International business

Assignment no: 01

Submitted to:
Mam Hina kanawal
Submitted by:
Eisha maham
Roll no:
18Arid-832
BBA 6th
Section:
A
Gujarat Institute of Management Sciences PMAS- Arid agriculture
University Rawalpindi

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Question no: 01

Differentiate between Domestic and International Business. Also highlights

the significance of International Business?

Differentiate between Domestic and International Business

BASIS FOR DOMESTIC BUSINESS INTERNATIONAL

COMPARISON BUSINESS

Meaning A business is said to be domestic, International business is one which is

when its economic transactions are engaged in economic transaction with
conducted within the geographical several countries in the world.
boundaries of the country.

Definition The trade which takes place within Whereas trade which occurs between
the geographical boundaries of the two countries internationally, is called
country is called domestic international business.
business.

Quality standards Quite low Very high

Deals in Single currency Multiple currencies

Capital investment Less Huge

Restrictions Few Many

Nature of Homogeneous Heterogeneous

customers

Business research It can be conducted easily. It is difficult to conduct research.

Mobility of factors Free Restricted

of production

Area of operation Within the country Whole world

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Significance of International Business

Significance of International Business

1. Market expansion

2. brings foreign exchange

3. spreading of business risks

4. Economics of scale

5. Cost advantages

6. Improve international business

7. Provide employee opportunity

8. Government support

Question no: 02

Discuss the impact of Political and Economic Ideology on Foreign Direct

Investment (FDI)?

Economic Ideology on Foreign Direct Investment (FDI)

There are two ways to look at FDI:

1) The flow of FDI refers to the amount of FDI undertaken over a given time period
2) The stock of FDI refers to the total accumulated value of foreign owned assets at a

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 give time

 Outflows of FDI are the flows of FDI out of a country

 Inflows of FDI are the flows of FDI into a country

 Both the flow and stock of FDI in the world economy has increased over the last 20 years

 Historically, most FDI has been directed at the developed nations of the world, with the
U.S. being a favorite target

 FDI inflows have remained high during the early 2000s for the United States, and also for
the European Union

South, East, and Southeast Asia, and particularly China, are now seeing an increase
of FDI inflows
Latin America is also emerging as an important region for FDI
 Important source countries - the U.S., the UK, the Netherlands, France, Germany, and
Japan
 The majority of cross-border investment involves mergers and acquisitions rather than
Greenfield investments

 Acquisitions are attractive because:

They are quicker to execute than Greenfield investments

It is easier and less risky for a firm to acquire desired assets than build them from the
ground up
Firms believe they can increase the efficiency of an acquired unit by transferring
capital, technology, or management skills

Political Ideology and FDI

There are several perspectives toward FDI:

 The radical view - the MNE is an instrument of imperialist domination and a tool for
exploiting host countries to the exclusive benefit of their capitalist-imperialist home
countries

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  The free market view - international production should be distributed among countries
according to the theory of comparative advantage Between these two extremes is
pragmatic nationalism - FDI has benefits (inflows of capital, technology, skills and jobs)
and costs (repatriation of profits to the home country and a negative balance of payments
effect)
 In recent years, there has been a strong shift toward the free market stance

Question no: 03

Do you think that business practices in an Islamic country are likely to differ
from business practices in the United States? If so, how?

Yes, I agree with this statement that business practices in Islamic country are differing from
business practices in the United States.

1. Language is the first and foremost aspects of international business. As every country has
its own language.
2. Laws are based on the Muslim Holy Book, the Quran.  The system is often known as
“Sharia” but their business rules and regulation are not so strict.
In United states their laws are very strict for export their product in other
countries for this strict rules and regulation it decreased other countries to import
product from them. It make difficult to business practices between Islamic
country and United States.
3. Business practices are also different by population, income rate, income growth rate,
heritage; so many things are related with business.
4. The weather pattern is also an important aspect of international business.
For example, the clothing pattern of cold country and the high-temperature
country will not be same as well as the cosmetic pattern of the cold and hot
weather country will not be seen that most of the Islamic country weather is not
hot. So when U.S goes for their business practice those countries must watch the
weather.
5. Difference in prays that makes critical business practice between Islamic countries and
United stated.

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 For example, Islamic countries peoples are play five time in a day, they doing
fast our whole month of Ramadan and the following Friday as holiday. But in
USA countries celebrate Christmas day and the following Sunday as holiday.
6. Product acceptability is also a major point for business practices in different country.
Like, hard drink and poke type of products are not allowed in Muslim country,
but those types of products are available and allowed in United States. So it also
being a difference between Islamic country and United State business practice

Question no: 04

A democratic political system is an essential condition for sustained economic

progress. Discuss?

A democratic political system is an essential condition for sustained economic progress

because it allows citizens to have a say in what goes on within the country. There are nine
safeguards, including freedom of expression and organization, a free media, and limited
terms for elected representatives, just to name a few. These allow citizens to stay
informed and elect new leaders when one’s term is up. In doing so, newly elected
officials must work for the people to create jobs and benefit society or else they will not
be reelected. In socialist countries, citizens do not have a choice over who governs them,
so the leaders do not feel any pressure. By giving citizens a voice and pressuring leaders
to act in their best interests, there is a better chance for long-term economic growth.

Question no: 05

What is the relationship among property rights, corruption, and economic

progress? How important are anticorruption efforts in the effort to improve a
country’s level of economic development?

Relationship among property rights, corruption, and economic progress:

1) Protection of Property Rights is fundamental for economic development. It guarantees

that any entrepreneur or innovator who invested his funds or his skills will be justly

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 rewarded for the same. The fruits of his labor will not be stolen used by others. Without
this protection, the incentive to invest does not exist.
2) Corruption can play a very big role in halting the progress of economic development.
Even if there is the IPR protection with corruption, one can never be sure whether the
protection would be available when it is required. Also corruption plays a major role in
dissuading new investors into any country. This corruption starts from the beginning of
making an application to getting the permission for starting a business. It may also
continue with every additional regulation that one has to get an approval for. This is the
taking of bribes.
3) In addition, there can be a much higher level of corruption where high-ranking politicians
siphon off funds from the state treasury for personal gain.
How important are anticorruption efforts in the effort to improve a country’s
level of economic development?

 Corruption in a country, specifically in a country’s government leadership, can halt

economic progress. Often times, in developing economies, corruption comes in the form
of the powerful elite taking advantage of their position to benefit themselves at the
expense of the economic progress of the people. Anticorruption efforts protect against
this stunting growth.

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