FINAL EXAMINATION
JULY 2021
SUBJECT CODE
: MIB603
SUBJECT TITLE : INTERNATIONAL BUSINESS
LEVEL : MASTER
TIME / DURATION : 10.00am-5.00pm
DATE : 30th July 2021
INSTRUCTIONS TO CANDIDATES
1. Please read the instructions given in the question paper CAREFULLY.
2. This question paper consists of ONE (1) Section.
3. Answer FOUR (4) questions ONLY.
4. Answer related questions in English.
THERE ARE FOUR (4) PAGES OF QUESTIONS, EXCLUDING THIS PAGE.
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MIB603 INTERNATIONAL BUSINESS 0918
SECTION A (TOTAL: 100 marks)
INSTRUCTION: Answer any FOUR (4) questions ONLY.
QUESTION 1
Regional Economic Integration (REI) is a process in which neighboring states enter into an
agreement in order to enhance cooperation through common institutions and rules. Intra-
egional trade refers to trade which focuses on economic exchange, primarily between
countries of the same region or economic zone. REI has enabled countries to focus on issues
that are relevant to their stage of development as well as encourage trade between
neighbours. There are four main types of REI namely Free Trade Area (FTA), Customs Union,
Common Market, Economic Union and Political Union. The complexity of the REI increases
as we move from FTA to a Political Union. The ASEAN Free Trade Area (AFTA) [1] is a trade
loc agreement by the Association of Southeast Asian Nations supporting local manufacturing
in all ASEAN countries. When the AFTA agreement was originally signed in 1992, ASEAN had
six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand.
Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now
comprises the ten countries of ASEAN. The European Union (EU) is an international
organization comprising 28 European countries and governs common economic, social, and
security policies. The EU was created by the Maastricht Treaty, in 1993. The treaty was
designed to enhance European political and economic integration by creating a single cu
ency
(the euro), a unified foreign and security policy, and common citizenship rights by advancing
cooperation in the areas of immigration, asylum, and judicial affairs. The EU was awarded the
Nobel Prize for Peace in 2012, in recognition of the organization’s efforts to promote peace
and democracy in Europe. Given the developments in international business it is possible for
REIs to enhance their cooperation and solidarity by strengthening their collaboration to include
several common goals.
If AFTA member countries were to adopt the EU model, discuss with examples of any FIVE
(5) major challenges that AFTA could face.
(25 marks)
QUESTION 2
Any company interested in a presence in the international market needs to be wary of
sensitivity related to environmental concerns, human rights and economic justice. A
https:
en.wikipedia.org/wiki/ASEAN_Free_Trade_Area#cite_note-1
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en.wikipedia.org/wiki/ASEAN_Free_Trade_Area#cite_note-1
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Trade_bloc
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Association_of_Southeast_Asian_Nations
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en.wikipedia.org/wiki/Brunei
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en.wikipedia.org/wiki/Brunei
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en.wikipedia.org/wiki/Indonesia
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en.wikipedia.org/wiki/Indonesia
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en.wikipedia.org/wiki/Indonesia
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en.wikipedia.org/wiki/Indonesia
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en.wikipedia.org/wiki/Malaysia
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en.wikipedia.org/wiki/Malaysia
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en.wikipedia.org/wiki/Philippines
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en.wikipedia.org/wiki/Philippines
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en.wikipedia.org/wiki/Philippines
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en.wikipedia.org/wiki/Philippines
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en.wikipedia.org/wiki/Singapore
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en.wikipedia.org/wiki/Thailand
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en.wikipedia.org/wiki/Thailand
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en.wikipedia.org/wiki/Vietnam
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en.wikipedia.org/wiki/Vietnam
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en.wikipedia.org/wiki/Laos
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en.wikipedia.org/wiki/Laos
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en.wikipedia.org/wiki/Myanma
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en.wikipedia.org/wiki/Myanma
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en.wikipedia.org/wiki/Cambodia
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en.wikipedia.org/wiki/Cambodia
https:
www.
itannica.com/topic/international-organization
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www.
itannica.com/topic/international-organization
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www.
itannica.com/topic/international-organization
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www.
itannica.com/topic/international-organization
https:
www.
itannica.com/event/Maastricht-Treaty
https:
www.me
iam-webster.com/dictionary/enhance
https:
www.me
iam-webster.com/dictionary/enhance
https:
www.
itannica.com/topic/economic-integration
https:
www.
itannica.com/topic/economic-integration
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www.
itannica.com/topic/cu
ency
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www.
itannica.com/topic/cu
ency
https:
www.
itannica.com/topic/euro
https:
www.
itannica.com/topic/Nobel-Prize
https:
www.
itannica.com/topic/Nobel-Prize
https:
www.me
iam-webster.com/dictionary/democracy
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MIB603 INTERNATIONAL BUSINESS 0918
company’s negligence relating to any of those factors can be detrimental to its investment
and reputation and consequently to the whole enterprise. At the same time, globalization
enables and compels international business to seek investment opportunities in developing
countries in order to maintain growth and competitive advantage. It has been observed that
there are very high growth opportunities in emerging markets, provided an investor can
understand and manage the risk. Therefore, there is a growing demand in the business
world for political risk analysis, which would provide knowledge and assessment of potential
harm to business operations arising from political behavior in different countries. The
external political environment is now increasingly recognized by MNCs as an important factor
which has led to an increase in emphasis on political risk assessment as a managerial
function (Yin, Sikorski & Phuong, XXXXXXXXXXPolitical risks faced by firms can be described as the
isk of a strategic, financial, or labour loss for a firm as a result of macroeconomic and social
policies or events related to political instability such as te
orism or war.
Discuss, with examples, any FIVE (5) advantages for firms investing in other countries to
undertake a Political Risk Analysis.
(25 marks)
QUESTION 3
Religion can impact international trade in several ways. Religion is a cultural institution that
directly guides human behavior. If a religion encourages production, hard work, and
commercial activity, it is likely to also encourage international trade. On the other hand, many
eligious cultures discourage the short-term “pursuit of happiness”, and this could suppress
people’s desire to engage in short-term welfare-enhancing economic transactions. The relative
strengths of religion’s positive and negative institutional effects on international trade differ
from one religious culture to another because each provides somewhat different incentives for
human behaviour. Nowadays, many firms produce and sell worldwide and employ workers
from different nations. Religion is a factor in global economic growth, perhaps more so in the
Asian Pacific markets. Successfully accounting for it requires a corporate culture capable of
engaging regional contexts where local elements such as religion can be like the air:
unobservable to the eye but of tremendous influence and impact. There are several incidents
that serve as evidence of the extent religion impacts upon international marketing. Mecca-Cola
has become the drink which has come to be seen as "politically preferable" to Pepsi or Coke
in many Muslim countries. Danish products were boycotted in many Islamic countries in protest
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MIB603 INTERNATIONAL BUSINESS 0918
over an offensive cartoon that was printed in a Danish newspaper. Mc Donald’s Big Mac was
a failure in India.
Given these pieces of evidence, explain, with examples, the influence of religion on
international marketing.
(25 marks)
QUESTION 4
Mr. Chan works in Malaysia but is a citizen of Singapore where his company is organized and
headquartered. Mr. Chan is an expatriate, who is a citizen of the company's home country
working in a foreign country. Ms. Hamidah is Mr. Chan's executive secretary in Malaysia, but
unlike Mr. Chan, she is a citizen of Malaysia and is considered a host-country national. She
is an employee hired by a foreign company to work in her own country. Mr. Alex works for the
same company as Mr. Chan and Ms. Hamidah in Malaysia, but he is an Australian. An
employee like Mr. Alex who is a citizen of one country, but works in another country for a
company that is headquartered in a third country, is called a third-country national. Mr.
Chan, Ms. Hamidah and Mr. Alex, are examples of MNC’s staffing approach. MNCs face
different challenges with employee selection leading them to use certain staffing approaches.
The international HR department must have a good idea about the skills and availability of
human resources in different labour markets around the world. The HR department must have
the capacity to foresee the changes in these markets and exploit those changes productively.
A truly international HR department would insist on hiring people from all over the world and
place them throughout the international business operations of the organization. There are
various techniques and methods used by organizations to hire the right candidate for a
position. In particular, a firm’s staffing policy is concerned with the selection of employees who
have the skills required to perform a particular job and there are three main approaches to
staffing within international businesses.
Describe, with examples, the THREE (3) staffing approaches that MNCs could adopt within
the international businesses context. Also, discuss any TWO (2) advantages and TWO (2)
disadvantages of each staffing approach.
(25 marks)
QUESTION 5
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MIB603 INTERNATIONAL BUSINESS 0918
When entering foreign markets, company executives must decide how many resources to
commit, and how much control they want to have over their foreign activities. Resource
commitment and control are both associated with risks and profits. Exploring foreign markets
can be a daunting proposition for MNCs due to the risks and uncertainties involved. Despite
the strategic intent of going international, businesses have to be wary of several tactical and
operational issues that can complicate the decision to go international. Such businesses are
advised to strategically weigh their international market entry modes before making a
commitment.
Describe any FIVE (5) foreign market entry modes and compare and contrast the international
market entry modes mentioned in terms of TWO (2) advantages and ONE (1) disadvantage
(25 marks)
QUESTION 6
Contemporary international business approaches appear to take a different stand from
traditional international business approaches. In traditional international business, competitors
are viewed as rivals and MNCs need to strategise to counter industry rivalry. However,
contemporary international business views competitors as allies and, in fact, MNCs are
advised to form strategic alliances with their competitors. This shift in paradigm has created
many possibilities and opportunities for MNCs. The continuous economic growth in the Asia-
Pacific region is presenting tremendous opportunities for MNCs in the region. MNCs observe
new shifts as a means to capitalize on new opportunities because these shifts reflect new
international business opportunities in the 21st century.