Some good good topics: Ethics in international business:

Business ethics are the accepted principles of right or wrong governing the conduct of business people.(the accepted principles of right and wrong ) An ethical strategy is a strategy or course of action that does not violate these accepted principles. Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation.as the world has many different ethical systems mostly derived from different religions Different systems can lead to different opinions about what is ethical Ethical issues in international business: 1.Employment Practices When work conditions in a host nation are clearly inferior to those in a multinationals home nation, what standards should be applied? How much divergence is acceptable 2.Human Rights Basic rights are not respected in many nations What is the responsibility of a foreign firm in a country where human rights are not followed 3.Environmental Pollution Environmental regulations (or enforcement) in host nations may be inferior to those at home Multinationals can produce more pollution than at home The tragedy of the commons occurs - The water in Mekong River 4.Corruption Interrnational businesses can, and have, gained economic advantages by making payments to government officials US passed the Foreign Corrupt Practices Act Organization for Economic Cooperation and Development (OECD) adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 5.Social responsibility Multinational firms have power, wealth from control over resources and ability to move production moral philosophers argue that with power comes the responsibility to give something back to the societies that enable them to prosper Why do managers behave in a manner that is unethical? Business ethics are not divorced from personal ethics Businesspeople sometimes do not realize they are behaving unethical because they fail to ask if the decision is ethical The climate in some businesses does not encourage people to think through the ethical consequences of business decisions Pressure to meet unrealistic performance goals that can be attained only by cutting corners or acting in an unethical manner Managers must confront real ethical dilemmas The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear cut Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable

The Roots of Unethical Behavior Personal ethics, organizational culture,decision making processes,unrealistic performance goals, leadership Philosophical approaches to ethics The Friedman Doctrine states that the only social responsibility of business is to increase profits, staying within the law May be defensible in developed countries What if youre in systems that let you destroy a countrys environment or keep people poor? Cultural Relativism suggests that ethics are nothing more than the reflection of a culture (When in Rome, do as the Romans) If a culture supports slavery, is it OK to use slaves? The Righteous Moralist claims that his or her own standards of ethics are the appropriate ones in all countries Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences One problem with utilitarianism is in measuring the benefits, costs, and risks of an action The second problem related to utilitarianism is that it does not explicitly consider justice, so the minority will always be at a disadvantage The philosopher Immanuel Kant (1724-1804) introduced the principle that people should be treated as ends and never purely as means to the ends of others People are not instruments like a machine People have dignity and need to be respected Rights theories recognize that human beings have fundamental rights and privileges, which transcend national boundaries and cultures Rights establish a minimum level of morally acceptable behavior Moral theorists argue that fundamental human rights form the basis for the moral compass that managers should navigate by when making decisions which have an ethical component the United Nations Universal Declaration of Human Rights All human beings are born free and equal in dignity and rights They are endowed with reason and conscience and should act toward one another in a spirit of brotherhood Everyone has the right to work, to free choice of employment, to just and favorable conditions of work, and to protection against unemployment Justice theories focus on the attainment of a just distribution of economic goods and services A just distribution is one that is considered fair and equitable There is no one theory of justice Several theories of justice conflict with each other in important ways John Rawls argues valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation Right ethics to be followed Five things that an international business and its managers can do to make sure ethical issues are considered 1.Favor hiring and promoting people with a well-grounded sense of personal ethics 2.Build an organizational culture that places a high value on ethical behavior

3.Make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric 4.Implement decision-making processes that require people to consider the ethical dimension of business decisions 5. Develop moral courage According to experts, a decision is acceptable on ethical grounds if a businessperson can answer yes to each of these questions: 1.Decision falls within the accepted values or standards that typically apply in the organizational environment (as articulated in a code of ethics or some other corporate statement)? 2.willing to see the decision communicated to all stakeholders affected by it for example, by having it reported in newspapers or on television? 3.Would the people with whom I have a significant personal relationship, such as family members, friends, or even managers in other businesses, approve of the decision? 4.Moral courage enables managers to walk away from a decision that is profitable, but unethical 5.Moral courage gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical 6.Moral courage does not come easy and employees have lost their jobs when acting on this courage 7.Moral courage enables managers to walk away from a decision that is profitable, but unethical 8.Moral courage gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical 9.Moral courage enables managers to walk away from a decision that is profitable, but unethical 10.Moral courage gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical

Strategies of international business

An international strategy is a strategy through which the firm sells its goods or services outside its domestic market" One of the primary reasons for implementing an international strategy (as opposed to a strategy focused on the domestic market) is that international markets yield potential new opportunities.Firms can derive four basic benefits from using international strategies: 1. Firms that operate internationally are able to expand the market for their domestic product offerings by selling those products in international markets. The success of many MNCs that expand is based on their core competencies which are the bed rock of their competitive advantages. Eg: Toyoto, McDonald, Wal-Mart etc. 2.Realize location economies ie; it performs at a location where ecnomic, political, and cultural conditionsincluding relative factor costs are most conducive. by dispersing individual value creation activities to those locations around the globe where they can be performed most efficiently and effectively.Clear vision, a manufacturer and distrubutor of eyewear opened manufacturing facility in Hong KongIBM 's Think pad X31 laptop computer designed in US and made in Thailand and in South Korea. 3.Realize greater cost economies from experience effects by serving an expanded global market from a central location, thereby reducing the costs of value creation. By using experience curve firms reduce production costs and doubles cumulative outputs.Marshushita was able to get its

VHS format accepted as the world standard and to achieve enormous experience curve-based cost economies. Firms have also made cost savings by from learning by doing which tend to be more significant when a technologically complex task is repeated. Companies in their global operations achieve unit costs by producing a large volume of a product and attain economies of scale.Eg.the fixed cost of establishing a new production line to manufacture semiconductor chips now exceeds $1 billion. 4. Earn a greater return by leveraging any valuable skills created within susidiaries and applying them to other operations within the firm's global network may create value. Eg. McDonald finds sources of new ideas in its foreign franchisees. Hewlett-packard has decentralised authority for the design and production of many of its leading ink jet printers. 5.Strategic Alternatives Global Strategy: The firm views the world as single marketplace. Primary goal is to create standardized products Home Replication: The firm uses the core competency or firm-specific advantage it developed at home Transnational Strategy: The firm attempts to combine the benefits of global scale efficiencies with the benefits of local responsiveness Multidomestic Strategy: The firm operates as acollection of relatively independent Subsidiariesfocusing on domestic marke Sources of Competitive Advantage for International Businesses Effficiency: Economies of scale from access to more customers ans markets. Exploit another country's resources -labour, raw material Extend product lifecycle-old products can be sold to lesser developed countries Operational flexibility: shift production as costs, exchange rates etc change over time.Strategic: First mover advantage and only provider of a product to a market. Cross subsidization between countries, Tranfer pricing Risk: Diversify macro economic risks as business life cycles are perfectly corelated among countries. Diversify operational risks (labour problesm, earth quakes, natural clamitiess) Learning: Broaden learning opportunities due to diversity of operating encvironments Reputation crossover customers between markets , reputation brand identification Strategy in production,outsoucing and logitics in IB: 1.In todays global economy, firms must decide 2.where to locate production activities 3.what are their long-term strategic role in the foreign production sites 4 whether to own or outsource foreign production activities activities 5.How to manage a globally dispersed supply chain and 6.what is the usage of Internet-based information technology management of global logistics 7.whether to manage global logistics or outsource Production refers to activities involved in creating a product Logistics refers to the procurement and physical transmission of material through the supply chain, from

suppliers to customers The strategic objectives of the production and logistics function are 1.to lower costs 2.to increase product quality by eliminating defective products from both the supply chain and the manufacturing process The two objectives are interrelated Better quality control helps firms reduce costs because time is not wasted manufacturing poor quality products that cannot be sold re-work and scrap costs are lower .warranty costs and the time used too fix defective products are lower What management tool is used to increase the reliability of product offerings? The Six Sigma quality improvement program aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company. some firms have also promoted specific quality guidelines likeISO 9000 standards. Some of these techniques are : Just-in-Time (JIT), Total Quality Management (TQM), and Flexible Manufacturing System (FMS). While Just-in-Time is mainly aimed at lowering the inventory levels, customer focus, process improvement, to upgrade the overall quality environment at the work place. Flexible manufacturing systems aim at making the. whole production system more market (or customer) oriented, flexible and adaptive. Where should production activities be located? To locate production facilities, firms must consider country factors technological factors and product factors and plant location decisions. Country Factors Optimum economic, political, and cultural conditions Externalities -Skilled labor pools-Supporting industries Formal and informal trade barriersExchange Technological factors Fixed costsMinimum efficient scale manufacturing -Reduce setup times for complex equipmentutilization-Improve quality control perform a variety of operations Flexible Increase machine Flexible machine cells to

Product Factors Two product factors impact location decisions 1.The product's value-to-weight ratio If the value-to-weight ratio is high, it is practical to produce the product in a single location and export it If the value-to-weight ratio is low, there is greater pressure to manufacture the product in multiple locations across the world 2. Whether the product serves universal needs or local need. Outsourcing Production: Make-or-buy decisions are important to a firms manufacturing strategy 1. Lowering Costs A firm should consider manufacturing a part in-house if the firm is efficient at that a production activity. 2. Facilitating Specialized Investments in specialized assets to manufacture a component

3. When proprietary technology is involved, 4. Improving Scheduling ti make planningand coordinationadjacent processes easier The Advantages of outsourcing 1.it gives the firm 1.Greater flexibility to switching orders between suppliers when there are changes in exchange rates and trade barriers 2. Lower Costs in coordinating and controlling additional subunits as there could be lack of incentive associated with internal suppliers 3.to overcome the difficulties with setting appropriate transfer prices 6. can help firms capture more orders from suppliers countries Benefits of manufacturing components in-house 1when highly specialized assets are involved 2.when vertical integration is necessary for protecting proprietary technology 3.when the firm is more efficient than external suppliers at performing a particular activity 4.Some firms have tried to use strategic alliances to capture some of the benefits of vertical integration,

International logistics:
In International operations, the goods can be out of exporter's control for longer period of time,more documentation is required, packaging may be more costly, shipping insurance is more costly. The transportation alternatives include ocean shipping and containerisation as well as airfreight, air express and parcel post. The basic activities involved in the flow of goods are:transportation, warehousing, and inventories, all of which, as we have emphasised, should be integrated in a system's approach. From the overall cost perspective, all these activities are inter-related. Efficient logistics can have a major impact upon a firm's bottom line.A just-in-time (JIT) economizes on inventory holding costs by having materials arrive just in time to enter the production process, It can help firms spot defective parts, The Role of Information Technology and the Internet Firms increasingly use electronic data interchange (EDI) to coordinate the flow of materials into manufacturing,through manufacturing, and out to customersEDI systems require computer links between a firm, its suppliers, and its shippers; -To place orders with suppliers-To register parts leaving a supplier -To track them as they travel toward a manufacturingplant-To register their arrival

Short note answers for questions from five year question papers:
Define International business refers to business activities that involve the transfer of resources, goods, services, knowledge, skills, or information across national boundries. International business is a term used to collectively describe all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more nations.

What is Globalization? Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world What is acculturation? It is a process in which members of one cultural group adopt the beliefs and behaviors of another group. Although acculturation is usually in the direction of a minority group adopting habits and language patterns of the dominant group, accult uration can be reciprocal--that is, the dominant group also adopts patterns typical of the minority group. Assimilation of one cultural group into another may be evidenced by changes in language preference, adoption of common attitudes and values, members hip in common social groups and institutions, and loss of separate political or ethnic identification. What is absolute advantage? In the theory of international trade, a country or firm has an absolute advantage if it can produce a product (good or service) more 'efficiently' (cheaply) than others. First suggested by the UK economist Adam Smith as an extension of his division of labour doctrine What are NTB?.Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are enacted. What is vertical integration? Vertical integration is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that companys or entitys power in the marketplace. wha is strategic alliance? A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property.
What are horizontal and vertical FDI

Horizontal FDI is FDI in the same industry abroad as that in which a firm operates at home.Vertical integration is the expansion of a firm into a stage of the production process other than that of the original business. A company such as BHP Billiton which makes steel can integrate vertically by expanding its activities upstream, or backward, toward the source of raw materials such as iron, coal and limestone production, or by expanding downstream, or forward, toward the sale of the end product as BHP Billiton does with its subsidiary Australian Iron and Steel Co. What is common law system?

Common law is a legal system that is largely formed by the decisions previously made by courts and not imposed by legislatures or other government officials. The reasoning used to interpret this type of law is known as case-based reasoning. It is a strict, principle-based reasoning that uses the circumstances of a case to evaluate the laws that are applicable. Decisions that were made about similar cases are valuable, and the case in question is evaluated on the basis of past cases. . What is civil law? civil law, a modern legal system based upon Roman law, It is based on written legal codes, a hallmark of the Roman legal system, in which disputes were settled by reference to a written legal code arrived at through legislation, edicts, and the like; The civil law judge is bound by the provisions of the written law. The traditional civil law decision states the applicable provision from the code or from a relevant statute, and the judgment is based upon that provision. free rider" problemA free rider is a person who enjoys the benefits of goods without contributing to the full cost or partial cost of providing them. This problem is now faced by European union with regard to PIGS. Portugal,Ireland,Greece and Spain. Fators influencing the organizational structure of MNCs: the following five factors are the most common influence MNCs: size, life cycle, strategy, environment, and technology What is Foreign exchange risk? FX risk is the exposure to potential financial losses due to devaluation of the foreign currency against the U.S. dollar. Obviously, this exposure can be avoided by insisting on selling only in U.S. dollars. However, such an approach may result in losing export opportunities to competitors who are willing to accommodate their foreign buyers by selling in their local currencies. This approach could also result in the non-payment by a foreign buyer who may find it impossible to meet U.S. dollar-denominated payment obligations due to the devaluation of the local currency against the U.S. dollar. Transaction exposure Risk to a firm with known future cash flows in a foreign currency that arises from possible changes in the exchange rate. Translation exposure Risk of adverse effects on a firm's financial statements that may arise from changes in exchange rates. Foreign exchange exposure:The risk of loss stemming from exposure to adverse foreign exchange rate movements Defne collectivism and individualism. Collectivism means the subjugation of the individual to a group -- whether to a race, class or state does not matter. Collectivism holds that man must be chained to collective action and collective thought for the sake of what is called 'the common good'. Collectivism holds that the group---the nation, the community, the proletariat, the race, etc.---is the primary unit of reality and the ultimate standard of value. Asian collectivist cultures like China (Hong Kong 37th rank), view other companies with less collectivistic philosophy as cold and not supportive. Collectivistic cultures have a great emphasize on groups and think more in terms of we. Harmony and loyalty within a company is very important and should always be maintained and confrontation should be avoided.

"Individualism stands for a society in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family on. For example, Germany can be considered as individualistic with a relatively high score (67) on the scale of Hofstede compared to a country like Guatemala where they have strong collectivism (6 on the scale). Mention three anti dumping measures.In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. Selling same product at different prices, at home and abroad It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition. Objectives of dumping.Seasonal - when exporter has a bumper crop Cyclical - when exporter has a slump at home Predatory - intended to eliminate competitors Persistent - goes on and on. Types of dumping: Sporadic Dumping: Occasional sale of a commodity at below cost in order to unload an unforeseen and temporary surplus of the commodity without having to reduce domestic prices. Predatory Dumping: Temporary sale of a commodity at below cost or a lower price abroad in order to derive foreign producers out of business, after which prices are raised to take advantage of the monopoly power abroad. Persistent Dumping: Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals). For international price discrimination to take place, conditions must be met: Domestic and foreign markets must be separated. Demand elasticity of the product must be different in two markets. The good can be sold with a lower price where the demand elasticity is high; and with a higher price where demand elasticity is low. What is social mobility? Social mobility or intergenerational mobility as economists prefer to call it measures the degree to which peoples social status changes between generations.Refers to the movement of individuals or groups in social position over time. It may refer to classes, ethnic groups, or entire nations, An obvious example would be the son or daughter of up unskilled worker who is successful at high school, goes to college, qualifies as a computer software engineer and make a success of his/her life and earns vastly more than his/her parents did.In the traditional caste system of India, social position is determined by the historical rank, or caste, of the family and can rarely be changed. Social mobility is very limited in areas with rigid social structures, as marriage is often forbidden or frowned upon between people with widely different social standing. what is multipoint competion? Multipoint competition exists when firms compete with each other (or could potentially compete with each other) in more than one market.Multipoint competition refers to situations in which firms meet the same rivals in many markets, which may lead to a reduction of competitive pressure. Indeed, a high number of multipoint contacts between two rivals provides many footholds in each others strategic territories called spheres of influence - increasing the deterrents to attack.,This situation is known under Mutual Forbearance (MF) Hypothesis, which proposes that firms wich are multipoint competitors will compete less intensively with one another.Multipoint competitors can develop a tacit agreement by which each firm recognises the most important territories of their competitors since all territories served by a firm do not

necessarily have the same strategic character. What is eclectic paradigm? The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-Framework In order for a direct investment in a foreign country to be beneficial, the following advantages must be present: 1. Product or company specific advantages, such as a comparative advantage. 2. Location specific advantages - where the company derives greater benefit through a foreign establishment. 3. Market internalization - meaning, it is better for the company to exploit a foreign opportunity itself, rather than through an agreement with a foreign firm. Definition of 'Purchasing Power Parity - PPP' An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. The relative version of PPP is calculated as: Where: "S" represents exchange rate of currency 1 to currency 2 "P1" represents the cost of good "x" in currency 1 "P2" represents the cost of good "x" in currency 2 the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency. For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.) Mercantilism: An economic philosophy of the 16th and 17th centuries that international commerce should primarily serve to increase a country's financial wealth, especially of gold and foreign currency. It emphasised limitation of imports from other nations in order to improve tax revenues by exporting more goods. A franchise is a method by which the owner of the business, the franchisor, confers on investors, the franchisees, the right to operate the business in an agreed manner and style in return for ongoing fees. The agreement is governed by a contract, the Franchise agreement, which runs for a defined period of time, generally renewable and ranging from five to 20 years. Economic exposure: Currency exchange rate fluctuations due to economic and political turmoils in a country like civil war affect a firm's competitive position, the value of its assets, and its operating cash flows. If a company strikes a business deal with a small foreign nation and that nation becomes embroiled in a civil war there is then a high probability that the country will not honour its debt obligation to the business. Leontief paradox: Professor Wassily W. Leontief in 1954 reached a paradoxical conclusion that the USthe most capital abundant country in the world by any criterionexported laborintensive commodities and imported capital- intensive commodities. This result has come to be known as the Leontief Paradox. [para = contrary to, dox = opinion]

customer mobility should be built on the assumption that consumers are mature citizens who freely choose products and services and should therefore take full responsibility for their actions. organizational structure is the pattern or arrangement of jobs and groups of jobs within an organization. This pattern pertains to both reporting and operational relationships, provided they have some degree of permanence. The individual elements of an organization structure typically include 1) departments or divisions; 2) management hierarchy; 3) rules, procedures, and goals; and 4) temporary building blocks such as task forces or committees. BOOT: (build, own, operate, transfer) is a public-private partnership (PPP) project model in which a private organization conducts a large development project under contract to a publicsector partner, such as a government agency. A BOOT project is often seen as a way to develop a large public infrastructure project with private funding Reverse Culture Shock (a.k.a. "Re-entry Shock", or "own culture shock" may take place returning to one's home culture after growing accustomed to a new one can produce the same effects of external culture shock. This results from the psychosomatic and psychological consequences of the readjustment process to the primary culture. The affected person often finds this more surprising and difficult to deal with than the original culture shock. Definition of acculturation- socialization: the adoption of the behaviour patterns of the surrounding culture; "the socialization of children to the norms of their culture" all the knowledge and values shared by a society. the process of assimilating new ideas into an existing cognitive structure. Cross cultural management: Is manage people across cultures. The effective interaction and understanding of people who represent different cultures. When person from one cultural background meets interacts with, understands and deals with person from other cultural background. That is cross-cultural management. Some people are in favour of the world is converging, all things are going to be same. They are right. Some people are arguing still the world has divergence. They are also right. we learn how to manage both the convergence and divergence Transaction risk: Exchange rate fluctuations affect a nation's trading relationships with other nations. A higher currency makes a country's exports more expensive and imports cheaper in foreign markets; a lower currency makes a country's exports cheaper and its imports more expensive in foreign markets. Also called accounting Risk, the degree to which a firm's financial statements are exposed to exchange rate fluctuations. Exchange rates usually change between quarterly financial statements, causing significant variances between the reported figures. Turnkey project: It is a contract under which a firm agrees to fully design, construct and equip a manufacturing/ business/ service facility and turn the project over to the purchaser when it is ready for operation for a remuneration Tax haven: a country or independent region where taxes are low. Tax Haven or the place in which certain taxes are imposed either at a low rate or not at all is the best possible way out for those interested in reducing their tax rates. Bermuda is the first Tax Haven .Tax Haven in its truest sense was Switzerland.

Technology Transfer Activities include: processing and evaluating invention disclosures; filing for patents; technology marketing; licensing; protecting intellectual property arising from research activity; and assisting in creating new businesses and promoting the success of existing firms. The result of these activities will be new products, more high-quality jobs, and an expanded economy. Commercialization is one effective method of transferring technologies. Establishing a technology's prospects for commercial success depends largely on five factors: 1.Technical Development 2.Regulatory Clearance: 3. Manufacturing Requirements: 4. Market Development: 5. Financial Feasibility: What is ethnocentrism? Ethnocentrism is defined as the viewpoint that "one's own group is the center of everything," against which all other groups are judged. Ethnocentrism often entails the belief that one's own race or ethnic group is the most important and/or that some or all aspects of its culture are superior to those of other groups.The ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture, especially with concern to language, behavior, customs, and religion What is an international accounting? INTERNATIONAL ACCOUNTING is the international aspects of accounting, including such matters as accounting principles and reporting practices in different countries and their classification; patterns of accounting development; international and regional harmonization, foreign currency translation; foreign exchange risk; international comparisons of consolidation accounting and inflation accounting; accounting in developing countries; accounting in communist countries; performance evaluation of foreign subsidiaries. What do you understand by market imperfections? Market imperfection can be defined as anything that interferes with trade] This includes two dimensions of imperfections. First, imperfections cause a rational market participant to deviate from holding the market portfolio. Second, imperfections cause a rational market participant to deviate from his preferred risk level. Market imperfections generate costs which interfere with trades that rational individuals make (or would make in the absence of the imperfection What is Confucian dynamism? Michael Bond discovered a new dimension and labeled it Confucian work dynamism, to emphasize the importance of practical ethics based on the following principles: (1) the permanence of society is contingent on imbalanced relationships 2) virtuous behavior toward others(3) the family is the foundation and archetype of all social organizations; ; (4) virtues in life involve acquiring skills and education, working hard, being thrifty, having a sense of shame, and being patient and persevering; and (5) individuals should have a sense of commitment and organizational identity and loyalty. A transnational corporation (TNC) defined by UNCTAD, is generally regarded as an enterprise comprising entities in more than one country which operate under a system of decision-making that permits coherent policies and a common strategy. The entities are so linked, by ownership or otherwise, that one or more of them may be able to exercise a significant influence over the others and, in particular, to share knowledge, resources and responsibilities with the others.