Assignment Code: IBO-01/TMA/2022-23

Course Code: IBO-01

Assignment Name: International Business Environment

Year: 2022-2023

Verification Status: Verified by Professor

Attempt all the questions: 20x5

Q1) (a) How does disequilibrium occur in the balance of payments? Describe the methods of correcting the disequilibrium with examples.

Ans) When a country is neither using up extra reserves to cover payments nor building up reserves as a result of receipts, its balance of payments is considered to be in equilibrium. Long-term or short-term disequilibrium in the balance of payments are both possible. The main causes of short-term disequilibrium are cyclical variables. Due to long-term structural changes in the economy, long-term or structural disequilibrium develops. A decrease in export earnings could result from a drop in demand for export goods brought on by technological advancements.

Methods of Correcting Disequilibrium

When such an unbalanced scenario occurs, the following actions are typically taken:

Use of Past Reserves: If there are available previous reserves, a country may use them to finance the BOP deficit. These reserves include gold, foreign currencies, assets associated to funds, a reserve position with the IMF, and SDR holdings. Increased SDR quotas, new SDR allotments, and greater private capital flows have all helped numerous countries' national reserves rise overall in recent years.

Borrowing from IMF: IMF facilities are available to nations with a B.O.P. state of disequilibrium which are:

1. Maintain a loan.

2. Extended Funding Resources.

3. Facilities for Structure Adjustment.

4. Expanded Facilities for Structural Adjustment.

5. Facilities for Compensatory and Contingency Financing.

6. Facilities for Systematic Transformation.

Monetary and Fiscal Policy Measures: Tools for affecting B.O.P. circumstances are monetary and fiscal policies. The required adjustment in the level of total demand, which includes demand for imported goods and services, can be achieved by altering the money supply through either fiscal or monetary policy.

Exchange Rate Adjustments: Exchange rate modifications are a useful tool. Exports will become more affordable and imports more expensive with a downward exchange rate adjustment.

Q1) (b) What is transfer of technology? Briefly explain mechanisms through which technology transfer takes place?

Ans) Technology transfer is the flow of information from one organisation to another, or from one use to another, including data, designs, ideas, materials, software, trade secrets, and technical knowledge. The rules, practises, and principles of each organisation involved in the process serve as a guidance for the technology transfer process. This method of knowledge transfer makes it possible for scientific and technological advancements to reach a wider audience of consumers, who can subsequently contribute to its development or use it.

Technology Transfer Mechanisms

Cooperative Research and Development Agreement: CRADAs are tools that can be utilised in all phases of a product and/or system lifecycle where research, development, test, and evaluation activities take place. They are perhaps the most often used technology transfer mechanism. Personnel, services, facilities, tools, intellectual property, and other resources may be given by the federal parties with or without payment. The non-federal parties may provide money, people, services, equipment, facilities, intellectual property, or other assets.

Licensing Agreement: A licencing agreement is a contract that allows the licensee to use the intellectual property in accordance with the terms of the agreement and is made between the owner or authorised user of the IP and another party.

Memorandum of Understanding: The basis for collaboration and coordination with other agencies is provided through an MOU. The agreement aids in ensuring efficient workflow or use of shared resources. It produces a clear awareness of the commitment and goal of each side.

Partnership Intermediary Agreement: A PIA is a contract between DHS and a state, local, or non-profit organisation.

1. The partnership intermediary is permitted to:

2. Find emerging private sector technology that DHS could use.

3. Encourage collaborative efforts between the department and businesses in the private sector as well as between government organisations and universities to hasten the supply of technological skills to the country.

4. Assist established businesses in locating divisional technology that may be licenced and sold.

Q2) How is a void contract different from a voidable contract? Explain essential elements of a valid contract.

Ans) A void contract is null and void from the moment it is created, which is the major distinction between void and voidable contracts. Contrarily, a contract that is voidable if specific requirements are not met continues to be in effect until the unsatisfied party terminates it.

Q3) Comment on the following: (4x5)

(a) The law of contract is not the whole law of agreements nor is it the whole law of obligations.

Ans) "An agreement enforceable by law is a contract," states Section 2(h) of the Indian Contract Act. Every promise and every group of promises comprising the consideration for one another is an agreement, according to Section 2(e), which defines the term. According to Section 2(b), "the proposal is deemed to be accepted when the person to whom the proposal is made signifies his assent thereto." When accepted, a proposal turns into a promise.

A contract is thus formed when a proposal or offer is accepted. However, a contract cannot be created by simple agreement. The agreement must be legally enforceable. An agreement cannot become a contract if it cannot be upheld by the law. A contract is only that arrangement that establishes certain rights and duties that may be upheld in court.

(b) World Trade is not concentrated in a few countries and products.

Ans) Today, intellectual property rights in one form or another govern a substantial and growing portion of global trade. Trading grows along with the incentives to breach PRs. Fair commerce is currently hampered by the prevalence of counterfeiting, copying, and piracy. The fact that many of the less developed nations do not have laws against such acts makes the matter worse. The industrialised nations have lost a significant amount of export earnings as a result of product copying.

Chemical and pharmaceutical industries have been particularly hard struck, but there are also significant issues with books, recordings, soft goods, and entertainment. According to estimates, copyright infringement costs the EU at least 10% of the value of its exports. The theft of brand names and even geographical appellations, as in the case of wine and food products, has been an issue. This has harmed the reputation of real goods, along with the subpar quality of the "secondary" product.

(c) The effects of globalization have not been favourable on the world economy.

Ans) Businesses benefit from globalization's ability to access raw commodities at lower prices, giving them a competitive edge. Organizations have the chance to benefit from cheaper labour costs in developing nations while utilising the technical knowledge and experience of more developed economies thanks to globalisation. Due to globalisation, various components of a product may be produced in various parts of the world.

Services are also impacted by globalisation. Many American enterprises have contracted with Indian firms to provide call centres or information technology services. Globalization generally lowers the cost of manufacturing. This implies that businesses can charge customers less for their products. One important factor that raises the level of life is the average cost of commodities.

(d) Indian foreign trade policy does not facilitate the import of technology.

Ans) A set of regulations governing the import and distribution of products and services, the foreign trade policy is defined by the constitution. These have been formed by the Directorate General of Foreign Trade, which oversees the Ministry of Commerce and Industry's efforts to advance and facilitate exports and contents but does not facilitate the import of technology. For a period of five generations, the policy is advertised.

WTO docile schemes This need to be the FTP's main focus. The WTO strives to prevent governments from significantly assisting exporters in order to level the playing field for all countries. The Indian government has previously taken major steps to eliminate appropriation-led programmes because it is aware of the necessity to adhere to WTO morals.

A crucial component of the nation's GDP is exports. Foreign trade must receive adequate attention and funding. Although there have been many successful approaches, there is still much to be done. The Indian Foreign Trade Policy, which discourages the import of technology, might adopt proactive measures to ensure that exports are viable for Indian businesses and compliant with WTO criteria. The new FTP might be another step toward a prosperous, durables-driven thrift.

Q4) Distinguish between:

(a) Implied conditions and Implied warranties

Ans) The contract contains express terms and warranties that are listed there. Implied conditions and warranties are those that are implied by law or custom; unless the parties agree otherwise, they take precedence in a contract of sale.

Condition as to Title: There is an implied condition on the part of the seller in every contract of sale unless the circumstances of the transaction indicate a different intention.

1. He has the right to sell the products in the event of a sale.

2. In the event of a sale agreement, he will be entitled to sell the products at the moment the property is to transfer.

Condition as to Description: There is an implied requirement that the items match the description in a contract for sale by description.

The following scenario is included in the phrase sell by description:

1. When a buyer buys something without seeing it and relies solely on the seller's description.

2. Where the buyer has really seen the products, he does not rely on what he has seen but rather on what the seller has told him, and there is no obvious difference between the actual things and the description.

3. Product packaging may occasionally be mentioned in the description. The buyer may reject the goods if the packaging does not follow the specifications in the contract.

(b) Arbitration and Litigation

Ans) It will be important to note that litigation and arbitration are two established and well-known procedures for resolving business issues. Arbitration or court proceedings aren't always a sign that the parties are at odds with one another or that their business relationship has suffered. Despite disagreements, businessmen all around the world continue to do business and live together for the benefit of both parties.

Due to the increasing complexity of doing business internationally, businesspeople desire to settle conflicts amicably and make every effort to do so. But once a dispute or disagreement arises, the parties usually leave the matter up to a court or arbitrator because they are too busy, unable to come to a consensus, or satisfied to have their disagreements/disputes resolved by an outsider. They want to maintain their positive business connection while adhering to the arbitrator's or court's ruling.

(c) Trade diversion and Trade creation

Ans) a circumstance where trade with non-member countries is switched to member countries as a result of the development of a regional grouping. a circumstance in which the creation of a regional organisation results in more wealth for the members, which is then reflected in greater commerce with non-member nations.

(d) FDI and Portfolio Investment

Ans)

Foreign Direct Investment

When an investor headquartered in one nation buys an asset in another nation with the intent to manage the asset, this is known as foreign direct investment. Technology, managerial, and marketing assets are also transferred by the corporation making the investment in this nation. Reinvested earnings, which represent the direct investor's share of earnings not dispersed as dividends by affiliates or earnings not remitted to the direct investor, are also included in the definition of foreign direct investment.

Portfolio Investment

Investment in financial stocks, bonds, and other financial products typically occurs with portfolio capital. In contrast to PDI, portfolio capital is generally affected by individuals and institutions through the capital market mechanism. It is projected that a major portion of portfolio investing would have a speculative and loose nature. The decision to invest is frequently based on the investor's confidence. The capital has a propensity to move quickly from one country to another if this confidence is disturbed, which can occasionally cause a crisis for the host nation.

Q5) Write short notes on the following: (4x5)

(a) Ethical system of beliefs

Ans) In brief, the nature and the problems associated with various systems of belief:

1. Eternal Law: The religious teachings reveal the moral standards, and these standards are eternal law to which we should adhere.

2. Utilitarian Theory: The perceived outcome of the action provides standards.

3. Universal Theory (Formalism): In this case standards are derived from intent of the decision according to universal principles.

4. Distributive Justice: A single value of justice, namely that everyone should act towards the more equitable distribution of benefits provides the basis for moral standards. It is believed that this will lead to social cooperation.

5. Personal Liberty: The principle of liberty, in this case, is the single basis of moral standard.

The moral standards of behaviours in the Hosmer's model, is determined by the above discussed ethical believe systems together with cultural experiences and the prevailing social and economic system. The managers resolve their ethical dilemmas in the context of their moral standards of behaviour.

(b) UNCTAD

Ans) The principal body of the UN General Assembly dealing with trade and development is the United Nations Conference on Trade and Development. It has 186 member states and was created as a permanent intergovernmental organisation in 1964. The unique contributions of UNCTAD to the field of trade and the environment include policy analysis and discussion, conceptual work, the development of member state consensus on the interaction of environmental and trade policies, the dissemination of information to decision-makers, and encouragement and support for capacity-building. The issues and unique situations that the emerging nations, particularly the least developed ones, face must receive special consideration.

(c) Asian Development Bank (ADB)

Ans) To advance the social and economic development of the Asian and Pacific area, 31 member states established the Asian Development Bank in 1966. The number of bank members has increased to 57 over the previous 31 years, with 16 members coming from outside the region and 41 from within. The bank prioritises regional, subregional, and national projects and programmes and pays particular attention to the needs of the smaller or less developed nations.

The main duties of the bank are:

1. To provide loans and equity investments for its developing member countries' economic and social growth.

2. To offer advice and technical support for the planning and execution of development projects and programmes.

3. To encourage and make it easier for people to invest public and private money for development.

4. To provide support when asked for in coordinating the development goals and programmes of its developing member nations.

(d) Intellectual Property Rights

Ans) The term "intellectual property rights" refers to the exclusive right provided to people or organisations to create, employ, or market products and services that incorporate the concepts, methods, and innovations they have appropriated. Thus, a system of intellectual property rights can be described as the relationship between a collection of rewards and incentives intended to encourage individuals and institutions to use their creativity and ingenuity to achieve particular objectives and the controls and procedures that enable the enforcement of the exclusive rights.

Patents and copyrights are the two most significant intellectual property rights currently in existence. A patent is the only way to create, utilise, or market a specific implementation of a novel concept. As a result, it serves as a channel for the dissemination of new knowledge and motivates business owners to invest in patents, which have since expanded to cover services and agriculture in addition to industrial processes and goods. Copyright refers to the exclusive right to duplicate or reproduce a certain tangible expression or piece of information.