Incentives are any measurable economic advantage afforded to specific enterprises or categories of enterprises by (or at the direction of) a government, in order to encourage them to behave in a certain manner. They include measures either to increase the rate of return of a particular FDI undertaking, or to reduce (or redistribute) its costs or risks. They do not include broader nondiscriminatory policies, relating to the availability of physical and business infrastructures, the general legal regime for FDI, the general regulatory and fiscal regime for business operations, free repatriation of profits or the granting of national treatment. While these policies certainly bear on the location decisions of TNCs, they are not Foreign direct investment incentives. The main types of Foreign direct investment incentives used are fiscal incentives (e.g. reduction of the standard corporate income-tax rate, investment and reinvestment allowances, tax holidays, accelerated depreciation, exemptions from import duties), financial incentives Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Export Credit – Definition and Types
Credit is an essential requirement for any kind of business. So is the case with exporting also. The various sources available have to be explored by the exporter in order to fulfill the financial requirements of export business. We can define export credit as “the credits required by the exporters for financing their export transactions from the time of getting an export order to the time of the full realization of the payment from the importers.” From the time of an export order is received and confirmed, the exporter needs finance (export credit) at pre-shipment stage and also at post-shipment stage. Finance is required at pre-shipment stage for the following purposes: To purchase raw materials and other inputs to manufacture goods. To assemble the goods in the case of merchant exporters. To store the goods in suitable warehouses till the goods are shipped. To pay for packing, marking and labeling Continue reading
International Strategic Alliances – Motivation, Advantages, and Disadvantages
An alliance can be defined as a business to business collaboration. In an alliance two or more companies agree to work together to achieve a common goal while not losing their individuality. Strategic alliance helps the both parties to gain the complementary strengths. Companies form alliances for joint marketing, joint sales or distribution, joint production, design collaboration, technology licensing and research and development. Strategic alliances have different forms, Contractual (non-equity- based) alliances (Alliances which are based on contracts and which do not involve the sharing of equity), Equity-based alliances (Strategic alliances which involves the use of equity), Cross-shareholding (Both partners invest in each other). One form of Equity-based strategic alliances is the joint venture. The formation of the alliance is rich and fragmented. One of the main reasons behind the collaboration is to gain the competitive advantages. Intermediate asset specificity and low uncertainty are conditions that may lead to a preference Continue reading
New Trade Theory of International Trade
New Trade Theory of International Trade takes a different approach from the Ricardian and the Heckscher-Ohlin models on why countries engage in international trade. Both Ricardo and Heckscher assumed constant returns to scale where to them if all factors of production are doubled then output will also double. But a firm or industry may have increasing returns to scale or economies of scale in way that when all factors of production are doubled, output more than doubles which will necessitate a bigger market and thus forcing firms to engage in international trade where there is a larger market. The New Trade Theorist noted that the bigger the size of a firm or industry the more the efficiency of its operations in that the the cost per unit of output falls as a firm or industry increases output. The increase in output must however be met with an increase in the Continue reading
Relevance of Sustainable Development Goals (SDGs) for Businesses and Organizations
The organizations have been focused towards adopting key business approaches and practices that would contribute towards their improved revenue as well as profitability in the marketplace. In order to achieve such strategic goals to revenue and operational growth, it is required by the management to identify and understand the changing market needs, as well as the stakeholder preferences and accordingly the internal business or operational strategies, are to be defined. Considering such need, it can be reflected that in the present marketplace there is a need for the business organization to focus towards the increased social preferences and need towards sustainability and societal development along with that of the business growth. The approach to sustainability ensures that the business organization have a balanced approach towards society, business as well as the environment. Further to strengthen the approach to sustainability international organizations including United Nations (UN) has defined several key sustainable Continue reading
Transformation of The European Union From a Political and Economic Union to a Monetary Union
The basis of the European Monetary Union was to build a united Europe after the World War II. This was initiated by when the European nations created the European Coal and Steel community, with a view to freeing trade in these two sectors. The pricing policies and commercial practices of the member nations of this community were regulated by a supranational agency. In 1957, the Treaty of Rome was signed by Belgium, France, Germany, Italy, Luxemburg and the Netherlands to form the European Economic Community (EEC), whereby they agreed to make Europe a common market. While they agreed to lift restrictions on movements of all factors of production and to harmonize domestic policies, the ultimate aim was economic integration. The EEC achieved the status of a customs union by 1968. In the same year, it adopted a Common Agricultural Policy (CAP), under which uniform prices were set for farm products Continue reading