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INTERNATIONAL BUSINESS
Case (20 Marks)
M/s Adjani Industries Ltd is working out for import of turbine shaft for a steam turbine at the rate of USD 4600 per unit on C&F Mumbai port basis. Following data is given for calculation purpose: (a) Landing Charges @ 1% of CIF (b) Exch. Rate: 1 USD = Rs 60.00 (c) BCD 7.5%, CVD 8.24 %, SAD 4% (d) Assessable Value = CIF value + Landing charges (e) Marine Insurance 1% of C& F (f) Ocean freight 3% of FOB You may assume any data if required. Answer the following question.
Q1. Calculate Basic Customs Duty (BCD)
Q2. Calculate SAD
Q3. Calculate CIF values in Rs
Q4. Calculate Total assessable value in Rs
Case (20 Marks)
Progressive Chemical Industries Ltd, is engaged in Manufacturing and export of specialty chemicals, having turnover of Rs 300 crores. The Company is growing and having good export orders. The CEO is in mood to expand the business and aiming to reach turnover of Rs 1000(thousand) crores in next 5 (five) yrs. The CEO is worried about the increase in input costs and workers demands. Union has threatened to go on strike indefinitely. Union has demanded 50% increase in salary and other benefits, But is not agreeing to link it to productivity. It has also raised issues like unsafe, hazardous working conditions, leakage of poisonous gases affecting the health of workers. The consultant has advised the CEO to be strict and take strict action against the erring employees and be ready to declare lockout if situation warrants.
Answer the following question.
Q1. Prepare a draft agreement for the above situation which could be acceptable for Management and Union.
Q2. As a HR Head how would you convince the Union and workers?
Q3. Do you feel management policies/practices are right?
Q4. What are the various laws which could be applicable in the above problems?
Case (20 Marks)
Strategic R & D by TNCs in Developing Countries TNCs have had long units in developing host countries for adapting products and processes to the local conditions, and in a few cases, to products for local markets. Since the min1980s, however, they have also started locating strategic R & D centers in some developing countries, for developing generic technologies and products for regional or global markets. The main incentives for this are : (a) access to highly qualified scientists as shortages of research personnel emerge in certain fields in industrialized countries, (b) Cost differentials in research salaries between developing and industrialized countries, and (c) rationalization of operations, assigning particular affiliates the responsibility for developing, manufacturing, and marketing particular products worldwide. Th new trends are more visible in industries dealing with new technologies, such as microelectronics, biotechnology, and new materials. In these technologies, the location of R & D can be geographically delinked more easily from the location of manufacturing. It is also possible to separate R & D in core activities from that in noncore activities. Consequently, countries like India, Israel, Singapore, Malaysia or Brazil serve TNCs as good locations for strategic R & D. For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It has three units in Singapore conducting R & D on core components such as optical data shortage devices, integrated chip design for audio products and CDROM drives, and multimedia and microchip software. It has three units in Malaysia working on video design, derivative models and circuit blocks for new TV chases, radio cassettes, discman and hifi receiver designs. It has one unit in Republic of Korea focusing on the design of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan designing and developing video taperecorders, minidisk players, video CDs, and duplicators. Finally, it has one unit in Indonesia focusing on the design of audio products. Such units often work in collaboration with science and technology institutes in the host country. For instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian Institute of Science to work on projects related to its vehicles and avionics business. Current work includes interface design of avionics landing systems and smart GPS sensors for use by the group’s business worldwide. Source: World Investment Report 1999.
Answer the following question.
Q1. Explain why MNCs have located R & D centers in developing countries?
Q2. Mention the areas where R & D activities can easily be decentralized.
Case (20 Marks)
NEC, a Japanese computer and electronics manufacturer, announced it was moving out of Scotland to gain cost advantages in China. These cost advantages included not only labor, but also taxes, because the company would be operating within a special Chinese economic zone. The move stranded its Scottish employees, particularly since other companies in the area, such as Coats, Motorola, and Mayflower, had recently moved facilities from Scotland to China as well. Similarly, two U.S. companies, Coast and Cast Alloys, moved golf club production from Mexico to China to reduce production costs. Many critics of FDI argue that it is unethical for governments to lure companies away from existing locations by offering lucrative incentives. (Incentives are often much greater than the tax breaks offered by China.) These critics also argue that it is unethical for companies to accept them. Companies say that their response to more favorable conditions – such as incentives, taxes, and regulations – is necessary because competitors are bound to take advantage of these conditions. Do governments in countries where a company is already located have any ethical obligations – especially if their policies, such as environmental regulations or high taxes, burden producers? On the one hand, direct investment may lead to better global use of resources and will employ laborers from developing countries who otherwise may not find work. On the other hand, it is the newly unemployed workers who suffer if they lose their jobs and cannot easily find new ones. For these employees, there is little solace in the economic gains that go to previously unemployed workers abroad or the lower consumer prices or higher corporate earnings resulting from the foreign production. Some people argue that the plight of these newly unemployed workers is no different from the results of technological change, such as when workers in clothespin factories lost their jobs with the invention of the electric clothes dryer. Other people argue that displacement from FDI is different because the workers can seldom move abroad to take advantage of the new opportunities there and because their employers are responsible for the job losses. They argue that the company has an ethical obligation to give employees advance notice of the move and to provide training and help with job searches.
Answer the following question.
Q1. Do you agree that countries are wrong in luring companies by offering incentives and tax benefits? Give reasons in support of your answer.
Q2. Who do you feel should be held responsible for the unemployment created because of relocation of a company in the given situation – the company itself, the current country, or the country to which the company is relocating? Discuss
Assignment Solutions, Case study Answer sheets
Project Report and Thesis contact
ARAVIND – 09901366442 – 09902787224
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