IB-Unit-4 BBA BVIMR 2022 Syllabus_watermark.pdf
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International Business BBA 4 as per Syllabus CBCS 2022 of Bharati Vidyapeeth (Deemed to be University)
IB-Unit-4 BBA BVIMR 2022 Syllabus_watermark.pdf
- 1. Slides Prepared by: Dr. Mahtab Alam INTERNATIONAL BUSINESS Dr. MAHTAB ALAM Assistant Professor Management Department
- 2. Slides Prepared by: Dr. Mahtab Alam UNIT -IV Unit Sub Unit Unit IV International Financial Management Balance of Trade and Balance of Payments, International Monetary Fund (IMF) – Objectives and functions., World Bank – Objective and Functions / Globalization in Marketing and International Human Resource
- 3. Slides Prepared by: Dr. Mahtab Alam Balance of Trade-Concept
- 4. Slides Prepared by: Dr. Mahtab Alam Meaning of BOT: The balance of trade refers to the difference between the value of a country's exports and imports of goods and services over a specific period, typically measured quarterly or annually. If a country exports more than it imports, it has a trade surplus, and if it imports more than it exports, it has a trade deficit. Definition of BOT Adam Smith – "The balance of trade is the value of exports minus the value of imports, indicating a nation's economic health in global commerce.“ Paul Samuelson – "The balance of trade is a key measure of international economic transactions and reflects a country's competitive position." Balance of Trade-Meaning & Definition
- 5. Slides Prepared by: Dr. Mahtab Alam Definition of BOT: The balance of trade refers to the difference between the value of a country's exports and imports of goods and services over a specific period, typically measured quarterly or annually. If a country exports more than it imports, it has a trade surplus, and if it imports more than it exports, it has a trade deficit. Balance of Trade-Definition Features of BOT 1. A balance of trade is a monetary value representing a country's trade value. 2. It refers to the net difference between a country’s exports and imports. 3. The transactions making part of the exports and imports in BOT are Visible Trade (Tangible Goods), not Invisible Trade (Services). 4. BOT is computed for a specific period, generally annually. 5. BOT is a Part of BOP, and it is the largest component of BOP. 6. It is Either Surplus/ Positive/ Favorable or Deficit/ Negative/ Unfavorable or Trade Equilibrium. 7. BOT is one of the indicators of Economic Strength.
- 6. Slides Prepared by: Dr. Mahtab Alam Types of BOT Favorable BOT = ExportsValue > ImportsValue Unfavorable BOT = ExportsValue < ImportsValue Equilibrium BOT = ExportsValue = ImportsValue The formula for the Balance of Trade is given below: Balance ofTrade (BOT) = Exports Value (Visible) – ImportValue (Visible)
- 9. Slides Prepared by: Dr. Mahtab Alam 1. Indicator of Economic Health: A positive BoT (trade surplus) reflects a strong economy, while a negative BoT (trade deficit) may indicate economic challenges. 2. Affects Currency Value: A trade surplus strengthens a country’s currency, while a deficit may lead to depreciation. 3. Influences GDP Growth: Higher exports contribute to economic growth, whereas excessive imports can slow it down. 4. Impacts Employment: A trade surplus boosts domestic industries, creating jobs, while a deficit may lead to job losses. 5. Determines Trade Policies: Helps governments design tariffs, subsidies, and trade agreements to maintain economic stability. 6. Reflects Global Competitiveness: A favorable BoT indicates strong industrial and export capabilities. 7. Affects Foreign Reserves: A trade surplus increases foreign exchange reserves, enhancing financial stability. Significance of BOT
- 10. Slides Prepared by: Dr. Mahtab Alam Causes of Unfavorable BOT 1. Increase in Oil Prices: Higher oil prices raise import costs, increasing the trade deficit for oil- dependent countries. 2. High Imports: Excessive imports without a matching level of exports lead to a negative trade balance. 3. Low Production: Reduced domestic production limits export capacity, forcing reliance on imports. 4. High Population: A large population increases demand for goods, often met through imports, worsening the trade deficit. 5. Low Quality of Goods: Poor-quality domestic products may reduce export competitiveness, leading to lower export earnings. 6. Imports of Consumer Goods: High dependence on imported consumer goods increases outflows of foreign exchange. 7. Currency Value: A weak currency makes imports more expensive, increasing trade deficits, while an overvalued currency makes exports less competitive.
- 11. Slides Prepared by: Dr. Mahtab Alam Measures of Improving BOT 1. More Trade Agreements: Bilateral and multilateral trade agreements can improve export opportunities and reduce trade barriers. 2. Reduce Imports: Implementing import restrictions, tariffs, and encouraging domestic production can lower dependency on foreign goods. 3. Export Promotion: Providing incentives, subsidies, and support for exporters can increase outbound trade. 4. Explore Market: Expanding into new international markets helps diversify export destinations and increase foreign exchange earnings. 5. Special Scheme: Government policies, such as tax benefits or subsidies, can boost local industries and improve competitiveness. 6. Reduce Use of Oil: Encouraging alternative energy sources reduces import costs, particularly for oil-importing nations.
- 12. Slides Prepared by: Dr. Mahtab Alam Balance of Payment (BOP)-Meaning
- 13. Slides Prepared by: Dr. Mahtab Alam Balance of Payment-Definition Kindleberger (1962) – "The balance of payments is a summary statement of all economic transactions between residents of a country and the rest of the world during a given period.“ Jacob Viner – "BoP is a statistical record of a country’s international economic transactions, including trade, investment, and financial flows."
- 14. Slides Prepared by: Dr. Mahtab Alam Features of BOP 1. Comprehensive Record: BoP systematically records all international economic transactions of a country over a specific period. 2. Includes All Transactions: It covers trade in goods and services, capital flows, and financial transfers. 3. Composition– BoP is the composition of the following: ❑ Current Account ❑ Capital & Financial Account ❑ Errors & Omissions ❑ Official Reserves transactions 4. Must Balance – In theory, total inflows and outflows should balance, though surpluses or deficits can occur. 5. Indicates Economic Strength – A surplus indicates a strong economy, while a deficit may signal economic challenges. 6. Affects Exchange Rates – BoP imbalances influence a country's currency value in global markets. 7. Guides Economic Policies – Governments use BoP data to frame policies on trade, exchange rates, and foreign investments.
- 15. Slides Prepared by: Dr. Mahtab Alam Types of BOP Favorable BOP = Receipts > Payments Unfavorable BOP = Receipts < Payments Equilibrium BOP = Receipts = Payments
- 18. Slides Prepared by: Dr. Mahtab Alam Composition of BOP (Current Account)
- 19. Slides Prepared by: Dr. Mahtab Alam Composition of BOP (Capital Account) In Balance of Payments (BOP), the Capital Account is often presented as a broad category that includes both capital account transactions and financial account transactions. The Capital Account in the narrow sense refers to non-recurring transactions, including: ❑ Capital Transfers: Transfers related to debt forgiveness, inheritance, or grants for infrastructure. ❑ Acquisition and Disposal of Non-Produced, Non-Financial Assets: Examples include land purchases by foreign entities, patents, copyrights, etc. The Financial Account Records transactions involving financial assets and liabilities between a country and the rest of the world. Includes direct investment, portfolio investment, and other financial transactions.
- 20. Slides Prepared by: Dr. Mahtab Alam Composition of BOP (Reserve Account/Official Settlement Account) Composition of BOP (Errors & Omissions)
- 21. Slides Prepared by: Dr. Mahtab Alam Invisible (Services) NR deposits: Non-Residents deposits Non-factor(The payments against which no good or service is provided in return are non- factor or transfer payments) BOP Example
- 23. Slides Prepared by: Dr. Mahtab Alam Remedies to Improve the (BOP) 1.Export Promotion ❑ Encouraging domestic industries to produce more goods for export. ❑ Providing subsidies, tax incentives, and financial support to exporters. 2.Import Substitution ❑ Reducing dependence on foreign goods by promoting local industries. ❑ Implementing higher tariffs or quotas on non-essential imports. 3.Foreign Direct Investment (FDI) Promotion ❑ Attracting foreign investors through favorable policies and incentives. ❑ Improving ease of doing business to encourage investment inflows. 4.Exchange Rate Adjustments ❑ Adjusting exchange rates through monetary policy to make exports more affordable and imports costlier, helping improve the trade balance. 5.Monetary & Fiscal Policies ❑ Controlling inflation to maintain competitiveness in exports. ❑ Reducing fiscal deficits to stabilize the economy. 6.Tourism and Service Sector Growth ❑ Promoting tourism to earn more foreign exchange. ❑ Expanding IT, outsourcing, and other services to increase foreign income. 7.Encouraging Remittances ❑ Offering incentives for non-resident citizens to send more money home. ❑ Reducing transaction costs for remittances. 8.Negotiating Trade Agreements ❑ Expanding trade ties with multiple countries to boost exports. ❑ Reducing trade barriers through free trade agreements (FTAs).
- 24. Slides Prepared by: Dr. Mahtab Alam Balance of Trade(BOT) Balance of Payments (BOP) Balance of trade or BoT is a financial statement that captures the nation’s import and export of commodities with the rest of the world. Balance of payment or BoP is a financial statement that keeps track of all the economic transactions by the nation with the rest of the world. It deals with the net profit or loss that a country incurs from the import and export of goods. It deals with the proper accounting of the transactions conducted by the nation. Balance of trade (BoT) is the difference that is obtained from the export and import of goods. Balance of payments (BoP) is the difference between the inflow and outflow of foreign exchange. Transactions related to goods are included in BoT. Transactions related to transfers, goods, and services are included in BoP. No Yes BOT=Net Exports-Net Imports (Visible items/Goods) BOP=Current Account+Capital Account+Reserves+Errors & Ommisions Balance of Trade gives a partial view of the country’s economic status. Balance of Payment gives a clear view of the country’s economic position. BOT has narrow scope. It is a part of BOP BOP is Broader in scope and includes BOT The net effect of BoT can be either positive, negative, or zero. The net effect of BoP is always zero. BOT Main Factors: (a) Availability of Raw Materials (b) Cost of Production (c) Exchange Rate (d) Price of Goods manufactured in Home Country BOP Main Factors: (a) All factors of BOT (b) Govt. Foreign Policy (c) Govt. Economic Policy (d) Stability of Govt. Factors affecting Definition What does it deal with? Fundamental Difference Type of transactions included Are capital transfers included? What is its net effect? Scope Calculations Economic View Difference Between BOT & BOP
- 27. Slides Prepared by: Dr. Mahtab Alam 1. Monetary Disequilibrium: This occurs when an excess money supply leads to inflation, affecting trade balances negatively. Example: A country prints more money, increasing domestic prices and reducing the competitiveness of exports, while making imports more attractive, worsening the trade deficit. 2. Trade Disequilibrium: This happens when a nation’s imports continuously exceed its exports, causing a persistent trade deficit. Example: A country heavily dependent on oil imports faces a rising trade deficit due to increasing global oil prices, while its exports remain stagnant or decline. 3. Fiscal Disequilibrium: Arises when government spending exceeds revenue, leading to budget deficits that require foreign borrowing. Example: A government funds large infrastructure projects through foreign loans, increasing external debt, putting pressure on foreign exchange reserves, and worsening the BOP. Types of Disequilibrium in BOP
- 28. Slides Prepared by: Dr. Mahtab Alam 4. Inflationary Disequilibrium: When inflation in a country raises domestic prices, exports become expensive, and imports become more attractive. Example: High inflation in a country makes its goods costlier abroad, reducing export demand, while cheaper imported goods flood the domestic market, leading to a trade imbalance. 5. Exchange Rate Disequilibrium: This happens when a country’s currency is too high or too low compared to its actual value, causing trade problems. Example: If a country's currency is too strong (overvalued), its goods become expensive for other countries, so exports decrease. At the same time, imported goods become cheaper, leading to more imports and a trade deficit. 6. Structural Disequilibrium: Long-term imbalances due to factors like outdated industries, poor infrastructure, or inefficient production. Example: A developing country with a weak industrial base and reliance on primary goods struggles to compete globally, leading to continuous trade deficits and foreign exchange shortages.
- 29. Slides Prepared by: Dr. Mahtab Alam Measures for Correction of BOP ❑ Monetary Contraction/Expansion: Correction of money market (Currency Supply or Interest Rate). ❑ Devaluation/Revaluation: CurrencyValues up & Down auto adjustment right value ❑ Exchange Control: Forex Demand and Supply adjustments
- 30. Slides Prepared by: Dr. Mahtab Alam Global Bodies-IMF & World Bank Global Humanitarian aid organizations ❑ Red Cross Society ❑ UNICEF (United Nations Children’s Emergency Fund) ❑ WHO (World Health Organization) Global Peace organizations ❑ Global Peace Foundation ❑ United Nations ❑ World Peace Foundation Globalization facilitating organizations These Organizations formulated various principles and practices with the objectives of free market economics across the globe. ❑ World Trade Organization (WTO) ❑ International Monetary Fund (IMF) ❑ World Bank
- 32. Slides Prepared by: Dr. Mahtab Alam Bretton Woods Conference (1944) The Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference, was a gathering of delegates from 44 nations that met from July 1 to 22, 1944 in Bretton Woods, New Hampshire, to agree upon a series of new rules for the post-WWII international monetary system. C. Deshmukh was a member of a five-member delegation representing India at the Bretton Woods Conference. The two major accomplishments of the Bretton Woods conference were the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), commonly known as the World Bank.
- 33. Slides Prepared by: Dr. Mahtab Alam International Monetary Fund (IMF)
- 34. Slides Prepared by: Dr. Mahtab Alam International Monetary Fund (IMF)-Key Facts Established December 1945 (77 years ago) Type International financial institution Headquarters Washington, D.C. (District of Columbia. USA) Membership 190 Countries Key people Kristalina Georgieva (MD) Pierre-Olivier Gourinchas (Chief Economist) Parent organization United Nations
- 35. Slides Prepared by: Dr. Mahtab Alam Types of IMF Membership
- 39. Slides Prepared by: Dr. Mahtab Alam Committees of IMF (IMFC & IDC)
- 46. Slides Prepared by: Dr. Mahtab Alam The World Bank (WB) was originally created as the International Bank for Reconstruction and Development (IBRD) in 1944 along with its twin, the IMF. Together they came to be known as the ‘Bretton Woods’ twin sisters. Initially it was decided that this international bank would assist in the economic reconstruction of the World War II-damaged European economies but after 1946 it decided to help nations worldwide therefore known as World Bank. World Bank
- 47. Slides Prepared by: Dr. Mahtab Alam World Bank-Key Facts Data as on 2025 Established December 1944 (78 years ago) Type International financial institution Headquarters Washington, D.C. (District of Columbia. USA) Membership 189 Countries Parent organization World Bank Group
- 48. Slides Prepared by: Dr. Mahtab Alam The World Bank Group is an extended family of five international organizations and the parent organization of the World Bank. It consists of the following extended arms of the World Bank group.
- 49. Slides Prepared by: Dr. Mahtab Alam S.No Group Income Threshold (2023) Countires 1 Low Income < $1,085 Afghanistan $500 2 Lower-Middle Income Between $1,086 to $4,255 India $2,170 3 Upper-Middle Income Between $4,256 and $13,205 Brazil $7,720 4 High Income > 13,205 Canada $48,310 2021 Data (Released 2023) GNI Per Capita based classification
- 52. Slides Prepared by: Dr. Mahtab Alam Board of Governors: The Board of Governors is vested with full authority and control over the activities of the World Bank. All member countries are represented in the Board of Governors. Executive Directors: There are 25 Executive Directors representing member countries. The Executive Directors are responsible for conducting the day-to-day business of the World Bank. Under the IBRD Articles of Agreement, the Executive Directors are responsible for the conduct of the general operations of the Bank. The Executive Directors consider and decide on loan and credit proposals made by the President, and they decide policy issues that guide the general operations of the Bank. President: The president of the World Bank Group is the head of the World Bank Group. The president is responsible for chairing the meetings of the boards of directors and for the overall management of the World Bank group.
- 54. Slides Prepared by: Dr. Mahtab Alam World Bank-Goals & Agendas 1.Economic & Financial Stability: ❑ Fiscal and financial reforms ❑ Strengthening public institutions ❑ Financial sector resilience 2. Sustainability & Environmental Goals: ❑ Sustainable infrastructure ❑ Low-carbon, resilient systems ❑ Investing in nature for a sustainable future ❑ Water-secure world 3. Social & Human Development: ❑ Food security ❑ Access to energy ❑ Resilient health systems ❑ Stronger social protection ❑ Global learning crisis 4. Urban & Infrastructure Development: ❑ Healthy and sustainable cities ❑ Greener transport ❑ Digital development 5. Risk & Crisis Management: ❑ Preparing against disaster risks ❑ Conflict and violence mitigation ❑ Debt management
- 55. Slides Prepared by: Dr. Mahtab Alam 1. Economic Reconstruction and Development: Supporting long-term capital investment for rebuilding economies. 2. Balance of Payments and Trade Stability: Ensuring financial equilibrium to facilitate international trade. 3. Encouraging Private Foreign Investments: Promoting capital inflows for economic expansion. 4. Loan Guarantees and Financial Support: Providing assurances for funding development projects. 5. Post-War Economic Recovery: Assisting countries in rebuilding economies after conflicts. 6. Technical and Advisory Services: Offering expert guidance to member nations for economic growth. 7. Poverty Alleviation and Social Welfare: Reducing extreme poverty and improving living conditions. 8. Shared Prosperity and Income Equality: Fostering inclusive growth for the bottom 40% of the population. Objectives of World Bank
- 56. Slides Prepared by: Dr. Mahtab Alam 1. Reconstruction Assistance: Provides loans for reconstruction to war- devastated countries. 2. Economic Growth & Poverty Reduction: Helps poor and underdeveloped countries to improve economic growth. It Aims to reduce poverty and raise living standards. 3. Development Loans: Grants development loans to underdeveloped countries. 4. Government Project Financing: Offers loans to governments for projects in irrigation, agriculture, water supply, health, and education. 5. Foreign Investment Promotion: Encourages foreign investments by guaranteeing loans. 6. Policy & Technical Assistance: Provides economic, monetary, and technical advice to member countries. 7. Industrial Development & Economic Reforms: Supports industrial development in underdeveloped nations. It introduces economic reforms to improve financial stability. Functions ofWorld
- 57. Slides Prepared by: Dr. Mahtab Alam Top Lenders-World Bank 2022/ 23
- 59. Slides Prepared by: Dr. Mahtab Alam World Bank-Work Highlights-Country wise
- 60. Slides Prepared by: Dr. Mahtab Alam World Bank-Work Highlights-Work wise
- 68. Slides Prepared by: Dr. Mahtab Alam Globalization in Marketing How to Manage?
- 69. Slides Prepared by: Dr. Mahtab Alam Globalization in HRM(IHRM) Meaning & Definition
- 73. Slides Prepared by: Dr. Mahtab Alam Challenges of Globalization in Human Resource
- 74. Slides Prepared by: Dr. Mahtab Alam ❑ Develop a Global HR Strategy ❑ Emphasize Cultural Awareness & Sensitivity ❑ Implement a Global Talent Acquisition & Retention Plan ❑ Foster Employee Engagement & Inclusion ❑ Ensure Compliance with Local and International Laws ❑ Leverage Technology for HR Digital Transformation ❑ Develop a Flexible and Inclusive Remote Work Policy ❑ Focus on Learning & Development (L&D) Programs ❑ Adapt Compensation & Benefits to Local Markets ❑ Build Strong Global HR Leadership & Communication Best Practices of Globalization in Human Resource How to Manage?