MCE Answers

7/30/2019 MCE Answers

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1*Define MNC? What are the Main Features of MNC? (*Very IMP)

Definition : An enterpriseoperatingin severalcountries but managed from one (home) country.

Generally, any company or group that derives a quarterofitsrevenuefromoperationsoutside ofits home country is considered a multinationalcorporation.

Features/ Characteristics of MNCs: (any 3)

The following are the main features of MNCs:

1. MNCs have managerial headquarters in home countries, while they carry out operations in a

number of other (host) countries.

2. A large part of capital assets of the parent company is owned by the citisens of the company'shome country.

3. The absolute majority of the members of the Board of Directors are citisens of the homecountry.

4. Decisions on new investment and the local objectives are taken by the parent company.

5. MNCs are predominantly large-sized and exercise a great degree of economic dominance.

6. MNCs control production activity with large foreign direct investment in more than one

developed and developing countries.

7. MNCs are oligopolistic in character. It is sustained by modern technologies, management skill,

product differentiation and enormous advertising.

8. MNCs are not just participants in export trade without foreign investments.

2*Name any 3 MNCs in India, Japan, USA, South Korea? (Very IMP)

India: Infosys, TATA MOTORS, VIDEOCON, RANBAXY, ASIAN PAINTS

Japan: Toyota, Honda, Nissan, Mazda, Suzuki

USA: Apple Inc, Microsoft, Johnson & Johnson, Pepsico, Dell

South Korea: FILA, Hyundai Group, LG Group, Samsung Group

*Name any 5 Global MNC Brands

Apple, Google, IBM, Microsoft, IBM, Wallmart, Samsung, GE.
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3*Full Form of WTO, NAFTA, ASEAN, SAARC, UAO ? (Very IMP)

WTO World Trade Organisation

NAFTA North American Free Trade Agreement

ASEAN Association of southeast asian nations.

SAARC South Asian Association for Regional Cooperation

UAO Urban American Outdoors

4*What are the Advantages and Disadvantages of MNC? (*Very IMP)

Any 2 points from each

Advantages of MNC's for the host country:

MNC's help the host country in the following ways

1. The investment level, employment level, and income level of the host country increases due to

the operation of MNC's.

2. The industries of host country get latest technology from foreign countries through MNC's.

3. The host country's business also gets management expertise from MNC's.

4. The domestic traders and market intermediaries of the host country gets increased businessfrom the operation of MNC's.

5. MNC's break protectionalism, curb local monopolies, create competition among domestic

companies and thus enhance their competitiveness.

6. Domestic industries can make use of R and D outcomes of MNC's.

7. The host country can reduce imports and increase exports due to goods produced by MNC's inthe host country. This helps to improve balance of payment.

8. Level of industrial and economic development increases due to the growth of MNC's in the

host country.

Advantages of MNC's for the home country


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MNC's home country has the following advantages.

1. MNC's create opportunities for marketing the products produced in the home country

throughout the world.

2. They create employment opportunities to the people of home country both at home andabroad.

3. It gives a boost to the industrial activities of home country.

4. MNC's help to maintain favourable balance of payment of the home country in the long run.

5. Home country can also get the benefit of foreign culture brought by MNC's.

Disadvantages of MNC's for the host country

1. MNC's may transfer technology which has become outdated in the home country.

2. As MNC's do not operate within the national autonomy, they may pose a threat to theeconomic and political sovereignty of host countries.

3. MNC's may kill the domestic industry by monpolising the host country's market.

4. In order to make profit, MNC's may use natural resources of the home country

indiscriminately and cause depletion of the resources.

5. A large sums of money flows to foreign countries in terms of payments towards profits,

dividends and royalty.

Disadvantages of MNC's for the home country

1. MNC's transfer the capital from the home country to various host countries causing

unfavourable balance of payment.

2. MNC's may not create employment opportunities to the people of home country if it adopts

geocentric approach.

3. As investments in foreign countries is more profitable, MNC's may neglect the home countries

industrial and economic development.


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5*What is PESTLE analysis? (*Very IMP)

PESTLE stands for political, economic, social, technological, legal, and environmental.

PESTLE analysis is a process, often reflected in a format type document you create, to help

understand the overall market environment (market risks, market growth or decline, etc.) for aparticular industry, business, product, or project. It is often a key part of strategic, marketing,

and/or business planning.

PESTLE allows an organization to go in depth into their current status and weaknesses. It helpsleaders better manage and define dangerous areas for the organization and greener marketing

pastures.

OR

What is a PESTLE analysis?

PESTLE analysis factors are Political, Economic, Sociological, Technological, Legal and

Environmental. The PESTLE analysis examines each factor to assess what their impact or

potential impact on the organisation. In this way, they can prepare strategically for any changes

that need to be made in the organisation or simply to have the awareness of the external marketto give them a competitive edge over other firms in the industry. Examples of each PESTLE

analysis factor are:

Political: what is happening politically with regards to tax policies employment laws, trade

restrictions, tariffs

Economic: what is happening within the economy i.e economic growth/ decline, minimum

wage, unemployment (local and national), credit availability, cost of living, etc.

Sociological: what is occurring socially i.e cultural norms and expectations, health

consciousness, population growth rate, career attitudes,.

Technological: new technologies are continually being developed. There are also changes to

barriers to entry in given markets

Legal: changes to legislation. This may impact employment, access to materials, resources,

imports/ exports, taxation etc.

Environmental: what is happening with respect to ecological and environmental aspects.

Why is a PESTLE analysis used? Importance of PESTEL?


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A PESTLE analysis is used in business and is a method of assessing the industry which an

organisation is in. The PESTLE analysis looks specifically at factors which are external to the

organisation which will impact on the business. This is with a view to determining the currentrole and status of the organisation in relation to its competitors and can be used as a marketing

tool.

6*Define Competitor? Why is Competitor analysis necessary? (*Very IMP)

Definition of ' Competitor '

Any personorentity which is a rivalagainst another. In business, a company in the

sameindustry or a similar industry which offers a similarproductorservice. The

presence of one or more competitors can reduce thepricesofgoods and services as the

companies attempt to gaina largermarket share. Competition also requires

companies to become moreefficient in order to reduce costs. Fast-food restaurants

McDonald's and Burger King are competitors, as are Coca-Cola and Pepsi, and Wal-

Mart and Target.

Definition of 'Customer'

An individual or business that purchases the goods or services produced by a business.

The customer is the end goal of businesses, since it is the customer who pays for supply

and creates demand. Businesses will often compete through advertisements or sales in

order to attract a larger customer base.

Importance of Competitor:

To study the market;

To predict and forecast organizations demand and supply;

To formulate strategy;

To increase the market share;

To study the market trend and pattern;

To develop strategy for organizational growth;

When the organization is planning for the diversification and expansion plan;

To study forthcoming trends in the industry;

Understanding the current strategy strengths and weaknesses of a competitor can suggest

opportunities and threats that will merit a response;
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Insight into future competitor strategies may help in predicting upcoming threats and

opportunities.

7*Sources of Information of competitors? (*Very IMP)

Public sources. You may gather information about your competitors frompublic sources such as:

Newspapers, magazines, other published articles and television programs

Advertisements and brochures intended for public distribution

Information freely available on the Internet and online research services

Public filings made with governmental or regulatory authorities, such as SEC

reports, patent filings and litigation records

Analyst reports

Industry surveys or reports

Public presentations given by competitors at trade shows and conferences

Freedom of Information Act (FOIA) and similar requests from governmental or

regulatory agencies

Conversations with customers. Talking with customers is essential. Themore you know about your customers and their businesses, the better you can

meet their needs. However, you shouldn't contact customers for the purpose ofobtaining confidential information about a competitor. Customers may

disclose information about a competitor's products or pricing, so long as the

information is not confidential.


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Hiring third parties to obtain information. Sometimes company's hire third partiesto help us gather competitive intelligence and information about the market for productsand services. Third parties are subject to the same standards of behavior that you abide

by, so you should assume that if we can't do it directly, you can't hire someone else to do

it.

Third parties conducting focus groups or interviews with a competitor's suppliers or

customers generally don't have to identify you as their client, so long as they identify

themselves and their company. While a third party doesn't have to disclose the purpose of

the focus group or interview, the third party shouldn't intentionally misrepresent thepurpose.

A few of your competitors may have informed you that you cannot subscribe for their

products and services. In these cases, you should not hire third parties to access the

competitor's products or services. However, absent knowledge that a competitor would

have barred or prohibited your access, you may engage a third party to subscribe to theproduct or service.

Keep in mind that your company can sometimes be legally responsible for damages or

losses caused by a third party if you authorized or appear to have authorized any illegalactions. This can be the case even if you don't issue direct instructions to the third party,

but know of the third party's likely conduct and "turn a blind eye".

If you engage a third party to gather competitive information, you should have the third

party confirm that it is aware of, and agrees to abide by, applicable laws related to

competitive intelligence.

Giving gifts for confidential or proprietary information. In gatheringcompetitive intelligence, you should not give entertainment, gifts, favors or

gratuities to induce someone to provide you with information that's confidential orproprietary. You may, however, pay third parties for competitive intelligence that's

derived from legitimate sources.

Anonymous packages containing confidential information. If you receiveanonymous submissions of competitive information you shouldn't distribute or

use the information.


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Information marked "Confidential." etc.You shouldn't use or purchaseinformation belonging to a competitor that is marked "confidential" or"proprietary."

Offers to access competitors' products and services. If you're offered

access to a competitor's product or service by a customer, friend or other person,

and you ordinarily would not be able to access the product or service on your

own, you should decline the offer.

8*What is the nature of the data/information required about the Competitor?

major types of information that you are likely to collect or need on your competitors as

follows:

Basic information such as location and core business.

Background information

Financial assessment

Marketing & sales capabilities

Operational details

Miscellaneous aspects

Key news stories / recent events

Strength & weakness assessment

Strategy evaluation

Threat evaluation & outlook

9*Top Export Products of India?(Very IMP)

Exports:

India's chief exports include computer software, agricultural products (cashews, coffee), cottontextiles and clothing (ready-made garments, cotton yarn and textiles), gems and jewellery, cut

diamonds, handicrafts, iron ore, jute products, leather goods, shrimp, tea, and tobacco. The

country also exports industrial goods, such as appliances, electronic products, transportequipment, light machinery as well as chemical and engineering products. India imports rough


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diamonds, cuts them, and exports the finished gems. India's main exports in 2005 included USA

16.7%, UAE 8.5%, China 6.6%, Singapore 5.3%, UK 4.9%, Hong Kong 4.4%. India's services

contributed about 35% of the total exports as of 2010-11.

10*Top Import Products of India?(Very IMP)

Imports:

Capital goods and fuel, each account for about a quarter of Indian imports. Other imports of

India include edible oils, fertilizer, food grains, iron and steel, industrial machinery, professionalinstruments and transportation equipment. Chemicals, precious and semi-precious stones and

non-ferrous metals are the other major imports. India's main import partners included China

7.3%, US 5.6%, Switzerland 4.7%.

11*Define Globalisation? Give strengths/Advantages and Weakness/

Disadvantage? (*Very IMP)

Globalisation is a process where an increased proportion of economic, social and cultural activityis carried out across national borders. The process of globalisation has significant economic,

business and social implications.

Advantages

Resources of different countries are used for producing goods and services they are able

to do most efficiently. Consumers to get much wider variety of products to choose from.

Consumers get the product they want at more competitive prices.

Companies are able to procure input goods and services required at most competitive

prices.

Companies get get access to much wider markets

It promotes understanding and goodwill among different countries.

Businesses and investors get much wider opportunities for investment.

Adverse impact of fluctuations in agricultural productions in one area can be reduced by

pooling of production of different areas.

Disadvantages


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Developed countries can stifle development of undeveloped and under-developed

countries.

Economic depression in one country can trigger adverse reaction across the globe.

It can increase spread of communicable diseases.

Companies face much greater competition. This can put smaller companies, at adisadvantage as they do not have resources to compete at global scale.

12*Why legal Knowledge is Important in international business ?(*Very IMP)

It is essential to know about business law before starting a business, as it will help you operate

your business without the hindrances of ignorance. It is better to seek the expert guidance of anaccountant and an attorney to learn about the latest business laws that will affect your business.

Below is a list of the most important business laws.

Business structure laws: There are different laws for different business entities. Be certain you

learn about the business laws that govern the kind of business entity that you choose to start. Themajor types of businesses are C, S and closed corporations, limited liability companies, and sole

proprietorships.

Zoning Laws: It is essential to know about zoning laws, as certain zones are restricted in certain

areas. It deals with the kind or type of business allowed in certain areas, how the landsurrounding a business is used, signboards, advertisements, and parking.

Licensing Laws: In order to operate a business certain licenses are required and there are some

important business laws you need to know. If a business operates without these licenses, it isillegal and the business may be dissolved or forced to close.

Trademark and Patent Laws: These are laws that deal with ownership; intellectual property

rights, and inventions. They are necessary to protect the business.

Employment Laws: These are laws regarding the hiring and firing of employees, their rights,

compensation, safety, work place discrimination, child labor laws, overtime pay structure,disability laws and unemployment laws.

Tax Laws: This section deals with filing of tax returns and depends on the kind of business entity

and the state the business operates in, sales tax. These include franchise tax, income tax andother state and federal tax requirements of a business. These are very important business lawsyou need to know before starting a business.

Environmental Laws: The government enforces the environmental laws for the discharge of

hazardous waste and the recycling laws pertaining to the business.


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Health Department Permits: This is necessary if your business deals with food products. You

must get health department permits to operate your business.

Fire Department Permits and Air and Water Pollution Control Permits: There are laws thatcertain kinds of business entities must get permits from these departments to operate.

Beware Of LawsThe list above contains basic business laws you need to know before starting a

company. It is necessary to take precautions that you are not violating any law by operating your

business. You must obtain all the necessary permits and licenses from the appropriate authority.

Additional HelpThere are firms that offer their services and products to help make the process ofstarting and running a business very simple and easy. There is also software to make sure your

company remains legitimate.

13*Define Risk ? State 5 Key Risk in Global business/International business?(*Very IMP)

Definition: A probabilityorthreatofdamage,injury,liability, loss, or any othernegative

occurrence that is caused by externalorinternalvulnerabilities, and that may be avoided

through preemptive action.

The risks in international business are:

(1) Strategic Risk

(2) Operational Risk

(3) Political Risk(4) Country Risk

(5) Technological Risk

(6) Environmental Risk(7) Economic Risk

(8) Financial Risk

(9) Terrorism Risk

Strategic Risk: The ability of a firm to make a strategic decision in order to respond to the forcesthat are a source of risk. These forces also impact the competitiveness of a firm. Porter defines

them as: threat of new entrants in the industry, threat of substitute goods and services, intensity

of competition within the industry, bargaining power of suppliers, and bargaining power ofconsumers.

Operational Risk: This is caused by the assets and financial capital that aid in the day-to-day

business operations. The breakdown of machineries, supply and demand of the resources and

products, shortfall of the goods and services, lack of perfect logistic and inventory will lead toinefficiency of production. By controlling costs, unnecessary waste will be reduced, and the
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process improvement may enhance the lead-time, reduce variance and contribute to efficiency in

globalization.

Political Risk: The political actions and instability may make it difficult for companies to operateefficiently in these countries due to negative publicity and impact created by individuals in the

top government. A firm cannot effectively operate to its full capacity in order to maximize profitin such an unstable country's political turbulence. A new and hostile government may replace the

friendly one, and hence expropriate foreign assets.

Country Risk: The culture or the instability of a country may create risks that may make it

difficult for multinational companies to operate safely, effectively, and efficiently. Some of the

country risks come from the governments' policies, economic conditions, security factors, andpolitical conditions. Solving one of these problems without all of the problems (aggregate)

together will not be enough in mitigating the country risk.

Technological Risk: Lack of security in electronic transactions, the cost of developing new

technology, and the fact that these new technology may fail, and when all of these are coupledwith the outdated existing technology, the result may create a dangerous effect in doing business

in the international arena.

Environmental Risk: Air, water, and environmental pollution may affect the health of the

citizens, and lead to public outcry of the citizens. These problems may also lead to damaging thereputation of the companies that do business in that area.

Economic Risk: This comes from the inability of a country to meet its financial obligations. The

changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of

exchange-rate and interest rate make it difficult to conduct international business.

Financial Risk: This area is affected by the currency exchange rate, government flexibility inallowing the firms to repatriate profits or funds outside the country. The devaluation and

inflation will also impact the firm's ability to operate at an efficient capacity and still be stable.

Most countries make it difficult for foreign firms to repatriate funds thus forcing these firms toinvest its funds at a less optimal level. Sometimes, firms' assets are confiscated and that

contributes to financial losses.

Terrorism Risk: These are attacks that may stem from lack of hope; confidence; differences in

culture and religious philosophy, and/or merely hate of companies by citizens of host countries.It leads to potential hostile attitudes, sabotage of foreign companies and/or kidnapping of the

employers and employees. Such frustrating situations make it difficult to operate in thesecountries.


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14* Risks while doing business in RUSSIA? (*Very IMP)

Political and Economic

The Russian Federation is internationally recognised as the legal successor to the Soviet Union

(USSR), which was dissolved on 26 December 1991. Russias post-Soviet Constitution wasapproved by referendum on 12 December 1993. This declares Russia to be "a democratic federal

law-based state with a republican form of government."

The Constitution establishes a bicameral legislature called the Federal Assembly. The lower

house (State Duma) consists of 450 elected deputies while the 174-member upper house(Council of the Federation) is composed of representatives nominated by the 83 regions and

republics that make up the federation. According to the Constitution, the presidency is Russia's

strongest political institution. Elected by universal suffrage, the president is head of state andcommander-in-chief of the armed forces.

Vladimir Putin won the Presidential elections on 4 March 2012 with 64% of the vote and wasinaugurated as President on 7 May 2012. He has appointed the former President, Dmitry

Medvedev, as his Prime Minister.

Russias economy remains in good short term health with consensus expectations for GDP

growth this year of around 3.5 - 4%. The budget is close to balanced and unemployment and

inflation are at historic lows. However, commentators continue to warn that economic and

institutional reforms are needed for the economy to achieve its full potential and reduce itsvulnerability to global commodity price changes.

These reforms include modernising and diversifying the economy; improving investment,

innovation and the business environment, notably by tackling corruption and reducing the role ofthe state; and reorient spending towards healthcare, education and infrastructure. The makeup of

the Governments cabinet will give an indication of how Russia intends to tackle these issues.

Oil and gas are at the heart of the Russian economy, responsible for around 25% of GDP, 50% of

Federal budget revenues and 80% of exports. The Russian real economy has recovered from thedramatic falls of 2009 and the IMF currently predict GDP growth at 4% and 3.9% in 2012 and

2013 respectively. The 2011 World Banks Ease of Doing Business survey ranks Russia 120th

out of 183 countries, indicating significant bureaucratic challenges in the business environment.

For information on the political and economic situation in Russia please visitFCO Country

Profile.

Human Rights

2014 Sochi Winter Olympic games offer extensive commercial opportunities for British

business. However, the site is close to the volatile North Caucasus region, where there arecontinuing reports of grave human rights violations. Amnesty International has reported that

armed groups have carried out attacks in Chechnya, Dagestan, Ingushetia, North Ossetia and
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Kabardino-Balkaria. Amnesty also reports that the efforts of law enforcement agencies to tackle

these groups are responsible for many of the human rights violations including enforced

disappearances, extrajudicial executions, unlawful detentions, torture and other ill-

treatment, with very limited access if any to judicial redress.

Corruption within Russia is widespread (see below). It is important to take note that theUK Bribery Act ensures British nationals involved in bribery will be prosecuted. However

this is part of a more general problem concerning the rule of law, which includes conduct of

law enforcement, access to justice and the gap between laws on paper and their

implementation in practice. According to Freedom House, the right to property is protected

in the Russian constitution, but the enforcement of contracts on property rights remains

uneven. The International Property Rights Index, a composite measure comparing relative

property rights among 70 countries, assigns Russia a score of 3.2 out of the best possible 10.

In particular, Russia scores poorly on judicial independence, physical property rights

protection, and intellectual property rights protection.

Access to justice and the use of the law for political means is a continuing concern. Politicallyactive Russian businessman Mikhail Khodorkovsky was arrested and charged in 2005 for fraud

and had his sentence increased in a further trial in 2010. Amnesty International considersKhodorkovsky a prisoner of conscience and the Foreign Secretary has stated that the second trial

brought into question how the rule of law is applied in Russia.

Russia is a country of concern for human rights issues. See theFCO Annual Human Rights

Report on Russia for more details.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident inthe UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the

conduct of a person who is neither a UK national or resident in the UK or a body incorporated orformed in the UK. In this case it does not matter whether the acts or omissions which form part

of the offence take place in the UK or elsewhere.

Corruption is a major barrier to business in Russia. Business concerned that situation is

deteriorating. Medvedev has made tackling corruption a major part of his modernisation agendabut most Russians are sceptical of short-term change.

Corruption is endemic in Russia. Transparency International ranks Russia 143 out of 182

countries in its Corruption Perceptions Index in. Anti-corruption lobby group Clean

Hands estimate that the level of bribes is as much as half of Russias GDP.

This damages Russias economic development. BNP Paribas estimate that perceptions of

corruption costs Russia the equivalent of 4 per cent of GDP in lost foreign investment each year.

The general public identified it as the biggest block to economic growth in a recent survey by
http://www.freedomhouse.org/report/countries-crossroads-2007/rule-law-19http://fcohrdreport.readandcomment.com/human-rights-in-countries-of-concern/russia/http://fcohrdreport.readandcomment.com/human-rights-in-countries-of-concern/russia/http://fcohrdreport.readandcomment.com/human-rights-in-countries-of-concern/russia/http://cpi.transparency.org/cpi2011/http://www.freedomhouse.org/report/countries-crossroads-2007/rule-law-19http://fcohrdreport.readandcomment.com/human-rights-in-countries-of-concern/russia/http://fcohrdreport.readandcomment.com/human-rights-in-countries-of-concern/russia/http://cpi.transparency.org/cpi2011/


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independent pollsters Levada Centre. The Association of European Business agrees: extras can

account for 20% of the cost of doing business in Russia.

Business representatives report that the situation is deteriorating. IKEA and Daimler have bothbeen caught up in high profile corruption scandals, with IKEA having threatened to suspend

further investment as a consequence. Even the Ministry of Interior estimates that the average sizeof a bribe has increased five-fold in the last two years.

President Medvedev has made the fight against corruption a key element of his ModernisationAgenda. Building on Putins Anti-Corruption Commission, established in 2004, he introduced a

National Plan to Counteract Corruption only a month after taking office. New legislation came

into force on 10 January 2009, requiring civil servants (and spouses) to disclose all income andassets, putting in place a framework for determining conflicts of interest, and simplifying the

Criminal Code to hold corrupt judges to account.

Russia also has international commitments: to the Council of Europes Criminal Law Convention

on Corruption since 1999 and the UNs Counteraction to Corruption (UNCAC) since 2006. TheOECD Working Group on Bribery is considering a phased approach to Russias bid for

membership, contingent on tackling three issues: criminalising foreign bribery; clarifying the

liability of legal persons; extending the statute of limitations.

Despite the flurry of activity, Medvedevs initiatives have had little traction to date. Analystsargue that the problem is not with the legislation but with its implementation. Some officials

apparently agree. Russian Prosecutor-General, Yuri Chaika, claimed that Russian law-enforcers

were only rooting out minor cases of bribery, ignoring large-scale corruption, while many believethe corruption cases brought by the authorities are little more than a pretext to dismiss officials

who have fallen out of favour.

In the absence of effective action by the State, some businesses have adopted their own

approaches. In 2010 at least 40 German companies operating in Russia signed up to an Anti-Corruption Pact, governed by Swiss law. British companies are subject to the UK Anti-Bribery

Act.

Terrorism Threat

There is a high threat from terrorism. Attacks cannot be ruled out and could be indiscriminate,

including in places frequented by expatriates and foreign travellers. Attacks have occurred mostfrequently in Moscow and in some regions of the North Caucasus particularly Dagestan and

Chechnya.

In Moscow, terrorist groups have carried out suicide attacks in public places, including the Metro

system and airports. The risk of terrorism could rise quickly in relation to any escalation ofviolence in the North Caucasus.


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The security situation in the North Caucasus remains unpredictable. Because of the threat

from terrorism and kidnappings, the FCO advises against travel to certain regions of the

North Caucasus

Protective Security Advice

There are protective security issues attached to doing business in Russia; business people need to

be conscious of the following activities of the local security service (FSB):

IT attack against office computers, laptops, PDAs and other electronic devices.

Physical, audio and video surveillance.

Approaches to staff.

Interception of telephone calls (landline and mobile), texts, emails, fax and post.

Searches of offices, homes, vehicles and (especially) hotel rooms (including safes).

Intellectual Property

IP rights are territorial, that is they only give protection in the countries where they are granted or

registered. If you are thinking about trading internationally, then you should consider registeringyour IP rights in your export markets.

15* Risks while doing business in RISK in Africa ?(*Very IMP)

Political and Economic

Political

South Africa is a young, relatively stable democracy, dominated by one political party. TheAfrican National Congress (ANC) has won all four national elections since the start of

democracy in 1994. Jacob Zuma became president in May 2009 following the ANCs victory at

the polls securing 65.9% of the popular vote. He came to power with the support of the tripartite

alliance consisting of the South African Communist Party (SACP), the Congress of South

African Trade Unions (COSATU) and the ANC.

Although the ANC recently won 63% of the vote in the May 2011 Local Government Elections,

the main opposition party, the Democratic Alliance, was deemed the biggest winner as itincreased its support base from 14% in 2006 to 25%. This gives the opposition a solid platform

to intensify their campaign and strengthen their bid for the 2014 national election.


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Despite the ANCs domination of South African politics, diverse interests within and between the

tripartite alliance creates its own checks and balances. Calls from the left for a more radical

approach to economic policy, including greater government intervention to create employment,competes with the views of economic moderates who emphasize the importance of prudent

monetary and fiscal economic policy.

2012 is an important year in South African politics. All three members of the Tripartite Alliance

will be holding internal election and policy conferences. The most important of these is the ANCelective conference which will be held in December, and will see the selection of the ANC

president who will, effectively, lead the country after the 2014 national polls. Incumbent Jacob

Zuma is expected to run for a second term.

Economic Situation

South Africa has recovered from its first recession in 17 years after it contracted by 1.7% in 2009

on the back of the collapse in global trade. Prudent macroeconomic policies and tight banking

regulation limited the impact of the global downturn, and years of fiscal responsibility providedthe space to respond effectively to the crisis. The National Treasury continues to implement a

counter cyclical fiscal policy and forecasts a deficit of 4.8% of GDP for 2011/12 declining to 3%

by 2014/15. But the National Treasury warned in February that the global outlook had once again

deteriorated and that much of Europe, South Africas major trading partner, risked slipping intorecession. This could harm domestic growth prospects. The National Treasury downgraded its

growth forecast for 2012 from 3.4% to 2.7%. It is then expected to recover, reaching 4.2% by

2014.

The economy is diversified, with a strong services sector. Finance, real estate and business

services is the largest industry contributing 21.2% to GDP, General Government Services 16.3%

and Wholesale, retail and motor trade, catering and accommodation 14.5% and manufacturing13.4%. Mining only contributes 5.5% to GDP, but it is important for employment and is asignificant foreign exchange earner.

Unemployment remains an immense challenge with an official figure of 25.2% but the real

figure is probably nearer 40%. Two thirds of all those unemployed are below the age of 35. The

National Treasurys forecasted growth rate falls short of the 6% rate analysts believe the countryneeds to tackle its stubbornly high unemployment levels. The South African Government has

embarked on an ambitious multi-year capital expenditure programme worth approximately 70

billion, to tackle infrastructure bottlenecks in energy, transport and water. It is hoped that theinfrastructure programme will create short term employment and also provide the infrastructure

necessary for the economy to grow at a faster pace in the longer term.

Key challenges for the year ahead will come from chronic skills shortages, low productivity

levels and infrastructure bottlenecks particularly in energy, transport and water which are a resultfrom years of underinvestment.

South Africa has an inflation target band of 3-6%, but this framework is heavily criticized

by the left. Inflation bottomed out at 3.2% in September 2010 and has been climbing slowly


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since (average 5% in 2011). External cost push factors of high fuel and food prices have

taken the blame. Domestic factors of double digit increases in electricity and significantly

above inflation wage increases are expected to add further pressure. The Reserve Bank has

cut the repo rate by 6.5 ppt since December 2008 to 5.5% but could start tightening before

the end of the year.

South Africa is now part of the BRICS grouping and China is South Africas largest trading

partner, although the UK is in the top 5. UK exports in goods to South Africa in 2011 were worth3.3 billion, while imports from South Africa totaled 2.2 billion. Some 600 South African

companies are present in the UK (4 out of 5 South African businesses in Europe are based in the

UK). Both countries are committed to the bilateral government agreement to double trade by2015.

Human Rights

Human rights in South Africa are protected under its 1996 constitution, which has been hailed

as one of the most progressive in the world as it also guarantees economic, social and culturalrights. The country has a strong commitment to human rights and has statutory oversight bodies

such as the South African Human Rights Commission which protects the rights guaranteed under

the Constitution.

South Africa is signatory to various international human rights instruments including theUniversal Declaration of Human Rights; African Charter on Human and Peoples' Rights; the

International Covenant on Economic, Social and Cultural Rights; and the UN declaration on

sexual orientation and gender identity.

However, concerns have been raised over poverty and access to healthcare; domestic violence

and violence against women; discrimination on grounds of sexual orientation or genderpresentation; high rates of violent crime against women and LGBTI individuals; and racism and

xenophobia.

Bribery and Corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in

the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the

conduct of a person who is neither a UK national or resident in the UK or a body incorporated or

formed in the UK. In this case it does not matter whether the acts or omissions which form partof the offence take place in the UK or elsewhere.

In 2011, South Africa was ranked 64th out of 182 countries inTransparency Internationals

corruption perception index (CPI).
http://cpi.transparency.org/cpi2011/results/http://cpi.transparency.org/cpi2011/results/http://cpi.transparency.org/cpi2011/results/http://cpi.transparency.org/cpi2011/results/


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South Africa is a signatory to the OECD Anti-Bribery Convention. The 2010 peer review by

members of the Working Group on Bribery found that South Africa had a modern anti-bribery

legislation, but more needed to be done on enforcement.

Bribery and corruption is not regarded as endemic in South Africa, but there have been reports

and some high level convictions of corruption, in both private and public organisations in SouthAfrica. Any approaches to experiences relating to bribery and corruption in business dealings

should be reported to relevant authorities. It should be noted that UK bribery legislation alsoapplies to UK registered companies and UK nationals committing acts of bribery wholly outside

the UK.

Terrorism Threat

There is an underlying threat from terrorism. Attacks, although unlikely, could be indiscriminate,including in places frequented by expatriates and foreign travelers.

Protective Security Advice

South Africa has a high level of crime and visitors should be vigilant about personal security and

when driving around the country. Please consult FCO travel advice for up-to-date informationabout the situation.

Visitors to South Africa should be diligent about protecting digital data. Spyware, phishing and

malicious software tools are common. One example of this is to send authentic-looking emails to

potential victims. The emails appear to have been sent from a trusted institution such as a bank,requesting recipients to divulge personal information. Once criminals have these details they are

able to steal money from the victims' bank accounts. Diligence coupled with firewalls or spyware

removal tools are recommended.

Intellectual Property

IP rights are territorial, that is they only give protection in the countries where they are granted orregistered. If you are thinking about trading internationally, they you should consider registering

your IP rights in your export markets.

In 2008, South Africa enacted the IPR Intellectual Property Right for Publicly Financed Research

and Development Act. The law clarifies obligations related to the ownership of intellectualproperty rights in the country and applies to aesthetic and functional designs, marks related to

patentable inventions and copyright

16* Qualities of a Global Manager ? (*Very IMP)

Needed Skills for Global Manager

There are basic skills needed by a global manager. Leadership Skills, Mentoring Skills,


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Communication Skills, Presentation Skills, Marketing Skills are compulsory for a global

manager. The global manager should be committed towards deliverables. He should always try

to get good customer satisfaction index and to make customer delight. A global manager shouldbe aware of social, political, technological and economic environment of his business. He should

be aware of the companys internal strengths and weaknesses. He should also be aware of the

external opportunities and threats for his business.

Other Needed Skills

Time management skills, negotiation skills, financial statement analysis, people managementskills are also main contributing factors in making a manager successful. There is lot of need for

developing soft skills and conceptual skills of the managers in these the emerging industries to

take the up coming challenges in Indian industry.

OR

Qualities of Global Managers :

Understand the worldwide business

Learn about many cultures

Work with many types of people

Create cultural synergy

Adapt to living in many cultures

Use cross-cultural skills daily

Treat foreign colleagues as equals

Use foreign assignments as career development

MCE Answers

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