MMPC-016

MBA and MBA (Banking & Finance)

ASSIGNMENT
for
July 2022 and January 2023 sessions

MMPC-016: International Business Management

(Last date of submission for July 2022 session is 31st October, 2022 and for January 2023
session is 30th April, 2023)

School of Management Studies

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 ASSIGNMENT
Course Code : MMPC-016
Course Title : International Business Management
Assignement Code : MMPC-016/TMA/JULY/2022
Coverage : All Blocks

Note: Attempt all the questions and submit this assignment to the coordinator of your study
centre. Last date of submission for July 2022 session is 31st October, 2022 and for January
2023 session is 30th April, 2023.

1. Discuss the evolution of globalization and the effects of globalisation.

2. What are the problems that companies face when they misjudge the cultural leanings of
a country? Explain with relevant examples.

3. What are the pros and cons of various entry modes? Critically comment upon them from
the current perspective.

4. Discuss the key drivers of international marketing.

5. Discuss the major challenges associated with appraisal of expatriate managerial

performance. What should be the main objectives of a multinational firm with regard to
its compensation policies?

6. Write notes on the following:

a) Heckscher-Ohlin Theory.

b) Foreign Investment.
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MMPC 16- International Business Management

Q1-- Discuss the evolution of globalization and the effects of globalisation.?
ANS-The Evolution of Globalization -In economics, globalization can be defined as the process in
which businesses, organizations, and countries begin operating on an international scale.
Globalization is most often used in an economic context, but it also affects and is affected by politics
and culture. As per UNESCO globalization can be defined as a “set of economic, social, technological,
political and cultural structures and processes arising from the changing character of production,
consumption and trade of goods and assets that comprise the base of the international political
economy” Having discussed the concept of globalization in sufficient detail, we now turn our
attention to another aspect, i.e., the origin and evolution of globalization
Origin of Globalization
Globalization is the process which began in the 20th century with the spread of capitalist system
around the world. However, globalization has evolved over centuries as a socioeconomic
phenomenon. As a result, globalization is not a new phenomenon as the world system has
maintained some of its main features over several centuries. In the beginning of 14th century;
modern political system of governance originated in parts of Western Europe which was
experiencing a prolonged crisis of feudalism. This paved the way to the rise of market institutions
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and technological innovation. Europeans reached other parts of globe through the long-distance
trade routes and made technological advances in production techniques and methods. Europeans
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started colonizing the parts of world, taking raw material and processing it into finished goods and
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again selling those goods in the markets around the world including their colonial markets. This led
to accumulation of wealth, which supported a strong and superior military power. The technological
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innovations resulted in improved means of transportation thus further facilitating the strong
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economic linkages among nations around the globe. In nutshell, a capitalist economic power of the
Europe succeeded in geographic and occupational division of labour.’
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Stages of Globalization
There are various stages of globalization. Cavusgil et. al., (2009) have identified four distinct stages
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of globalization beginning the 1800s. Each stage of the evolution is marked by changes in
technological innovations and international trends.
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The first stage of globalization which started in 1830; became more stabilized by 1880.This period
was marked by the growth of global business due to development of railroads,ocean transport, and
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large scale manufacturing and trading companies. Telegraph and telephone were invented which
further gave rise to enhanced information flows between nations and facilitated the management of
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supply-chains among the companies.

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The second stage of globalization which started around 1900 was marked by the increase in
electricity and steel production. This stage of globalization reached its climax during the Great
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Depression of 1929. Western Europe was the most industrially developed region of the world in
1900. Multinational firms were established as a result of European colonization of Asia, Middle-East
and Africa. The companies like Seimens, Nestle, Shell and British Petroleum had established their
subsidiaries in various parts of the world. Before 1914 (First World War), many companies were
established at the global level.
The third stage of globalization started around 1945 after World War II when Europe and Japan were
devastated by the war and USA and erstwhile USSR emerged as a dominant power. During the war
the trade barriers were high. Soon the developed countries wished to lessen the barriers to
international trade. This led to Bretton Woods Conference of 1947 in which 23 countries
participated and resulted in the setting up of General Agreement on Tariffs and Trade (GATT) which
sought to liberalize trade and investment by reducing barriers. This gave rise to industrialization,
modernization and improving the standard of living. GATT was subsequently replaced by another
multilateral agency, that is, World Trade Organization (WTO) which is established to regulate
international trade and investment and to introduce equality and transparency in global exchange.
To further facilitate international co-operation, two international organizationsInternational
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Monetary Fund and World Bank - were set up in 1944. This was followed by the rise of Multinational
Corporations (MNC’s) like Coco-Cola, Philips and IBM which established their global presence by the
virtue of technological and competitive advantages and started outsourcing their business to
developing countries to reap the benefits of cheap labour and easy access to global markets.
By 1960’s; the increase in the process of liberalization by removing trade barriers and currency
controls led to increase in international trade and investment and integrated international financial
markets. This was followed by increasing competition among the US, European and Japanese MNCs
1980s marked the beginning of the fourth and present stage of globalization which experienced
increasing global trade and investments. This stage witnessed increasing use of computer, Internet,
and development of information and communication technologies. The newer and smarter
technologies are enabling the industrial production which is widely referred as Industrial Revolution
4.0.This period saw the disintegration of Soviet Union (1991), emergence of market economies of
Europe (1990-2008) and development of countries like China, Brazil, India and Mexico ( 1980-to
date). Technological advancements in transportation, information and communication led to
integration of world economy and also facilitated development of services like insurance, banking,
fin-tech, e-commerce, infotainment, retailing and tourism. This was followed by strategic alliances
like mergers and acquisitions among corporate units and the world came to be known as a ‘global
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village’.
EFFECTS OF GLOBALIZATION
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The phenomenon of globalization began in a primitive form when humans first settled into different
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areas of the world; however, it has shown rather steady and rapid progress in recent times and has
become an international dynamic which, due to technological advancements, has increased in speed
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and scale, so that countries in all five continents have been affected and engaged . Now you have a
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fair idea of how present day globalization evolved. We shall now briefly discuss the effects of
globalization.
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Globalization is a process by which there is an increase in inter-connection and dependence between

nations, people and businesses through greater cross-country mobility, communication and cross-
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cultural exchanges. Thus globalization process has given impetus to greater global production and
distribution of products and services of a homogeneous kind on a world-wide basis. Now we can
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demarcate the separate areas of the effects of the process of globalization. These areas of effects of
globalization are as follows
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1--Integration of Economies: Globalization essentially leads to greater interdependence among

countries. For instance, China is a largest producer of raw material for pharmaceuticals, known as
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Active Pharma Ingredients and Excipients. India imports huge quantities of these APIs and Excipients
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from China to manufacture a variety of generic drugs to world market. India is referred as the
pharmacy of the world for its innate capacities to supply generic drugs to world markets at a fraction
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of cost of what some of these drugs are sold in developed countries. In this process, the entire
mankind benefits from the raw material expertise of China and manufacturing excellence of India for
supply of low cost generic drugs to world markets.
2---Integration of Strategy: A global strategy would require establishing the brand name and
products in prominent markets globally, in order to reap the benefits of competitive advantage
through scale, scope, systems and synergy economies. This further facilitates integration of global
vision, business strategy and business activities throughout the world.
3---Integration of Industries: Globalization facilitates the increase in integration of production
activity and distribution of value added goods to world markets on the basis of competitive
advantages. Global industries become inter dependent enjoying location advantages by virtue of
their presence in host, parent or third world countries and leveraging the cost-effective factors of
production in the entire supply chain operations of a firm.
4--Integration of Markets: Globalization leads to lowering of tariff and nontariff barriers thus
providing bigger market access. The consumers further benefit from cultural globalization as they
start using the standard products as being consumed or used in developed countries. The name and
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brand ofproducts are popularly known in various markets under the waves of socioeconomic
globalization. This has created homogeneity in tastes and liking of end users for a product in specific
markets.
The process of globalization integrates global economies, global strategy, global industries, global
markets, global drivers and global players in order to create organizations for global environment. It
has created integration of services, resources and products thus creating a boundary-less
environmentNon-economists and the wide public expect the costs associated with globalization to
outweigh the benefits, especially in the short-run. Less wealthy countries from those among the
industrialized nations may not have the same highly-accentuated beneficial effect from globalization
as more wealthy countries, measured by GDP per capita, etc. Although free trade increases
opportunities for international trade, it also increases the risk of failure for smaller companies that
cannot compete globally.

Q2-- What are the problems that companies face when they misjudge the cultural leanings of a
country? Explain with relevant examples?
ANS- The problems that companies face when they misjudge the cultural leanings of a country - In
the new global environment; cultural awareness about other countries is essential for the managers.
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This is a critical issue and any ignorance of cultural sensitivities will lead to dire consequences which
would even jeopardize business transaction. Before proceeding on overseas assignment, the
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managers should do their homework, i.e. acquainting themselves a bit about the foreign cultures.
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This could be done by undergoing a short course in foreign language, cross cultural training,
familiarizing themselves about specific business etiquettes and practices. One can do so through
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cultural guides thus avoid mistakes.

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Cultural Identification and Dynamics of Cultures

There are certain ways by which a manager can understand the dynamics of different cultures.
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1-- Nation as a Point of Reference: Cultural differences exist usually between nations due to
different cultures, customs, beliefs, values and faiths. Thus, it becomes essential to compare
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differences in national cultures to understand and appreciate specific cultural nuances.

2--- Dynamics and Cultural Formation: Cultures are imbibed by children from their parents in early
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age. Culture and value systems are also inherited from one generation to another. There are cultural
changes over time due to a variety of reasons such as greater exposure to foreign cultures, shifting
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from one area to another, acquaintances with people of foreign culture, foreign media, etc. If a
change in a country’s culture is due to forceful imposition of foreign nation’s culture it is known as
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cultural imperialism.
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3--- Language creating Cultural Stability: Culture can be identified in terms of language spoken, such
as French, English, etc. The people speaking the similar languages in an area, are likely have similar
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cultural attitudes. Many countries have diverse cultures because they have different languages
spoken within their borders.
4-- Religion creating Cultural Stability: Religion followed by people of a country also reflects its
cultural values thus affecting its business practices. The holidays, working hours, food habits,
religious practices and lifestyle, etc. have its influence on culture of a country.
5-- Cultural-Oriented Social Practices: A Manager should be aware of the cultural-oriented social
practices as they influence business in international markets
Social Stratification
A society can be stratified on the basis of varying cultural values. A person can be ranked on the
basis of his ‘birth’ or on the basis of ‘achievement’, political affiliation, religion or other factors.
Social stratification may influence the determination of target market, human resources policies and
practices and other similar activities.
Following cultural characteristics influence person’s social ranking.
1-- Merit as basis of selection: In many advanced countries, the basis of selection or promotion for a
job is the merit or competence. This creates healthy competition in the working environment as
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each employee has opportunity to compete based on his/ her performance. In Japan, seniority has
greater say in promotion decisions as experience is valued in management positions. It may
sometimes lead to lower competition in performance and even dissonance among junior employees.
2-- Groups based on Gender: Different countries have different social perception or orientation to
think towards males and females in society. In this regard; we can quote Political Risk Insurance (PRI)
case of Middle-East and other Muslim-majority countries. This is how Islamic laws postulate,
perceive and view the role of women in the society. The Islamic clergy prohibit the women from
attending school and working in offices also and even participating in the workforce, for instance,
Afghanistan, Sudan and Saudi Arabia. The things are changing partially and slowly, at least for Saudi
Arabia in the recent years.
3-- Groups based on Age: In many countries, age is associated with experience and wisdom. The
superannuation of workforce is fixed on the basis of age i.e. 60 or 65 years. Many companies prefer
young employees and accordingly fix the age of service as these organizations require young and
dynamic workforce.
4-- Groups based on Family: In some societies, instead of individual’s achievement, it is the family’s
social status which determines the position in the business. Recently, family owned businesses are
gaining importance where non-family members find it difficult to move-up in the managerial
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hierarchyladder.
5-- Source of Livelihood: People select their source of livelihood or occupation on the basis of
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economic and social prestige attached to certain occupation. In some countries, professionals from
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teaching stream are given greater importance than business professionals. While in other societies,
people opt to become Doctors or Engineers on the basis of prestige attached to jobs of science
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discipline.
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Strategies for Coping with Cultural Differences

Different countries have different cultures and accordingly appropriate strategies should be devised
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by managers to deal with cultural differences.

1-- Making Slight or No Adjustment: The managers of an internationally engaged firm need to
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slightly adjust with the people of varying cultures. On the other side, some cultures which allow
greater freedom to foreigners than their own people require less adjustment. Region-wise cultural
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similarities may also exist, for instance, such cultural similarity exist between Argentina and
Uruguay. The workforce of the firm in such kind of countries can easily adjustment culturally if the
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firm expand and diversify to such similar country.

2-- Communication: Cultural differences can be handled with the help of effective communication.
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Communication includes both oral and written components and also sign language.
3-- Oral and Written Language: Communication problem exists between countries due to
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differences in language. It is difficult to find an exact meaning and interpretation of words between
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two different languages. For example, over 4000 words in English are spelled differently and have
different pronunciation and meanings between United States and United Kingdom.
4-- Silent Language: Non-verbal cues such as the kinesis and proximities (body movement) like
gestures, postures hap-ties (touch), para-language (emotions), colour preferences, can be described
as “silent language”. Silent language like standing too close or too far, or wrong body language can
be misinterpreted and can ruin an important business deal.
5-- Cultural Shock: When an employee leaves his own country and settles in a new country, he has
to cope-up with different cultural cues and language(s). Accordingly, the cultural training programs
are organized by companies before employees depart for the foreign assignment. Employees also
come-across reverse cultural shocks when they return to their home country after having completed
a foreign assignment.
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Q3-- What are the pros and cons of various entry modes? Critically comment upon them from the
current perspective?
ANS- Pros and cons of various entry modes and current perspective - There are different ways in
which an organization enters any market. In fact, the choice is dependent on the factors. We will
now explain some of the key modes in the ensuing paragraphs. The usual choice is to start the
international business with the ‘exporting’ and especially the ‘direct exporting’. It offers a firm to
gain insights of the market along with experience which helps it to plan bigger decision. The
exporting is also a least cost model as the production is being done home, and if the product fails
even after making several adaptations and leveraging other elements of marketing mix, it can be
easily withdrawn. Indirect export also helps some knowledge of international business and help to
create a network of prospective buyers along with understanding of various stakeholders in the
export supply chain.
The third major mode is licensing/franchising in which the licensor or franchisor (usually the owner
of the title) sells the rights of intellectual property such as‘patents’ or ‘technical know-how’ to the
licensee/franchisee for a royalty. The licensor/franchisor does not have to bear the full costs and
risks associated with foreign market expansion. The fourth most preferred option is joint venture, in
which a new entity takes birth, by joining of hands of two parties. The last and the most significant
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mode of international market entry is that of foreign direct investment (FDI). FDI can be in the form
of a Wholly-owned Subsidiary or an acquisition of an existing company, in part or as whole. In both
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cases the company decides to build or acquire offices, factories and other infrastructure in the host
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country in order to operate. Usually subsidiaries come into existence through green or brown field
projects.
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These are some of the most popular forms or modes of international market entry. Further, table
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gives a brief idea about the merits and demerits of the different modes of entry
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Table : Modes of Entry-Advantages and Disadvantages

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Q4-- Discuss the key drivers of international marketing?

ANS- The key drivers of International Marketing include:
1-- Liberalization of Markets: Liberalization of economic policies has been the key driver for opening
up the greater number of economic opportunities. With the economic globalization, it has become
easier to market globally. The economic barriers in the forms of tariff and non-tariffs are blurring
thus providing access to firms in global market place. E-commerce platforms are opening up
opportunities for all. One needs to have a high quality product, a right business strategy and
willingness to cope with higher degree of risks to grow internationally.
2-- Tax Advantages: The firms are exploring international marketing opportunities as corporate
taxes are much lower or negligible in some countries. For instance, Singapore and Cyprus have zero
corporate tax, thus inviting firms from the world to set-up businesses. These firms leverage transfer
pricing mechanism to evade tax by setting up headquarters in tax-heaven nations.
3-- Free Trade under Trading Blocs: The large number of trading blocs in the forms of Free Trade
Agreements/ Customs Union/Common Markets and Economic Union are driving the firms to explore
marketing opportunities in the other countries. Trading blocs provide a large contagious economic
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area where goods and services can be exchanged under harmonized and standardized economic
policies and without barriers.

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Q5-- Discuss the major challenges associated with appraisal of expatriate managerial performance.
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What should be the main objectives of a multinational firm with regard to its compensation
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policies?
ANS- major challenges associated with appraisal of expatriate managerial performance:
A performance appraisal is the formal assessment of employee’s job performance. Such appraisals
are important to the employing institution because they: (1) provide feedback to employees that will
assist them in doing better and in planning their careerpath; (2) provide information that is needed
to make employment decisions on such issues as pay levels, promotions and training needs; and (3)
provide information necessary for human resource research tasks, such as validating selection
methods and training programmes. There are many performance appraisal methods, and they can
be divided into two categories, i.e. the objective appraisal methods and judgmental appraisal
methods.
Objective Appraisal Methods
Objective performance appraisal measures involve such objectives and quantifiable outputs as sales
volume, units produced, scrap rates, and so on. Yet another objective measure is the score on some
form of standardized performance test. These data are fairly easy to obtain and compare, but they
suffer from two major weaknesses. First, these data may not measure performance related to many
important organizational goals, such as customer service or corporate image. Second, these data are
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subject to “opportunity bias”, wherein some employees are in a better position to succeed than
others. For instance, a computer salesman in an underdeveloped country does not have an
opportunity to generate sales when compared with a salesman in a developed community.

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How to Conduct Appraisal of HCN Employees?

The practice of performance appraisal confronts the issue of cultural applicability. Performance
appraisal in different nations can be interpreted as a signal of distrust or even an insult. In Japan, for
instance, it is important to avoid direct confrontation to “save face,” and this custom affects the way
in which the performance appraisal is conducted. A Japanese manager cannot directly point-out a
work-related problem or a mistake committed by subordinate. Instead, he is likely to start discussing
with the subordinate about the strong points of that person’s work, and further continuing with a
discussion about the work on a relatively general level. Then she/he might continue to explain the
consequences of the type of mistake committed by the subordinate, still without directly pointing
out the actual mistake of the individual employee. From all this, the subordinate is supposed to
understand his/her mistake and propose how to improve his/her work.
Main objectives of a multinational firm with regard to its compensation policies
we talk about objectives, approaches, and key components of international compensation.
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Q6-- Write notes on the following:

a) Heckscher-Ohlin Theory.?
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ANS- Heckscher-Ohlin theory, in economics, a theory of comparative advantage in international

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trade according to which countries in which capital is relatively plentiful

and labour relatively scarce will tend to export capital-intensive products and import labour-
intensive products, while countries in which labour is relatively plentiful and capital relatively scarce
will tend to export labour-intensive products and import capital-intensive products. Heckscher-Ohlin
trade theory was another name for the Heckscher-Ohlin trade model. Heckscher published a paper
in 1919 in which this theory was presented, but Ohlin published a book in 1933 in which this model
was presented. Furthermore, Ohlin was awarded a Noble Prize for his theory in 1977. This model is
also known as the H.O Model. The model is 2x2x2 because it consists of two goods, two production
factors, and two countries. Capital and labour are the two factors. Ricardo failed to explain how
comparative advantage is determined. According to this theory, a country will export commodities
with abundant factors and import commodities with scarce factors. However, in Adam Smith and
Ricardo’s trade models, labour was the only factor input, and the differences in the trade is
determined by labour productivity. They pointed out that different countries have different factor
endowments, and that the differences in factor endowments facilitate trade between trading
partners. The theory is based on the assumption that there are trade barriers and that goods and
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factor markets are perfectly competitive. Furthermore, the theory is predicated on comparative
advantage in terms of relative factor prices. As a result, if a country has a large amount of capital, it
will produce capital-intensive products and export them in exchange for labor-intensive products.
While another country, which is rich in labour, will produce and export laborintensive goods. Despite
this, it will import capital-intensive goods. The term “abundance” has two meanings in this theory: it
refers to the price of the factor and it refers to the physical quantity of the factor. If there are two
countries, A and B, then the prosperity of the country in terms of factor prices means that the price
of the factors of production is relatively lower.
Unlike the classical trade model, H.O. trade theory cannot guarantee the desired income distribution
among the country’s various classes. Because of the greater demand for producing respective goods
for the global market, returns to capital are higher in country A and returns to labour are higher in
country B. The traditional trade models were predicated on certain assumptions, such as no
transportation costs and the free flow of information to all producers and consumers. They do not
account for the effects of trade on global prices. These trade theories are static and ignore the
effects of technological progress on global economic growth. These are real concerns that must be
addressed in a customized description of classical and neoclassical theories. If a country has a
monopoly on a particular good, it can have an impact on global prices. It can either supplement its
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gains through “optimal tariffs,” which seek to maximize the welfare of the country. Trade has the
potential to complicate the growth process. It can have an impact on employment and even the
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overall well-being of the country. This is possible in the case of exponential growth (when benefits
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from the higher output are neutralized by the adverse terms of trade). The country ends up with
lower real income after growth because the benefits of higher output are washed out by
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deteriorating trade terms. However, it should be noted that the adapted version of the basic theory
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does not change the assumption that a country produces and exports the product in which it has a
comparative advantage, and uses the abundant factor in the production. The country benefits from
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trade, but the distribution of gains can be distorted. Change in trade is not free, but the short-term
cost of adjustment should be balanced against the long-term benefits of trade.
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The theory was criticized on the following grounds: the assumption of 2x2x2 model was found to be
unrealistic; unlike classical theory, this theory was also static in nature; the theory was based on the
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assumption of homogenous factors which was calculated with the help of factor endowment; the
techniques of production cannot also be homogenous even for the same good in the two countries
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as assumed in H.O. model; the theory is based on another assumption of similar taste. The theory
was based on the assumption of constant returns to scale, which is also not true because a country
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with a rich factor endowment frequently obtains the benefits of economies of scale through a
smaller amount of production and exports, implying that there should be increasing returns to scale;
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the theory does not take into account transport costs in trade between trading countries; the
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impractical supposition of full employment and perfect competition; the Leontief paradox has been
proven.
The Leontief Paradox
Wassily Leontief conducted an input-output analysis using data from the United States in 1947 to
validate the Heckscher-Ohlin model. He divided 200 industries into 50 sectors, 38 of which were
discovered to be trading their goods directly on the international market. Leontief discovered a
paradoxical situation in which the United States was importing capital-intensive goods from abroad
despite being a capital-rich country and was found to be exporting labor-intensive goods. The
supporters of H.O. trade theory experienced a slowdown in the early 1950s, when Leontief tested
his hypothesis using data from the US economy. His findings refuted the H.O. claim. It was shocking
news for economists that the United States, despite being a capital-rich country, was exporting
labor-intensive goods a several explanations were considered in order to resolve the Leontief
paradox. The following significant factors were identified as supporting the Leontief paradox: the
United States’ protective trade policy, the import of natural resources, and the investment in human
capital. William Travis investigated Leontief theory in the context of US tariff policy.When Leontief
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tested his hypothesis, the United States was found to be importing more capital-intensive items such
as crude oil, paper pulp, primary copper, lead, metallic ores, and newsprint. Thus, according to
Travis, the United States’ protective trade policy was to blame for Leontief’s findings. The United
States imports natural resources such as minerals and forest products and exports farm products,
according to Leontief’s presentation. Human capital investment 79 boosts labour productivity.
Because of these factors, the United States’ exports were Trade Theories labor-intensive, whereas its
imports were capital-intensive and importing capital-intensive goods. Leontief analysis was also
found to be flawed on statistical and methodological grounds. The main points of criticism were: the
year 1947 was not a normal year for testing the H.O. Model because of World War II, as the United
States was the only major industrial country that was not destroyed by war; economists criticized
the aggregation used in the input-output model for computing capital-labour ratios in some way; it
was argued that Leontief model with fixed input coefficients was found to be mismatched with
world trade equilibrium in which every country achieves.

Q6-- Write notes on the following:

B) Foreign Investment.?
ANS- Foreign investment, in its classic definition, “is defined as a company from one country making
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a physical investment into building a factory in another country”. In an era of globalisation; foreign
investments definition has been broadened to include the “acquisition” of a lasting management
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interest in a company or enterprise outside the investing firm’s home country. As such, foreign
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investment in another country or foreign firm may take many forms, such as a direct acquisition/
purchase of a foreign firm, completely new construction of a facility in form of green field
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investments, or investment in a joint venture with foreign firm. Furthermore; foreign investment
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may also be in form of strategic alliance with a foreign firm with attendant input of technology /
technical knowhow; licensing of intellectual property, or entering into management contract or
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turnkey projects. Foreign investment primarily may be of two types i.e. Foreign Direct Investments
(FDI) and Foreign Portfolio Investment (FPI) which in turn may have several sub-constituents
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Figure : Types of Foreign Investment

Foreign direct investment is an investment by foreign investors into the assets of host country
structures, real estate; roads; ports; rail; plants and machinery; equipment, financial institutions
such as opening a new bank/ insurance company and sometimes in host country organizations like
investment in Indian Premier League (IPL) by foreign counties. Foreign direct investment does not
include foreign investment into the stock markets of host countries that is separately treated as
portfolio investment. In other words, the term portfolio refers to any collection of financial assets
such as stocks, bonds and cash. Portfolios may be held by individual investors and/or managed by
financial professionals, hedge funds, banks and other financial institutions.
SELF GYAN YOUTUBE 9699784305 SOLVED ASSIGNMENT AND CLASSES

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