Dixon Inc. is a U.S. pencil company that faced increasing competition from Chinese pencil imports beginning in the 1990s. By 1999, China supplied 50% of the U.S. pencil market, forcing Dixon to shift production overseas. Dixon first lobbied the U.S. government to impose anti-dumping duties on Chinese pencils in 1995. It later opened plants in Mexico and China to take advantage of lower costs. By 2003, Dixon had closed its last U.S. plant and expanded production in Mexico and China.

1. MAY-2006 TOTAL MARKS-100(3 HOURS) N.N.: 1. Question No. 1 is compulsory.2. Attempt any four questions
out
of rest.3. All questions carry equal marks.4. Draw suitable diagrams to support your answers.1. Analyse the case
given below and answer the questions using the concepts of International Business.DIXON INC.Dixon Inc. is one of
the oldest companies in U.S. with a flagship product of pencil which was introducedin 1913. The turnover in 1995
was U.S.$ 100 million. The Americans bought an estimated 4.2 billion pencils in 1999 which was 53% higher than
1991; but an increasing proportion of these came from China.China entered the American pencil market in 1991 and
by 1994 had 20% share of American market. In1995 U.S. government was persuaded by Dixon to levy Anti
Dumping Duty on Chinese imports of penciland the imports temporarily fell, but the Chinese kept on making better
and cheaper pencils and by 1997achieved the market share levels of
1994. The Chinese were aggressive in marketing pencils in U.S. and toadd to the problems exports of
Dixon Inc. also fell drastically by about 200 million units in 1999 ascompared to 1991 figures.By 1999, U .S.
imported 50% of
its requirement of pencils from China which forced the U.S. Governmentto impose a whooping 53% Anti Dumping
Duty in 2000 on Chinese pencils. However, it did not givemajor boost to Dixon as expected.Dixon Inc. during the
decade tried to experiment with cheaper ways to make pencils. The company shiftedfrom California incense cedar
wood (which was expensive raw material) to Indonesia jelutong wood.Dixon also started buying erasers for its
pencils from a Korean supplier instead of traditional local source.During all this time it not only lost its share
to cheap imports but was also losing money and itstrategically started a lie new manufacturing unit in Mexico a
NAFTA partner. The original idea was tosupplement the U.S. set up but with a view to be more aggressive it
expanded Mexico's unit and startedreducing the production of its home base, U.S.In the year 2001
,
Dixon created a wholly owned subsidiary in China to manufacture wooden slats - a processed raw material for
manufacturing pencils. These slats were exported by Dixon from China toMexico where they were turned into
pencils. The graphite lead for pencils is still made in USA; buterasers arc shipped from Korea. .The Chinese
subsidiary of Dixon also produces and sells its products internationally. By 2003 Dixon's performance registered a
significant improvement but, the company decided to be aggressive in
International business and it shut down its U.S manufacturing base at Sandusky, Ohio and expanded it production in
Mexico and have also started manufacturing pencils from it's China venture.Questions:a) Why do you think that the
Chinese apparently have a cost advantage in the production of
pencils? b).
Do
you think that lobbying in the U.S. government to imposing antidumping duties on imports of pencils from China is
a good way to protect U.S. jobs? Who benefits most from such duties? Who loses?c) Why has Dixon become a.
multinational company? What are the economic benefits to Dixon
of
goingglobal?d) Why does it not simply import finished pencils from China to the United States, instead of
makingthose pencils in Mexico?e). What is the role of tariff and non-tariff barrier in the whole process?2. State the
objectives of International Business. Give an overview of various methods of doingInternational Business with
suitable practical examples3. State the advantages and disadvantages of FDI to the home and host country? List out
the problemsfaced by MNEs in the home country and the problems faced by host country due to MNEs.4. Risks arc
inevitable in International Business. The success is totally depending on the techniques of handling, risks at every
stage. Justify with examples.5. WTO was formed to foster International Trade. State principle objectives of WTO
and list at least 10activities monitored by WTO. Discuss the impact of WTO on India find other developing nations

2. withspecial reference to Hong Kong Ministerial Conference.6.What is the meaning of globalization? Categorize
manufacturing and service sectors of India havingglobal competitive advantages.7. Write short notes on:-a.Explain
salient features of any two Regional Trade Agreements (RTA). b.Discuss general characteristics
of Intellectual Property Rights (IPR).
8. Write short notes on:-a . D a v i d R i c a r d o ' s T w o C o u n t r y - T w o P r o d u c t
Theory, b.Purchasing Power Parity Theory