IBMS IBMS definition Decisions needs

IBMS § IBMS definition § Decisions /needs § Decisions to which forms of IBMS § response of country to globalization/ § environmental changes. § FOREX management n Global finance. § Conflict resolution.

IBMS § Why : Reasons/ Needs § Facilitators/ drivers/attractions/compulsions § Inference study § Analysis on functions

Factors § § § Economic reforms WTO/GATT Communication Transportation Technology

DRIVERS § § § Protection MNC impetus Cultural change Urge to expand / Global image Change in empire /country pattern.

Attractions § § § Profit Availability of 4 ps Feasibility Lesser cost high price ROI

Compulsions § § § Domestic limitations Minimized Risk Conglomerate/ parallel possbilities/Diverse.

Patterns § Based on factors/ interest / response/ strategy--- configuration § Local/ INC / TNC / MNC / GNC

Concepts § § Flow IBMS concepts Share Capitalise

Concepts IBMS § EXIM flow / trade flow § Finance flow / investment flow § § § Trade flow Resources flow Benefit of cost Expertise countries participation in flow Techno sharing

Trade flow § § § Increased trade flow Profit / exchange profit Possibility of BE/ PE thro source exploitation Common currencies benefit. World over development of DVGC/ UDC Cultural migration and Reverse cultural shock.

Investment n Trade trends § High by USA /EU more than 10 % 2006 § Low by India /SA less than 1 % § § § INV: World : 12113 bn $ High by USA/ EU : 15. 8 / 43. 1 Low by 1. 4 india/AZ/NZ.

Motives of FDI § § § Country inflows Country outflows FDI capitalization Exploitation thro FDI GDP/ GGDP Income thro FDI

Reasons for FDI § § § Mergers n Acquisitions Weakening currencies of developed country ex: Dollar Secular govnts High P/S n ROI increase.

Mercantilism § § § Mercantilism meaning Theories Mercantilism theory( gold and silver) Based BOT /BOP- Monarch wealth Neo mercantilism (Higher. production – higher exports) § Cost advantage n comparative cost adv. §

Other theories IB § Heckscher ohlin theory § Relative resource endowment (Labour adv vs resouce adv) R a /L a >> R b/L b § Country similarity theory( steffan linder) § Based on DC to Dc / Dvg to DVg / etc. , § IPLC theory -Louis wells § Release- export-prodn increase- foreign prodn. - foreign protectionimport competiton.

IB theories Country size theory Country size – resources together. Country size – High transport costreducing global trade. Vastness of economy and IT trade go together. Michels porters theory.

Forms of IBMS § Non ownership --- Product EXIM , Service EXIM, Licensing or franchise , contract mfg § Turnkey operations, and management control § Ownership : Foreign operations , Assembly subsidiaries, JVs, Strategic alliances, M & As

Export strategy § § § § Decision to export than TNC /GNC a. Foreign business not large enough b. High cost of foreign production c. High Investment risk or political risk d. No long term forecasting /guarantee e. Country or operation not favoring. f. Hence licensing or franchise or direct not.

Import strategy § § § No feasibility for local production High cost of production Local mkt is with infra/ raw materials/labor issues § Orgn. interest in foreign production § More subsidiaries/sops/ tax discounts in foreign soil.

J V types § § JV adoption JV restart or rejuvenation JV creation JV internal ties bkwd integration or fwd integration

Trade policies § guidelines drafted by concerned govts. § To protect domestic environment. § Priorities, assistance , concessions, preferences , norms , rules , regulations , taxes, quotas , etc. ,

Trade policy § Ex: governing bodies § CII/ COC/ FICCI/ ASSOCHAM § § § State owned/ autonomous bodies: STCL ( state trading corporation ltd) ECGC ( Export credit guarantee corporation)

Trade policy objectives § § § § Economic growth Share – global merchandise Employment Simplification- procedures Inter alia ( further liberalization) Neutralizing levies n duties SEZ/ FTZ/ Tech parks etc. ,

Trade agreements § § § WTO GATT NAMA ( non agri mkt access § Regional trade agreements § SAFTA, LAFTA, NAFTA SAARC , BIMST-EC ( bay of bengal § Multi sectoral technical economic co op

§ Examples: CEPA with srilanka § CECA with singapore § § Agreements Misc: § GSTP Global system of trade preferences. § GSP Generalized system of preferences.

§ Governing bodies : § § § DIPP under dept of commerce. FIPB ministry of finance. FIIA foreign investment implementation authority § FDI direct under RBI § SEBI etc. ,

EXPORT PROMOTION § Export promotion measures: to protect n promote domestic exporters r TNC r INC § Financial , § Fiscal § Facilitative § Favors n facilitating

Services to exporters § § Cr finance thro EXIM bank Cr guarantee Cr by ECGC n Commercial banks Pre shipment cr facility – access of cr from mfg stage n to buy raw materials § Suppliers crfacility.

§ § § Project cr facility. SME s schemes Rural grass root promotion (RGR) Funding for overseas exporting Funding for overseas acquisition. Fiscal concession for exports.

§ Target plus support – duty free credit – pro rata based. § Web chat : Facilitator for queries or clouts § for exporters.

Documents for Shipping § § § § Shippers export declaration Shipping bill - Cess /duty if any Commercial invoice Origin certificate Insurance certificate Packing list ATA CARNET Dock receipt n ware house receipt.

Shipping bill needs § GR forms duplicate. § Contents copy qua triplicate ( size , content , qty weight , etc. , ) § Four copies of invoice § Copy of Contract , L/C , purchase order of importer. § Inspection certificate

IEC /RCMC § Import export code no: first legal step in EXIM – DGFT director genl of foreign trade § Registration cum membership certificate number : thro Federation of indian exporters organization FIEO.

FOREX § § § Macro aspects: a. Forex meaning b. Uniform currency codification c. Exchange rate determination d. Dynamics of FX rates e. Fluctuation in Fx rate ( brickbats n bouquets )

FX rate types § § § Inter bank mkts - parties banks Merchant deal mkts – parties dealers Wholesale mkt - size large corporations r inter banks. Retail mkt – size deals less than $1000 OTC mkt : ORGN - direct parties no IMAs Exchange mkt : ORGN -thro exchanges of clearing house.

§ Transactional mkt : Type of deal : Trade or finance exchange § Hedging mkt : Risk cover deal § Speculation : Wait n pegg deal to gain profit.

§ § § Spot mkt : based on shedules: in two days FWD mkt : scheduled for future delivery. Arbitrage mkt : simultaneous exchange Options mkt : Open schedule in call / put Futures mkt : scheduled with stdzd agents LIFFE / TIFFE( london intnl fncl futures exchange ) § SWAPS mkt : Temporary schedules

§ Types of Forex rate : § § § Telegraphic transfer Direct n indirect rates Bid and ask rates Spot n fwd rates Cross rates pound vs dollar thro rupee

Determinants – Ex rates § § § § GDP Inflation rates Interest rates Demand n supply mapping Exim trends Forex reserves Natural resource Vs policies

§ Political system § Market trends.