INTERNATIONAL BUSINESS – LAWS AND PRACTICES

488 Pages·2014·5.07 MB·English

STUDY MATERIAL
PROFESSIONAL PROGRAMME
INTERNATIONAL
BUSINESS – LAWS AND
PRACTICES
MODULE 3
ELECTIVE PAPER 9-5
ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003
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INTERNATIONAL BUSINESS - LAWS AND PRACTICES
Today globalization has dramatically re-shaped the markets and has changed the way business is being done.
One has to keep pace with the customer’s requirement and has to bring in services and products as per global
standards. International trade has become a vital component of development strategy, which can be used as an
effective instrument of economic growth. Moreover the establishment of institutions like World Trade Organisation
has ushered a new era of global economic co-operation reflecting the widespread desire to operate in a more
open multilateral trading system. Participation in international trade has become necessity for all countries and
as well as companies for growth.
Thus it becomes important for professionals to acquire knowledge and skill to help work in international companies
and in global environment. Having updated knowledge of international business laws and procedures becomes
key requisite for professionals. So, in this study broad aspects related to international business environment,
export management, FDI policy, FTP policy, international trade theories, international trade bodies like WTO,
UNCTAD, international logistics and supply chain etc. has been discussed in detail. Added emphasis has been
laid on strategic alliances, foreign collaborations and joint ventures abroad, to enable the students to discharge
efficient services and to tackle practical situations.
In this study every efforts has been made to give a comprehensive coverage of all the topics relevant to the
subject. At the end of each study lesson a brief about the lesson have been given under the caption ‘Lesson
Round Up’ as well as questions have been given under the caption ‘Self Test Questions’ for the practice of
students to test their knowledge.
This study material has been published to aid the students in preparing for theINTERNATIONAL BUSINESS –
LAWS AND PRACTICESpaper of the CS Professional Programme. It is part of the education kit and takes the
students step by step through each phase of preparation stressing key concepts, pointers and procedures.
Company Secretaryship being a professional course, the examination standards are set very high, with emphasis
on knowledge of concepts, applications, procedures and case laws, for which sole reliance on the contents of
this study material may not be enough.
Therefore, in order to supplement the information/contents given in the study material, students are advised to
refer to the Suggested Readings mentioned in the study material, Student Company Secretary, Business Dailies
and Journals.
In the event of any doubt, students may write to the Directorate of Academics in the Institute for clarification at
[email protected].
Although due care has been taken in publishing this study material yet the possibility of errors, omissions and/
or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall
not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf.
Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if
the same are brought to its notice for issue of the corrigendum in the e-bulletin Student Company Secretary.
There is open book examination for this Elective Subject of Professional Programme. This is to inculcate and
develop skills of creative thinking, problem solving and decision making amongst students of its professional
programme and to assess their analytical ability, real understanding of facts and concepts and mastery to apply,
rather than to simply recall, replicate and reproduce concepts and principles in the examination.
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SYLLABUS
ELECTIVE PAPER 9-5 : INTERNATIONAL BUSINESS - LAWS AND PRACTICES
Level of Knowledge: Expert Knowledge
Objective: To acquire specialized knowledge in International business, law, procedure and practices.
Detailed Contents:
1. Introduction
– International Business - Nature and Scope,
– Globalization - Meaning, Levels, Merits, Limitations and irreversibility of Globalization
– Need to go global
– Internationalization Decisions (entry modes)
– SEZ features
2. International Business Environment
– Meaning of Environment
– Dimensions - PEST to STEEPLE
– Internal Environment and External Environment
– SWOT Analysis
– Various approaches to Assess competitiveness including Michael Porter’s 5- Forces Model
– Global Competitiveness Index
3. Multi National Enterprises (MNEs) and Foreign Direct Investment (FDI)
– Meaning and Characteristics
– Role of MNEs in host economy
– Trends in Global FDI
– Trends in FDI with reference to India
– Issues with MNEs - Taxation, Restrictive Trade Practices,Currency, Jurisdiction and Technology Transfer
4. Foreign Trade Policy and Procedures
– Introduction to Foreign Trade Policy
– Institutional Framework for Export Promotion
– Export Incentives and Facilities
– EPZ/FTZ/100% EOUs
– Quality Control for Exports
– Export Prospects for Select Products and Services
– INCO Terms
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– International Commercial Arbitration-Shipment and Post Shipment Finance
– SEZ-Incentives and Benefits
– Method of Realizing Export Payments and Ensuring Guaranteed Export Payment
– Central Excise Clearance Formalities
– Customs Regulations and Clearance Formalities for Exports & Imports
– Duty Draw Back Claims Procedure
– Foreign Trade Financing - Export & Import
– Foreign Exchange Risk Management
– International Credit Management
– Warehousing
– Instruments of Trade Policy and India’s Trade Policy
5. International Trade and Regional Economic Integration
– Theory - Mercantilism, absolute advantage and comparative advantage
– Trends in Global Trade
– Trends in India’s Trade
– Types of Regional Economic Integration - Free Trade Area,Custom Union, Common Market, Economic
Union, Monitory Union and Political Union etc.
– Trading Blocks- ASEAN,SAFTA,SAARC,NAFTA,EU
6. Institutional Environment
– Pre WTO Scenario, difference between GATT and WTO
– Trade Related Institutions - WTO and UNCTAD
– WTO - Basic Principles, various agreements, Functions and Areas of Operations, Dispute Settlement
Mechanism (rules and procedures)
– IMF, IBRD, ADB
– Commodity Agreements
7. Anti-Dumping Duties
– WTO Provisions on Anti-Dumping-, Anti-Dumping Duties, Procedure and Developments
– Regulatory Framework for Anti Dumping in India
– Recent Anti Dumping Cases in India
8. Subsidies and Countervailing Duties
– WTO Provisions
– Administration
– Procedure and Emerging Trends
– Regulatory Framework for Subsidies & Countervailing duties in India
– Doha Development Round
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9. Foreign Collaborations and Joint Ventures
– Foreign Direct Investment Policy, Industrial Policy
– Kinds of Collaboration and Joint Ventures
– Drafting of Agreement
– Restrictive Clauses in the Foreign Collaboration/Joint Venture Agreements
– International Commercial Arbitration
10. Strategic Alliances
– Meaning, Rationale, Types, Trends in Alliances in New Competitive Environment, Strategic Alliance
Failures, Managing Strategic Alliances.
11. Logistics Management
– Logistics Framework- Concept, Objective and Scope
– Transportation, Warehousing, Inventory Management, Packing and Unitization, Control and
Communication
– Role of IT in Logistics, Logistics Service Firms andThird Party Logistics
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LIST OF RECOMMENDED BOOKS
MODULE 3
ELECTIVE PAPER 9-5 : INTERNATIONAL BUSINESS - LAWS AND PRACTICES
The students may refer to the given books and websites for further knowledge and study of the subject :
Books :
– International Trade and Export Management by Francis Cherunilam , Himalaya publishing House
– International Business by K Awasthappa, Mc Graw Hill
– Foreign Trade Policy and Handbook of Procedures by R.K.Jain (17th Edition 2012)
– Anti Dumping Law and Procedures by R.K.Gupta (4th Edition 2013)
– International Business – Justin Paul, PHI Publications
– A Guide to Export-Import Consultancy & Registration Services V.K.Pamecha, Paper Bac
– Export Management, P.K.Khurana, Paper Back
Websites :
– www.wto.org
– www.imf.org
– www.adb.org
– www.unctad.org
– www.worldbank.org
– www.finmin.nic.in
– www.commerce.nic.in
– www.saarc-sec.org
– www.iccwbo.org
– www.rbi.org.in
– www.asean.org
– www.europa.eu
– www.sapta.co.in
– www.naftanow.org
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CONTENTS
INTERNATIONAL BUSINESS - LAWS AND PRACTICES
LESSON 1
INTRODUCTION TO INTERNATIONAL BUSINESS
Business 2
International Business 2
Drivers of International Business 2
Benefits of International Business 4
Scope of International Business 5
Difference between Domestic and International Business 5
Globalisation 8
Benefits of Globalisation 9
Criticisms of Globalisation 10
Myths about Globalization 10
Stages of Globalisation 11
Risks in Global Business 13
Issues in Global Business 13
Globalisation and International Trade 14
Globalisation and Financial Markets 15
Globalization, Income Inequality and Poverty 15
Globalisation and Strategic Management 16
The Future of Globalization 18
India and Globalisation 18
Needs to go Global 22
From an individual company’s viewpoint 22
From the governments viewpoint 23
Modes of Entry and Operation in International Business 24
Exporting 25
Licensing 25
Franchising 26
Special Modes 28
Foreign Direct Investment without Alliances 29
Foreign Direct Investment with Strategic Alliances 30
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Page
LESSON ROUND UP 30
SELF TEST QUESTIONS 31
LESSON 2
INTERNATIONAL BUSINESS ENVIRONMENT
Concept of International Business Environment 34
Internal and external environment 34
Economic Environment 36
Technological Environment 39
Political – Legal Environment 40
Socio-Cultural Environment 42
Global Environment 43
Physical Environment 44
Tools for Environmental Analysis 44
Pest Analysis 44
PEST Analysis Template 47
PESTEL Model 50
SWOT Analysis 51
SWOT Analysis Template 54
Porter’s Five Forces model 57
Global Competitiveness index 61
The 12 Pillars of Competitiveness 62
The Global Competitiveness Index of India 2012–2013 67
LESSON ROUND UP 68
SELF TEST QUESTIONS 69
LESSON 3
MULTINATIONAL ENTERPRISES (MNEs)AND FOREIGN DIRECT INVESTMENTS (FDI)
Multinational Enterprises/Multinational Corporations 72
Characteristics of Multinational Corporations 73
Forms of Multinational Corporations 74
Role of Multinational Corporations 75
Benefits to Host Country 75
Benefits to Home Country 76
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Page
Criticism of Multinational Corporations 76
Issues with Multinational Corporations 77
Foreign Direct Investment 78
Importance of FDI 79
Advantages of FDI 80
Disadvantages of FDI 80
Trends in global FDI 80
FDI trends in INDIA 87
Industrial policy of India 90
Industrial Policy Resolution, 1948 91
Industrial Policy Resolution, 1956 91
New Industrial Policy, 1991 92
FDI Policy Framework in India 92
Role of Department of Industrial Policy & Promotion 93
FDI Policy of India 94
Key Changes in Consolidated FDI Policy 2013 103
Foreign Investment Implementation Authority (FIIA) 111
FDI Policy: The International Experience 112
Cross-Country Comparison of FDI Policies 115
LESSON ROUND UP 118
SELF TEST QUESTIONS 118
LESSON 4
FOREIGN TRADE POLICYAND PROCEDURES PART I – EXPORT PROMOTION
Introduction 122
Foreign Trade Policy 2009-14 123
Export promotional measures 127
Assistance to States for Developing Export Infrastructure and Allied Activities (ASIDE) 127
Market Access Initiative (MAI) 127
Market Development Assistance (MDA) 128
Meeting Expenses for Statutory Compliances in Buyer Country for Trade Related Matters 128
Towns of Export Excellence (TEE) 128
Brand Promotion and Quality 129
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