X 303 SB SS 0

INTERNATIONAL

BUSINESS
RAKESH MOHAN JOSHI
Indian Institute of Foreign Trade
New Delhi

C 267315

OXJFORD
UNIVERSITY PRESS

Contents
Prefact
List of Abbreviations

1. Globalization and
International Business
1.1 Introduction
1.2 Globalization of Business:
A Historical Perspective
1.3 Concept of Globalization
1.4 Factors Influencing Globalization
1.5 Measuring Globalization
1.6 Globalization: Reality or Myth
1.7 Support of Globalization
1.8 Criticism of Globalization
1.9 Response Strategies to Globalization
Forces for Emerging Market
Companies
r

1.10 Concept of International Business

1.11 Reasons for International Business

Expansion
1.12 Domestic versus International
Business
1.13 Managing Business in the
Globalization Era

2. Theories of International

XV

1
1
2
7
15
20
24
24
26

32
35
36
38
41

45

trade
2.1 Introduction
2.2 Theory of Mercantilism

45
47

2.3 Theory of Absolute Advantage

2.4 Theory of Comparative Advantage
2.5 Factor Endowment (Heckscher-Ohlin)
Theory
2.6 Country Similarity Theory
2.7 The New Trade Theory
2.8 International Product life-Cycle
Theory
2.9 Theory of Competitive Advantage
2.10 Implications of Trade Theories
Case Study: Emergence of Chip Design
Industry in Asia

3. International Trade Patterns

and Balance of Payments
3.1 Introduction
3.2 World Trade: An Overview
3.3 India's Foreign Trade:
An Overview
3.4 Gains from International Trade
3.5 Balance of Payments
3.6 India's Sluggish Export Performance:
An Evaluation
Case Study: Developing Countries' Trade
Dependence and Exports Growth Opportunities

48
52
56
57
58
59
62
66
70

74
74
77
91
103
107
111
116

Annexure I: India's Foreign Trade

121

Annexure II: Direction ofIndia's Trade:

Exports

123

xii

Preface

Annexure III: Direction ofIndia's Trade:

Imports
Annexure IV: Share and Percentage
Change in India's Exports
Annexure V: Composition of India's
Exports
Annexure VI: Share and Percentage
Change in India's Imports
Annexure VII: Composition of India's
Imports

4. Institutional Framework for

International Business
4.1 Introduction
4.2 International Economic Institutions
4.3 Organizations for International
Trade Promotion
4.4 Institutional Framework for
International Trade in India

5. World Trade Organization

5.1 Introduction
5.2 WTO Agreements: An Overview
5.3 Ministerial Conferences and
Emerging Issues
5.4 The Deadlock in WTO Negotiations
5.5 GATT/WTO System and
Developing Countries

6. International Economic
Integrations
6.1 Introduction
6.2 Theoretical Framework of PTAs
6.3 Forms of International Economic
Integration
6.4 Growth of Regional Trading
Agreements
6.5 Major Regional Trade Agreements
6.6 India's Participation in PTAs
6.7 Limitations of Regional Economic
Integrations

125

6.8 Regional Trade Agreements

vis-a-vis Multilateral Trading
System under the WTO

250

127
128
130
131

133
133
134
152
156

175
175
185
211
215

7. International Cultural
Environment
7.1 Introduction
7.2 Self-reference Criterion and
_ - Ethnocentrism: Major Obstacles
in International Business Decisions
7.3 The Concept of Culture
7.4 Comparison of Cross-cultural
Behaviour
7.5 Cultural Orientation in
International Business
7.6 Emic vs Etic Dilemma: Cultural
Uniquness vs Pan-culturalism

254
254

256
256
274
286
291

Case Study: Cross-cultural Misapprehensions

295
over the Swastika in the West

8. Political and Legal

Environment
8.1
8.2
8.3
8.4

Introduction
International Political Environment
International Legal Environment
Risks in International Business

299
299
300
312
320

216

221
221
223

9. Policy Framework for

International Trade
9.1 Introduction
9.2 Trade Policy Options for
Developing Countries

227

9.3 Instruments of Trade Policy

9.4 India's Foreign Trade Policy
9.5 Policy Initiatives and Incentives by

228
229
238

9.6 WTO and India's Export Promotion

249

the State Governments

Measures
Case Study: Special Economic Zones
under Fire

332
332
333
337
340
373
374
380

Preface

10. Country Evaluation and

Selection
10.1
10.2
10.3
10.4

Introduction
International Business Research
Country Evaluation
Tools for Country Evaluation and
Selection

11. Modes of International

Business Expansion
11.1 Introduction
11.2 International Business
Expansion Modes
11.3 Strategy for Selecting International
Business Expansion Mode
Case Study: International Business
Expansion Strategy ofONGC

12. Foreign Direct Investment

12.1
12.2
12.3
12.4
12.5

387
387
388
395
431

440

Case Study: Ranbaxy: No More an

Indian Multinational

571

14. International Marketing

14.1
14:2

14.3
14.4
14.5
14.6

14.7
14.8
483 14.9
14.10

491

520
527

Case Study: FDI in Automobile Sector

in India.
\

533

13.1 Introduction
13.2 Concept of a Multinational
Enterprise
13.3 Types of Multinationals
13.4 Impact of MNEs on Host
Economies
13.5 Measuring the Extent of
MNE's Internationalization

565

475

Introduction
Types of FDI
Theories of International Investment
Patterns of FDI
Policy Framework to Promote
Foreign Direct Investment
12.6 FDI Trends in India

13. Multinational Enterprises

13.6 Emerging M N E s from

Rapidly Developing Economies

440
443

491
496
506
513

14.11
14.12

Introduction
Framework of International
Marketing
'
Setting Marketing Objectives
Market Identification,
Segmentation, and Targeting
Entry Mode Decisions
International Marketing
Mix Decisions
Product Decisions
International Pricing Decisions
International Distribution Channels
Communication Decisions for
International Markets
Framework for International
Product Promotion Strategies
Reviewing Performance and
Consolidating International
Marketing Operations

Case Study: Barbie Faces Islamic Dolls

546
546
549
554
558
561

xiii

15. International Finance

15.1 Introduction
15.2 International Monetary Systems
15.3 Contemporary Exchange Rate
Arrangements
15.4 Prevailing Currencies and Markets
15.5 Determination of Exchange Rates
15.6 Foreign Exchange Market
15.7 Foreign Exchange Risks and
Exposure
15.8 Global Cash Management
15.9 Modes of Payment in
International Trade

582
582
584
585
585
587
588
589
601
606
611
621

623
626

634
634
635
638
640
641
646
651
657
658

xiv

Preface

15.10 International Trade Finance

15.11 Export Finance

16. Global Operations and

Supply Chain Management
16.1
16.2
16.3
16.4
16.5

Introduction
Global Operations Management
Global Supply Chain Management
Third Party Logistics
Maritime Transportation in
International Trade
16.6 Alternates for Ocean Shipment
16.7 International Organizations
Associated with International
Maritime Transportation
16.8 Institutional Framework for
Maritime Transport in India

17. International Human

Resource Management
17.1 Introduction
17.2 Concept of International Human
Resource Management
17.3 International Organizational
Structures
17.4 Strategic Orientations and
Practices for I H R M
17.5 Managing International Human
Resource Activities
17.6 Regulatory Frameworkand
Industrial Relations

18. International Trade

Procedures and
Documentation
18.1 Introduction

667
673

684

18.2 Export-Import Procedures

18.3 Terms of Delivery in International
Trade Transactions
18.4 Documentation for International
Trade Transactions

684
19.
19 Global E-business
685

690 19.1 Introduction

699 . 19.2 Conceptual Framework of
E-business
700 19.3 Prerequisites for Effective
E-business Transactions
708
19.4 E-enabled Business Process
Transformations and Challenges
717 19.5 E-business Technology and
Environment
720 19.6 E-business Applications
19.7 E-business Models
19.8 Alternative E-business Strategies
725
19.9 Global E-marketing
19.10 Global E-services
725 19.11 Electronic Processing of
International Trade Documents
727 19.12 Policy Framework for
Global E-business

767
782
786

807
807
809
816
817
819
824
826
831
832
837
839
846

729
737
740
759

763

763

20. Ethics and Social

Responsibility
20.1
20.2
20.3
20.4

Introduction
Ethics
Unethical Business Practices
Corporate Social Responsibility

851
851
852
855
887

Case Study: Multinational's Lackadaisical

Attitude Led to World's Worst Industrial
Disaster

895

Index

898