1.

The Big Mac Index is also known as ___________________________________ Explain

the term in a few sentences.

The Big Mac Index is also Known as Purchasing Power Parity (PPP). The Purchasing Power
Parity exchange rate is the rate at which the currency of one country would have to be
converted into that of another country to buy the same amount of goods and service in
each country. Examining the difference between the PPT exchange rate and the market
exchange rate help us understand how trade relations might be affected. This would give an
indication of the purchasing power.

Taking the idea of PPP from economics, any changes in exchange rates between nations
would be seen in the change in price of a basket of goods, which remains constant across
borders.

The Big Mac index suggests that, in theory, changes in exchange rates
between currencies should affect the price that consumers pay for a Big Mac in a particular
nation, replacing the "basket" with the popular hamburger.

To explain this further, if the price of a Big Mac is Rs 75 in India and $ 1 in the US. Then,
logically, the exchange rate should be 75 per USD. If the price of the USD goes up, then the
Big Mac Index would indicate that the USD is over-valued and conversely too.

The theory is quite imperfect, because the price of the Big Mac is fixed by the McDonalds,
and their ricing is impacted by a host of factors, and the prices in each region might change
and all of these prices need not have any link to the exchange rates prevailing. The Cost in a
labour and resource rich India would be much lower than the US, for instance.

2. What is GDP? What effect does the country’s population have on the GDP, explain in a
few sentences
The gross domestic product (GDP) is one of the primary indicators used to gauge the health
of a country's economy. It represents the total value of all goods and services produced over
a specific time period, often referred to as the size of the economy. Usually, GDP is
expressed as a comparison to the previous quarter or year.

For example, if the Q3 2018 GDP of a country is up 3%, the economy of that country has
grown by 3% over the third quarter. While quarterly growth rates are a periodic measure of
how the economy is faring, annual GDP figures are often considered the benchmark for the
size of the economy

In economics, labour is a factor of production and with an increase in the labour force, due
to population growth, the total output may increase causing the GDP to increase. The wages
for labour may also decrease due to an abundance of labour, this would allow the cost of
production to decrease. Thus the producer may choose to employ more people and
increase production.

However, the increase in GDP would be a long run effect as people are not considered part
of the labour force until the age of approximately 18. The economy may not have enough
available jobs for the population, which would cause the unemployment rate to increase.
Meaning an increase in population does not always result in growth in GDP

GDP and Population: The more the people live in a region, the more productive action they
would perform, leading to a higher GDP. This makes logical sense. However, what would be
more interesting, would be to check the GDP per capita. Statistics say countries like our own
and China which together account for over 37 % of the world`s population, do not have the
largest GDP. Although things are changing now. The European region and the US with a far
lesser population density have a higher GDP than the more populous regions. This is
because of the level of economic activity. And, a large portion of the GDP is produced by
companies, than individuals. That means, the US companies are far more productive in
creating economic value than, say, an Indian company on an average. This explains the
difference.
Hence, the GDP per capita can be a tempting measure to assess the productivity of a nation,
but not necessarily the best way.

3. Name two countries each of High and Low Context Societies a.____________ and
b.____________. What are the three typical characteristics of these societies
High Context Societies: Africa, China, India & Arab
Low Context Societies: German, America, Australia & UK

# Characteristics High Context Societies Low Context Societies

Relationships build slowly and depend Relationships begin and end quickly.
on trust. Productivity depends on Productivity depends on procedures
relationships and the group process. An and paying attention to the goal. The
1 Association
individual’s identity is rooted in groups identity of individuals is rooted in
(family, culture, work). Social structure themselves and their accomplishments.
and authority are centralized Social structure is decentralized
Nonverbal elements such as voice tone,
Nonverbal elements are not significant.
gestures, facial expression and eye
Verbal messages are explicit, and
movement are significant. Verbal
communication is seen as a way of
messages are indirect, and
exchanging information, ideas and
communication is seen as an art form
2 Interaction opinions. Disagreement is
or way of engaging someone.
depersonalized; the focus is on rational
Disagreement is personalized, and a
(not personal) solutions. An individual
person is sensitive to conflict expressed
can be explicit about another person’s
in someone else’s nonverbal
bothersome behaviour
communication
 Space is compartmentalized. Privacy is
Space is communal. People stand close
3 Territoriality important, so people stand farther
to each other and share the same space
apart
Events and tasks are scheduled and to
Everything has its own time, and time is
be done at particular times. Change is
not easily scheduled. Change is slow,
4 Temporality fast, and time is a commodity to be
and time is a process that belongs to
spent or saved. One’s time is one’s
others and nature
own.
Multiple sources of information are
One source of information is used.
used. Thinking proceeds from general
Thinking proceeds from specific to
to specific. Learning occurs by
general. Learning occurs by following
5 Learning observing others as they model or
the explicit directions and explanations
demonstrate and then practicing.
of others. Individual orientation is
Groups are preferred, and accuracy is
preferred, and speed is valued
valued

4. The Global Business is right in your backyard. Do you agree to this statement? Elaborate
in a few sentences

The idea of globalization has many people worried about their economic and
employment future. After all, globalization means competition with everyone on earth and
those who have favourable trade, regulatory or tax environments enjoy an advantage.
Maybe fear a race to the bottom in wages and prices because there is always someone who
may undercut.

But globalization presents extraordinary opportunities. Because of the common bonds

all humans share, globalization provides with an opportunity to take your product or service
to new markets, and introduce varied cultures and backgrounds to the value have to offer.

Globalization means we are operating on an international scale. Even as a small

business, owner thinking about how to deliver product or service in a global marketplace.
 Globalisation is the widening and deepening of interdependent relationships among
people from different nations.” This results in elimination of barriers to the movement of
goods, services, manpower or for that matter any other resource. This enables a company
operating out of any remote corner of the world to operate in any other corner or space.

“A “Global Business” is a company that operates facilities (such as factories and

distribution centers) in many countries around the world. This contrasts with international
business, where in the company manufactures in the base or home country but sells across
the globe.

when it comes to buying a commodity like a Mobile phone, we reach out to a global
business model of a company. Say a company like Xiomi, which is a Chinese company,
makes a lot of their equipment right in India and is marketed here as well. This is a classic
relatable case of a global business.

In pre-Internet days, if you had a product or service to offer, you couldn't sell it to
anyone across the globe even if it was of great value. Now, you can, thanks to the Internet
and communication technology.
The advantage of reaching out globally applies to both tangible and intangible
products, but the latter has far greater edge over the other because the delivery of the item
happens instantly upon realization of payment.
There are other advantages as well. An intangible item like an e-learning course or
an e-book can have any number of consumers. In other words, create one e-book and sell it
to hundreds or thousands of readers. This one-to-many advantage of intangible items is the
principal reason why dotcom startups are valued more than pure brick-n-mortar ones.
This one-to-many advantage of intangible items is the principal reason why dotcom
startups are valued more than pure brick-n-mortar ones. No wonder Facebook paid a
whopping $19 billion to acquire WhatsApp. We could go a step further to study the start=up
ecology, especially in a tech-city like Bangalore. There are quite a few start-ups that have
started in a small way, but with global ambitions and in a position to execute their business
plan. The case of Red-bus is a classic case. They started off with seed funding purely from its
promoters, and with a target market being the commuting community of Bangalore. Now, it
is a well-funded enterprise, in a position to replicate their model globally, wherever there is
a community wishing to make a travel inter-city.

5. With India in the 90s as an example, what is the effect of “closed economy” on a
country? In your business opinion why is North Korea negotiated peace.
A closed economy is one that has no trade activity with outside economies. The
closed economy is self-sufficient, which means no imports come into the country and no
exports leave the country. The purpose of a closed economy is to provide domestic
consumers with everything they need from within the country's borders.
A closed economy is a self-contained economic unit that has no business or trading
relations with anyone outside of that unit. Usually referring to a nation or area of common
currency (but can, in general, refer to any system of self-reliance), the relatively closed
system would be characterized by a small amount of exposure to external markets, as
opposed to the relatively open economy. The latter allows large movements of goods and
services, intellectual property, financial capital, and foreign exchange across its borders.
Policy tools such as import and import quota, tariffs, monetary or fiscal policy, exchange
rate controls, and controls on capital are some of the means whereby a national
government might try to influence the degree of openness of its economy. However, no
economy is perfectly open or closed.
The 2018—19 Korean peace process was initiated in order to resolve the long-term
Korean conflict and denuclearize the Korean peninsula. A series of summits were held
between North Korea's Kim Jong-un, South Korea's Moon Jae-in, and Donald Trump of the
United States. In parallel to this, a number of cultural exchanges began.
President Trump and North Korean leader Kim Jong Un unexpectedly cut short their
second summit Thursday after failing to come to an agreement to dismantle Pyongyang’s
nuclear weapons and provide sanctions relief. USIP’s Ambassador Joseph Yun and Frank
Aum explain what happened in Hanoi and what comes next for U.S.-North Korea nuclear
diplomacy.
The South and the North shall uphold and endeavor actively to realize the June 15
Declaration. The South and the North have agreed to resolve the issue of unification on
their own initiative and according to the spirit of "by-the-Korean-people-themselves." The
South and the North will work out ways to commemorate the June 15 anniversary of the
announcement of the South-North Joint Declaration to reflect the common will to faithfully
carry it out. 2. The South and the North have agreed to firmly transform inter-Korean
relations into ties of mutual respect and trust, transcending the differences in ideology and
systems. The South and the North have agreed not to interfere in the internal affairs of the
other and agreed to resolve inter-Korean issues in the spirit of reconciliation, cooperation
and reunification. The South and the North have agreed to overhaul their respective
legislative and institutional apparatuses in a bid to develop inter-Korean relations in a
reunification-oriented direction. The South and the North have agreed to proactively pursue
dialogue and contacts in various areas, including the legislatures of the two Koreas, in order
to resolve matters concerning the expansion and advancement of inter-Korean relations in a
way that meets the aspirations of the entire Korean people.

6. Name typical three modes of entry in International Business. Explain any two
Typical Modes of entry in International Business are as follow;
a. Exporting
b. Licensing and Franchising
c. Partnering and Strategic Alliance
d. Acquisition
e. Greenfield Venture (Launch of a new, wholly owned subsidiary)
Exporting:
Exporting is a typically the easiest way to enter an international market, and therefore most
firms begin their international expansion using this model of entry. Exporting is the sale of
products and services in foreign countries that are sourced from the home country. The
advantage of this mode of entry is that firms avoid the expense of establishing operations in
the new country. Firms must, however, have a way to distribute and market their products
in the new country, which they typically do through contractual agreements with a local
company or distributor. When exporting, the firm must give thought to labeling, packaging,
and pricing the offering appropriately for the market. In terms of marketing and promotion,
the firm will need to let potential buyers know of its offerings, be it through advertising,
trade shows, or a local sales force.

Acquisition
An acquisition is a transaction in which a firm gains control of another firm by purchasing its
stock, exchanging the stock for its own, or, in the case of a private firm, paying the owners a
purchase price. In our increasingly flat world, cross-border acquisitions have risen
dramatically. In recent years, cross-border acquisitions have made up over 60 percent of all
acquisitions completed worldwide. Acquisitions are appealing because they give the
company quick, established access to a new market. However, they are expensive, which in
the past had put them out of reach as a strategy for companies in the undeveloped world to
pursue. What has changed over the years is the strength of different currencies. The higher
interest rates in developing nations has strengthened their currencies relative to the dollar
or euro. If the acquiring firm is in a country with a strong currency, the acquisition is
comparatively cheaper to make.