ADL 84 International Business Environment V1

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ADL 84 International Business Environment V1
Assignment – A
Question 1. What factors should Indian Exporters consider in assessing demand
for a product in foreign markets? How are they different from assessing domestic
Question 2. a. What are the specific advantages that a firm can derive by going
Question 2. b. Why is the task of the international marketer more difficult that
of the domestic marketer?
Question 3. Describe the impact of foreign trade on the economic development of
a country. Illustrate your answer with examples from India.
Question 4. How would you proceed to shortlist possible markets for your
products? Explain in detail. Also explain the various methods through which you
can export your products.
Question 5. What are the sources of commercial intelligence available to
exporters in India? How far can a firm arrange for its own sources of commercial
Assignment – B
Question 1. Critically examine the Japanese style of management and distinguish
it from Indian style of Management. Also explain how their importance in
International Negotiations by giving relevant examples.
Question 2. Is international marketing research generally more complex task than
Domestic marketing research? Discuss with reference to problems regarding
collection, analysis and interpretation of data from foreign markets.
Question 3. By giving the appropriate examples explain how Chinese, American and
Turkish Markets are different from each other.

Case Study
The hypermarket concept is usually defined as an outlet retailing both food and
non-food products from a sales area of at least 2,500 sq. Meters with extensive
car parking. It was Maicel Fournier and Louis Deffrorey who opened the first
European hypermarket just outside Paris. It was an instant success and largely
as a result Carrefour has grown into one of the largest grocery retailers in
Europe with sales exceeding from 117 billion in 1992.
The basic strategy of Carrefour, which has remained largely unaltered over the
past 30 years, was summed up in the Annual Report: “Carrefour, a single
objective; offer quality products and services to consumers at lowest prices and
convenience of choice in large well stocked, well managed stores.” There are
three elements to this objective.
1. Discounting Carrefour has been nominated as the leading discounter, not only
in France, but also in Brazil.
2. Multi specialization. Carrefour is a specialist in every product line whether
it is in butchery, bakery or delicatessen.
3. Empowerment of staff. It is at the store level at which decisions are made.
Not only has the hypermarket concept-changed little over the past 30 years, the
basic approach has been adapted very little for the international market. Each
hypermarket operates as a profit centre with the Store Manger responsible for
International Expansion
Almost from the outset Carrefour adopted a strategy which took account of
internationalization. After the first hypermarket was opened in France, the
group ventured into Belgium in a joint venture, followed by a similar
arrangement with another company in Switzerland. As far as the UK was concerned,
Carrefour took a minority shareholding in the hypermarket holdings with Wheat
sheaf distribution which itself became part of the Dee Corporation. Carrefour
went on to expand with joint venture operations in Italy, Spain, Brazil, Austria
and Germany. Following this strategy of market spreading, the group rationalized
its overseas operations to focus on a limited number of markets. The number of
joint ventures operation to focus on a limited number of markets. The numbers of
joint ventures have been discontinued. Attempts were made to build up the
Italian subsidiary but with little success and divestment followed in the early
80s. More recently, two stores in Switzerland were sold.
While divestment was occurring in some areas, in other Carrefour invested
heavily. Spain, Brazil, Argentina, the USA and Taiwan saw heavy investment.
Stores continued to be opened via a number of separate operating subsidiaries,
but since the mid 1980s a policy of organizational consolidation ensures. In
Latin, America, investment has continued despite the difficulties of operating
in markets experiencing hyper Inflation in Brazil, annual inflation rates soared
to levels of 200% in the mid 1980s and 1700% in 1989, while in Argentina a
figure of 5,000% is recorded in the annual report for 1989 and 800% in 1990.
Such figures have rendered a marketing strategy based in low prices almost
impossible to promote as prices are virtually obsolete from the moment they are
set. The hypermarket has been an innovation in these markets, reinforced by the
development of focused shopping centre to support the stores. In south America
much of the development is self-financing.
The American experiment was a different story. The Carrefour store opened in
February 1988 in Philadelphia but failed to live up to expectations. Carrefour
responded to this by increasing the range of food which did result in some
improvement in performance but many still felt that the hypermarket was not
suited to the American market. In early 1993 the American operation was to be
Carrefour’s expansion into Taiwan has met with the much greater degree of
success. By 1993 there were five stores trading successfully, although certain
adaptations have been made to the retail format to include an outdoor market and
only 200 parking spaces. Carrefour intends to continue its expansion plans into
Carrefour was at the forefront of innovation with the development of
hypermarkets. In the last three decades they have attempted to maintain this
leadership in retail innovation. They have done this by the introduction of
retailer brands, the launching of financial services and investment in
innovative retail concepts. This innovative approach has been demonstrated by
involvement in DIY stores, shareholdings in CostCo, the large American club
stores, and involvement in restaurants and freezer centres.
Most of the development has taken place under the same families of original
founders, Marcel Fournier and Louis Defforey. Since 1984 however Michael Bond
has occupied a post of either Deputy or Chief Executives whilst in 1990 he
became Chairman of the group, the first non-family member to hold this post.
Bond was replaced under dramatic circumstances by Danniel Bernard to sort out a
short term balance sheet problem. The group announced that it would sell
non-essential investments, an unusual approach for a company which has in the
past been noted for showing patience and taking a long term view of investments.
Question: Consider Carrefour’s competitive strategy in relation to alternatives,
some of which may be adopted by rival companies. While their strategy would
appear to have been successful for thirty years, is it likely to continue to be
for the next 30 years?


Case Study
“Export Promotion”
India’s tea exports rose to 46.74 million kg. during the first quarter of the
current financial year from 35.47 million kg. in the previous comparable period.
Export earnings from this item aggregated Rs. 81.61 crore during April – June,
1981 against Rs. 68.03 crore in the corresponding period last year. Thus,
although in terms of quantity our tea exports have looked up this year, the unit
value realization dropped from Rs. 19.8 per kg. to Rs. 17.46 per kg.
The drop in unit value realization is attributed to the slackness in the
international tea market due to the global over-supply in the commodity. Since
1975, world tea production has gone up by 41 percent whereas increase in
consumption by the tea-improving countries has been only of the order of 9
percent. Naturally, the prospects of a revival in international tea prices are
dim, at least in the immediate future. The recommendations made by the recent
national tea meet to ‘revitalise’ the tea industry in the country have to be
viewed in this context.
The national meet on tea, organized by the Union Commerce Ministry, was held in
the first week of August to take a close look at the various problems
confronting the tea industry. The meeting which was attended by the
representatives of Central Government, tea producing States, Planters’
associations and small growers, has recommended a package of fiscal
reliefs—both at the Central and State levels.
The package includes, among other things, a substantial reduction in excise duty
on tea, refund of indirect taxes paid on tea exports, simplification of drawback
procedures, substantial reduction or removal of the excise duty on packet tea
until further review, suspension of sales tax on auction tens concessional
scredit and a significant cut in the agricultural income-tax and other local
taxes by the respective State Governments. It was also recommended that the
State Government should consider grant of exemption from rural employment cess
to all export sales of tea and teas used for packeting by the producers
themselves. According to the available information these recommendations are
being considered by the Centre and States concerned for implementation.
The basic problem that confronts the tea industry in the international sphere is
one of depressed prices. More and more black tea is coming into the
international markets from several new producing-exporting countries leading to
over-supply and lower price realisation. And the tea producing nations are
realizing that without demand and supply, the cannot get a better price for
their produce.
Viewed against this background, it is doubtful that the massive relief’s being
sought on tea exports will really be helpful. Excise duty drawback on export, if
granted, may compound the declinein unit values. This may temporarily improve
our competitive position and increase the quantum of exports. But at the same
time this may firm up domestic price to some extent and lead to further
slackening of internal consumption, which has already been affected by the high
prices of sugar and mild.
Yet another factor needs consideration before attempting to step up the quantum
of exports by making tea cheaper through concessions. This is the discouraging
trend in production so far this year. During January – June 1981, estimated tea
production at 173.7 million kg is down by as much as 27.4 million kg over the
same period of last year. If this trend continues in the remaining months of the
year, the resultant lower output itself may push up internal tea prices to some
Moreover, most of the tea growers, who do not export directly and who deserve
government help the most, are unlikely to benefit from excise rebate or fiscal
concessions to tea exports. Instead, these would benefit substantially the FERA
companies who export their produce for sale in the London auctions and export
under forward contract and private sale. The other likely beneficiaries would be
exporters of blended tea and foreign buyer purchasing tea from public auctions
in India.
What is needed, therefore, is a selective and judicious approach towards the
whole issue of fiscal incentives for tea exports. Because of lower production
cost some of our competitors have an edge over us in export markets and
incentives may be necessary to an extent for offsetting this price disadvantage.
Similarly, assistance for exports of non-traditional items such as tea bags and
packet teas would be advantageous for establishing markets for these high
value-added items whose share in our overall tea exports is small at present.
Question 1. Analyse the arguments for and against granting additional assistance
to tea exports.
Question 2. What in you opinion should be the ideal package of assistance for
the tea industry against the give perspective?
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