Right: This prevents reproduction of an original design, which lasts for a maximum
of fifteen years.
Copyright: Copyright prevents reproduction of an original literary, artistic, musical or dramatic work. It is
valid for a period of seventy years after the death of the author.
Confidentiality and Trade Secrets: This prevents misuse of confidential or secret information.
Plant Variety Right: This relates to a new horticultural genus or species. It gives the monopoly rights of
the new variety of plant to the scientist.
THE PROCEDURE TO OBTAIN IPR PROTECTION
Intellectual property rights can be obtained in one of two ways, by application or by automatic
derivation. Where an application procedure is involved, it usually follows the steps set out in the
following sequence:
1. File application

7. 2. Search carried out to ascertain originality
3. Examination carried out
4. Objections raised/No objections raised
5. Dealing with objections
6. Grant/Registration
Q 4) “Modern trade theories are essential for formulating business strategies at macro level in
companies” Discuss in detail only relevant three trade theories.
Ans: MODERN THEORY OF INTERNATIONAL TRADE:
THE HECKSCHER-OHILIN THEORY
The Heckscher-Ohlin theory explains why countries trade goods and services with each other, t he
emphasize being on the difference of resources between two countries. This model shows that the
comparative advantage is actually influenced by the interaction between the resources countries have
(relative abundance of production factors) and production technology (which influences the relative
intensity by which the different production factors are being utilized during the production cycle.
The model starts with the presumption that country A produces two products: food (X) and
textiles (Y). These two kinds of production need two different inputs, territory (T) and labour (L), which
are available in limited quantities. In the same time, food production (X) requires more land, so it can be
said it is territory intensive and textile (Y) production requi res more labour, being in this way labour
intensive.
Beginning with these presumptions, the Heckscher-Ohlin model explains the implications trade between
two countries A and B has, if the countries produce the same products: food (X) and textiles (Y).
The relative resource abundance, factors intensity and trade specialization
Country
Inputs and production without trade
The relative abundance
and trade specialization
in the product for which
there is a factor intensity
Product
Labour (L)
L/T
Territory (T)
T/L
A
X
0.21
10
5
2.00
30
X
100
Y
0.30
-
3.33
Y
5
0.60
1.66
10
Total
Y
95
3
X
Y
X
20
2
5.00
1.20
13
7
1.85
0.53
4.75
0.50
B
X
Y

8. Total
A country having a bigger offer in a resource than in another is relative abundant in that resource
and tends to produce more products that use that resource. Countries are more efficient in producing
goods for which they have a relative abundant resource.
According to the Heckscher-Ohlin theory, trade makes it possible for each country to specialize.
Each country exports the product the country is most suited to produce in exchange for products it is
less suited to produce. In our case, country A is relative abundant in territory (T) and will specialize in
producing food (X) and country B is relative abundant in labour (L) so it will specialize in producing
textiles (Y). In this case, trade may benefit both countries involved.
The changes in relative prices of goods have a powerful effect on the relative income obtaine d from the
different resources. International trade also has an important effect on the distribution of incomes.
NATIONAL COMPETITIVE ADVANTAGE
It is a fact that Porter (1990) never focused primarily on the factors determining the pattern of trade, yet
his theory of national competitive advantage does explain why a particular country is more competitive
in a particular industry. If, for example, Italy maintains competitive advantage in the production of
ceramic tiles and Switzerland possesses the competitive advantage in watched, it can be interpreted
that the former will export ceramic tiles and the latter will export watches and both of them will import
goods in which their own industry is not competitive.
Why is this there a difference? Porter explains that there are four factors responsible for such
diversity. He calls those factors the “diamond of national advantage”. The diamond includes:
1. Factor conditions
2. Demand conditions
3. Related and supporting industries
4. Firm strategy, structure and rivalry
These factors have been more or less taken into account by earlier economists. What is crucial in
Porter’s thesis is that it is the interaction among these factors that shapes the competitive advantage.
Factor conditions show how far the factor of production in a country can be utilized successfully in a
particular industry. This concept goes beyond the factor proportions theory and explains that availability
of the factors of production per se is not important, rather their contribution to the creation and
upgradation of product is crucial for competitive advantage. If one says that Japan possesses
competitive advantage in the production of automobiles, it is not simply because Japan has easy access
to iron ore, but because the country has skilled labour force for making this industry competitive.
Secondly, the demand for product must be present in the domestic market from the very beginning
of production. Porter is of the view that it is not merely the size of the market that is important, but it is
the intensity and sophistication of the demand that is significant for competitive advantage. If
consumers are sophisticated, they will make demands for sophisticated products and that, in turn, will
help the production of sophisticated products. Gradually, the country will achieve competitive
advantage in such production.

9. Thirdly, the firm operating along with its competitors as well as its complementary fi rms gathers
benefit through a close working relationship in form of competition or backward and forward linkages. If
competition is acute, every firm will like to produce better quality goods at a lower cost in order to
survive in the market. Again, if there is agglomeration of complementary units in a particular region,
there may be strong backward and forward linkages. All this will help attain national competitive
advantage.
Figure 1: Porter’s Diamond of National Advantage
Fourthly, the firm’s own strategy helps in augmenting export. There is no fixed rule regarding the
adoption of a particular strategy. It depends upon a number of factors present in the home country or
the importing country and it differs from time to time. Nevertheless, the strategic decisions of the firm
have lasting effects on their future competitiveness. Again, equally important is the industry structure
and rivalry among different companies. The greater the rivalry, the greater the competitive strength of
the industry.
Besides the four factors, Porter gives weightage to a couple of factors, such as governmental policy
and the role of chance of events. Governmental policy influences all the four factors through various
regulatory/deregulatory measures. It can control the availability of various resources of change the
pattern of demand through taxes and so on. It can encourage/discourage supportive industries through
various incentives/disincentives. Similarly, chance of events, such as war or some unforeseen events like
inventions/innovations; discontinuities in the supply of inputs; and so forth can eliminate the
advantages possessed by competitors.
However, there are various criticisms put forth against Porter’s theory. First, there are cases
when the absence of any of the factors embodies in Porter’s diamond does not affect the competitive
advantage. For example, when a firm is exporting its entire output, the intensity of demand at home
does not matter. Secondly, if the domestic suppliers of inputs are not available, the backward linkage
will be meaningless. Thirdly, Porter’s theory is based on empirical findings covering 10 countries and
four industries. A majority of the countries in the sample have different economic backgrounds and do
not necessarily support the finding. Fourthly, availability of natural resources, according to Porter, is not
the only condition for attaining competitive advantage and there must be other factors too for it. But

10. the study of Rugman and McIlveen (1985) shows that some Canadian industries emerged o n the global
map only on the basis of natural resource availability. Fifthly, Porter feels that sizeable domestic
demand must be present for attaining competitive advantage. But there are industries that have
flourished because of demand from foreign consumers. For example, a lion’s share of Nestle’s earnings
comes from foreign sales. Nevertheless, these limitations do not undermine the significance of Porter’s
theory.
THEORY OF PRODUCT LIFE CYCLE
Theory of international product life cycle propounded by Raymond Vernon emphasizes that every
product has to pass through different stages. Conceptually, the life cycle consists of four stages introduction, growth, maturity and decline.
1. Introductory Stage
New products are generally developed after observation of demand, utility and benefits a group of a
group of customers enjoy in a given market. It is a normal practice that Japanese company develops a
new product for Japanese market first and US Company develops a product for US market first. The
Research and Development group creates a new product and predominantly the company concentrates
on the domestic market and gradually starts export to other countries. By way of getting constant
market feed back the company modifies or alters or adds new features to match international
markets.
2. Growth stage
Growth stage has few salient features:
1. It increases in export to many countries by which the company generates huge revenue.
2. More competitive forces crop up from a country by innovation, country of entry and any other third
country.
3. The organization becomes high capital intensive.
4. The innovator resorts to foreign production units in order to bring down the cost and come closer to
customer.
Since the customers are aware of the products and the demand is li kely to grow substantially, setting up
manufacturing units become inevitable. While Sony products have huge demand in South East Asia and
Middle East, the company started manufacturing products in Malaysia. Hewlett Packard started setting
up units in South East Asia due to rapid growth in sales in the whole region. The innovating company will
increase its quantum of exports and is prepared to incur small loss in the export markets where the
manufacturing subsidiary unit will commence its operations.
3. Maturity stage
This stage has following features:
1. There is a gradual fall in quantum of exports from innovating country.
2. Standardization and quality aspects are pre-requisites.
3. Sophisticated machineries are used, hence is huge.
4. Price war is inevitable due to many players.
5. Production facilities are available in many developing countries at a low labors cost.

11. It is a general trend that innovating countries no longer enjoy production advantage. Since many
physical, fiscal and infrastructural incentives are offered by the developing countries, such innovators
are lured and increase there production in developing countries. Today, we see such manufacturing
units in Indonesia, Thailand, Malaysia and Brazil. India is also emerging as a strong production centre for
automobiles, health care and consumer products.
4. Declining stage
1. The main feature of the
declining stage is that maximum
production takes place in less
developed countries.
2. The innovating country starts
importing from other countries.
3. The days of keeping high
margins are over.
4. It is the stage of survival and
no prosperity for the innovator.
5.
The
innovator
may
completely deviate from a
specific product and go in for a
completely new product.
The
industrial
countries
disappoint
the
innovator
because the affluent customer
demands more and more. New
products are flooded in the
market with so many features.
Since cost factor is the only
weapon, production from less
developed countries will win. The innovator of the product cannot
depend on the first production unit which gave the first product for launching.
Q 5) Discuss major objectives, agreements & achievements of WTO & the issues encountered by WTO
at the end of Doha round?
Ans: The WTO has six key objectives:
(1) to set and enforce rules for international trade,
(2) to provide a forum for negotiating and monitoring further trade liberalization,
(3) to resolve trade disputes,
(4) to increase the transparency of decision-making processes,
(5) to cooperate with other major international economic institutions involved in global economic
management, and
(6) to help developing countries benefit fully from the global trading system.
Although shared by the GATT, in practice these goals have been pursued more comprehensi vely by the
WTO. For example, whereas the GATT focused almost exclusively on goods—though much of agriculture
The WTO’s rules — the agreements — are the result of negotiations between the members. The current
set were the outcome of the 1986–94 Uruguay Round negotiations which included a major revision of
the original General Agreement on Tariffs and Trade (GATT).

12. The WTO agreements cover:
Goods
It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower customs
duty rates and other trade barriers; the text of the General Agreement spelt out important rules,
particularly non-discrimination.
Since 1995, the updated GATT has become the WTO’s umbrella agreement for trade in goods. It has
annexes dealing with specific sectors such as agriculture and textiles, and with specific issues such as
state trading, product standards, subsidies and actions taken against dumping.
Services
Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport
companies looking to do business abroad can now enjoy the same principles of freer and fairer trade
that originally only applied to trade in goods.
These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have
also made individual commitments under GATS stating which of their services sectors they are willing to
open to foreign competition, and how open those markets are.
Intellectual property
The WTO’s intellectual property agreement amounts to rules for trade and i nvestment in ideas and
creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify
products, industrial designs, integrated circuit layout-designs and undisclosed information such as trade
secrets — “intellectual property” — should be protected when trade is involved.
Dispute settlement
The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital
for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to
the WTO if they think their rights under the agreements are being infringed. Judgements by specially appointed independent experts are based on interpretations of the agreements and individual
countries’ commitments.
Policy review
The Trade Policy Review Mechanism’s purpose is to improve transparency, to create a greater
understanding of the policies that countries are adopting, and to assess their impact. Many members
also see the reviews as constructive feedback on their polici es.

13. ACHIEVEMENTS OF WTO
1. Trade Liberalisation
• WTO’s trade liberalization measures are embodied in a variety of agreements, No.60,which each
country has to sign for becoming member of WTO.
2. Agreement on Agriculture (AOA)
• Tariffs on agricultural products are bound
• Non Tariff barriers such as Quotas for Import have been converted to tariff (Tariffication) to give
predictability to trade in agriculture commodities.
• Developed countries have agreed to cut export subsidies by 36% (24% cut for developing
countries).
3. Trade Related Investment Masures Agreement (TRIMS)
Applies to measures that affect trade in goods.
• No country shall apply any measure that discriminates against foreigners or foreign products
(Principle of National treatment). However, permits utilization of local resources through ‘Local
Content Requirements’.
• Discourages ‘trade belonging requirements’ of countries by restricting import & pushing
exports.
• Deadlines for implementation –
• Developed Countries - 1996
• Developing Countries – 1999 (extended)
• LDC
- 2001 (extended)
4. SPS Agreement (Sanitary & Phyto – Sanitary Agreement )
Anti Dumping Agreement –
• Member Countries can resort to anti dumping measures if they can establish that goods are
being dumped at price lower than the price prevailing in the exporting country.
• Extension of Import Duty can be levied to prevent dumping
5. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
• Enjoins on the member countries to protect the rights of the creators/invention of products or
ideas.
• Copyrights, trademarks, geographical indications, Industrial designs, patterns etc. are covered.
e.g. Computer programs, films, wires & spirits are protected.
6. General Agreement on Trade in Services (GATS) –
• Lays down obligations of member countries to provide access to import of services on the basis
of MFN principle.
• Exclusions permitted but to be notified by respective Govts. eg. Air Transport Services are
excluded.
ISSUES OF DOHA ROUND
The fourth round was Doha round of negotiations which was held in Doha, Qatar in 2001. Many of the
Seattle issues, covering unfinished agenda of Uruguay Round, were reconvened in Doha. This round is
also known as Doha Development Round because it is mentioned in the Ministerial Declaration that this
round seeks to place developing countries’ needs and interests at the heart of the Work Programme
adopted in this declaration. In every negotiable issue of the round, special concessions for developing
countries were mentioned. The declaration stated that “We commit ourselves to the objective of dutyfree, quota-free market access for products originating from LDCs”. However, there was no mention
about the policies that involve use of domestic instruments in creating a protective environment and
achieving the end result of restricting exports from LDCs. One such example is farm subsidies.

14. The final resolution on Doha issues has still not been achieved, even after more than 8 years since its
introduction. The reason is lack of forward movement by major negotiators on agriculture subsidy and
tariff reduction, the two most intractable issues in the Round.
Negotiations aimed at a world that no longer exists
Neither the collapse of the Round, nor the recriminations to follow, should be taken too seriously. The
mandate for negotiations under the auspices of the Doha Round has fallen further and further behind
the pace of change in the world economy
Success requires a different game, with different rules and different players
Consider agriculture – the proximate cause of the Doha collapse. According to World Bank commodity
price indexes, in 2001 grain prices were only 70 % of their nominal 1995 levels. In defining the
negotiating agenda for the Doha Round, the focus of commodity exporters in the WTO (Brazil,
Argentina, Australia, etc.) has been to raise these prices by eliminating price -distorting policies. At the
same time, major importers (India, China) have also been concerned about the impact of low prices on
their farmers.
Impasses over agriculture are as much an excuse as a cause of the breakdown
In a sense, developing countries are collectively asking that food prices go up and down at the same
time. The inconsistency reflects divergent interests across the newer, non-OECD members of the WTO.
It also highlights the fact that remaining impasses over agriculture are as much an excuse as a cause. The
problem is irreconcilable differences in views on trade policy, linked to differences in stages of economic
development.
Non-agricultural issues
Moving past agriculture to NAMA and services, developing country gains at this point really require
South-South dialog and South-South initiatives at liberalization.
This is the message from much of the policy modeling literature. Indeed, model -based analysis of recent
NAMA proposals simply reinforces the message from earlier research on the impacts of multilateral
trade liberalization, namely: “active developing country participation in terms of market access
concessions is critical to their prospects
Q 6) “NAFTA is emerging as an effective trade partner for India despite of global slowdown” if so,
categories major sectors & business opportunities for Indian business houses to prosper in future in
the NAFTA bloc.
Ans: NAFTA- The north American free trade agreement (NAFTA) came into being on January 1,1994.the
most affluent nations of the world ,i.e. the USA and Canada along with Mexico –a developing country
joined together to form a trade block. A free trade agreement was signed by the USA and Canada in
1989.this was extended to Mexico in 1994.NAFTA is expected to eliminates all tariffs and trade barriers
amng these countries by 2009.However internal tariffs on a large number of product categories were
removed already.
NAFTA has a population of 363 million and hence it is one of the significant trading areas in the globe.

15.  Objectives
To create new business opportunities particularly in the Mexico
To enhance the competitive advantage of the companies operating in the USA,Canada and
Mexico in wider international markets.
To reduce the prices f the products and services by enhancing the competition
To enhance industrial development and thereby employment throughout the region.
To provide stable and predictable political environment for the investors.
To develop industries in Mexico in order to create employment and to reduce migration
from Mexico to the USA.
To assist Mexico in earning additional foreign exchange to meet its foreign debt burden.
To improve and consolidate political relationship among member countri es.
 There are tremendous opportunities in Canada and globally for Canadian banks. Domestically,
we are positioned as an alternative to the Canadian financial institutions; our model can be best
identified as a full-service direct bank. In addition, our structure is flat and our size allows us to
be close to our customers.
 Indian engineering exports and Free Trade Agreement amongst the three countries i.e. Canada,
USA and Mexico, provided enormous opportunities for bilateral trade.
Q 7) Emunerate all the challenges encountered by global human resources division operating in a
cross border business environment.
Ans: challenges related to managing people in management an internationally oriented business.
Driving force for globalization
1. Foreign direct investment (FDI) flows
2. Cross-border inter-firm agreements
Organizations expand beyond domestic boundaries to achieve
1. Satisfied employees
2. Competitive products and services
3. Searching for new or broader markets
4. Acquiring new, more efficient manufacturing technology
5. Large, inexpensive labor forces
Global human resource management (GHRM) includes the same functions as domestic HRM, plus
several aspects unique to international management
1. “people challenge” the most difficult for firms becoming international
2. Most critical to success, acquiring a competent workforce (survey of top execs.)
The top HR challenges include
1. Finding suitable candidates
2. Intercultural understanding
3. Career management
4. Employee retention
5. Adjusting to environment
6. Partner dissatisfaction
7. Relocation reluctance
The cultural nature of global human resource management cultural differences

16. 1. Individualism versus collectivism
2. Power distance
3. Uncertainty avoidance
4. Masculinity versus femininity
The concept of "fit" in global human resource management
1. Fit (congruence among HR policies, firm’s plan & values of foreign culture)
2. Internal fit (HR policies that allow for smooth work flow: HQ & local)
3. External fit (HR to consider the local cultural/socioeconomic environment)
The legal and ethical climate of global human resource management
1. Foreign Corrupt Practices Act – (1977) forbids in conducting to give the firm an unfair advantage
2. There exists varying degrees of employment discrimination in other countries which may cause
problems/dilemmas for PCNs managers