This document provides information about an assignment for an International Business course. It includes instructions to email or call a provided contact for fully solved assignments. It then lists 5 questions related to topics in international trade, multinational corporations, foreign direct investment, and managing individual commitment in MNEs. Students are instructed to attempt all questions and submit the completed assignment by October 31st, 2014.

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ASSIGNMENT
Course Code : MS-97
Course Title : International Business
AssignmentCode : 97/TMA/SEM-II/2014
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment on or before 31st October, 2014 to the
coordinator of your study centre.
Q. 1. Selectany two trade theoriesandanalyze the applicabilityofthese theoriesintoday’s context.
Answer:International business began with international trade operations, facilitated by the lasses faire
in the world economy. It improved the well-being of many nations, and the imposition of trade barriers
reduced the gains from trade, giving rise to the search for alternate avenues to exporting. The latter
resulted in the established of subsidiaries in foreign countries through FDI. In this context, it is pertinent
to understand the determinants of and the effects of international trade and FDI on the trade trading
partners, international operations of multinationals and the economies of the home and hose countries.
Several theories have been formulated, from time to time which form the bases of international trade
and FDI.

2. Theory of Absolute CostAdvantage: The theoryof
Q. 2.Describe the main features of MNCs. Critically evaluate the relationship between MNCs and host
countries.
Answer:Multinational Companies (MNCs) are also known as Transnational Corporations (TNCs).There is,
however, according to some, a difference between the MNCs and the TNCs. According to some experts,
MNCs produce commodities/products for domestic consumption of the countriesin which they operate.
The TNCs, on the other hand, concentrate on producing products/commodities to meet the markets of
third countries. This difference is not normally made while referring to either MNCs or TNCs. Therefore,
an MNC can also be calledTNC.Inthis paperwe
Q. 3. Analyse the issuesand objectivesonthe code of conduct of Transnational Corporations (TNCs).
Answer:Issues Involved in the Negotiations:The main concern of the developed countries in the code
negotiations was the establishment of a regime of minimum standards for the treatment of
transnational corporations. Increased reliance on foreign investment flows was promoted consistently
by the developed countries as a means to achieving efficient allocation of resources worldwide and
contributing to economic growth. Some developed countries made promotion of foreign investment
through the transnational corporations as a major component of there foreign economic policies. In
view of the emphasis in the promotion of the transnational corporations, these countries argued for a
favourable climate forforeigninvestments
Q. 4. Discuss the impact of FDI inflows in developing countries and the implications of FDI on National
Income and employmentinthe host economies.
Answer:FDI inflows, generally, have important direct and indirect implications for the national income
(output), employment, balance of payments, technological capability, market structure, and other
parameters of development in the host economies.FDIs comprise inflow of productive resources, such
as, capital and foreign exchange are, generally, accompanied by flow of entrepreneurial and managerial
skills and technology. FDIs complement the domestic savings in financing the capital formation in the
host country. Thus FDIs contribute to the generation of output and employment. The foreign exchange
inflowaugmentsthe supplyof foreignexchange,
Q. 5. Discuss how the MNEs try to develop and maintain commitment of individual managers. Give
examples.
Answer: There are two related processes involved in the growth of a domestic firm to an international
one. These are: geographic dispersion of corporate resources and corresponding changes in

3. organizational development. One can classify the evolutionary pattern of MNEs from purely domestic
company to a transnational corporation into five types. A company gets into foreign MARKETS by
starting export sales to other countries. The growth in international business evolves from the export
departmenttothe international division,world-wideprodu
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