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IBMS

IBMS. IBMS definition Decisions /needs Decisions to which forms of IBMS response of country to globalization/ environmental changes. FOREX management n Global finance. Conflict resolution. IBMS. Why : Reasons/ Needs

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IBMS

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  1. IBMS • IBMS definition • Decisions /needs • Decisions to which forms of IBMS • response of country to globalization/ • environmental changes. • FOREX management n Global finance. • Conflict resolution.

  2. IBMS • Why : Reasons/ Needs • Facilitators/ drivers/attractions/compulsions • Inference study • Analysis on functions

  3. Factors • Economic reforms • WTO/GATT • Communication • Transportation • Technology

  4. DRIVERS • Protection • MNC impetus • Cultural change • Urge to expand / Global image • Change in empire /country pattern.

  5. Attractions • Profit • Availability of 4 ps • Feasibility • Lesser cost high price • ROI

  6. Compulsions • Domestic limitations • Minimized Risk • Conglomerate/ parallel possbilities/Diverse.

  7. Patterns • Based on factors/ interest / response/ strategy--- configuration • Local/ INC / TNC / MNC / GNC

  8. Concepts • IBMS concepts • Flow Share Capitalise

  9. Concepts IBMS • EXIM flow / trade flow • Finance flow / investment flow • Trade flow • Resources flow • Benefit of cost • Expertise countries participation in flow • Techno sharing

  10. Trade flow • Increased trade flow Profit / exchange profit • Possibility of BE/ PE thro source exploitation • Common currencies benefit. • World over development of DVGC/ UDC • Cultural migration and Reverse cultural shock.

  11. Investment n Trade trends • High by USA /EU more than 10 % 2006 • Low by India /SA less than 1 % • INV: World : 12113 bn $ • High by USA/ EU : 15.8 / 43.1 • Low by 1.4 india/AZ/NZ.

  12. Motives of FDI • Country inflows • Country outflows • FDI capitalization • Exploitation thro FDI • GDP/ GGDP • Income thro FDI

  13. Reasons for FDI • Mergers n Acquisitions • Weakening currencies of developed country • ex: Dollar • Secular govnts • High P/S n ROI increase.

  14. Mercantilism • Mercantilism meaning • Theories • Mercantilism theory( gold and silver) • Based BOT /BOP- Monarch wealth • Neo mercantilism (Higher. production – higher exports) • Cost advantage n comparative cost adv.

  15. Other theories IB • Heckscherohlin theory • Relative resource endowment (Labour adv vsresouce adv) R a /L a >> R b/L b • Country similarity theory( steffanlinder) • Based on DC to Dc / Dvg to DVg / etc., • IPLC theory -Louis wells • Release- export-prodn increase- foreign prodn- foreign prodn.- foreign protection-import competiton.

  16. IB theories Country size theory Country size – resources together. Country size – High transport cost- reducing global trade. Vastness of economy and IT trade go together. Michels porters theory.

  17. Forms of IBMS • Non ownership --- Product EXIM , Service EXIM, Licensing or franchise , contract mfg • Turnkey operations, and management control • Ownership : Foreign operations , Assembly subsidiaries, JVs, Strategic alliances, M & As

  18. Export strategy • Decision to export than TNC /GNC • a. Foreign business not large enough • b. High cost of foreign production • c. High Investment risk or political risk • d. No long term forecasting /guarantee • e. Country or operation not favoring. • f . Hence licensing or franchise or direct not.

  19. Import strategy • No feasibility for local production • High cost of production • Local mkt is with infra/ raw materials/labor issues • Orgn. interest in foreign production • More subsidiaries/sops/ tax discounts in foreign soil.

  20. J V types • JV adoption • JV restart or rejuvenation • JV creation • JV internal ties bkwd integration or fwd integration

  21. Trade policies • guidelines drafted by concerned govts. • To protect domestic environment. • Priorities, assistance , concessions, preferences , norms , rules , regulations , taxes, quotas , etc.,

  22. Trade policy • Ex: governing bodies • CII/ COC/ FICCI/ ASSOCHAM • State owned/ autonomous bodies: • STCL ( state trading corporation ltd) • ECGC ( Export credit guarantee corporation)

  23. Trade policy objectives • Economic growth • Share – global merchandise • Employment • Simplification- procedures • Inter alia ( further liberalization) • Neutralizing levies n duties • SEZ/ FTZ/ Tech parks etc.,

  24. Trade agreements • WTO • GATT • NAMA ( non agrimkt access • Regional trade agreements • SAFTA,LAFTA, NAFTA SAARC , BIMST-EC ( bay of bengal • Multi sectoral technical economic co op

  25. Examples: CEPA with srilanka • CECA with singapore • Agreements Misc: • GSTP Global system of trade preferences. • GSP Generalized system of preferences.

  26. Governing bodies : • DIPP under dept of commerce. • FIPB ministry of finance. • FIIA foreign investment implementation authority • FDI direct under RBI • SEBI etc.,

  27. EXPORT PROMOTION • Export promotion measures: to protect n promote domestic exporters r TNC r INC • Financial , • Fiscal • Facilitative • Favors n facilitating

  28. Services to exporters • Cr finance thro EXIM bank • Cr guarantee • Cr by ECGC n Commercial banks • Pre shipment cr facility – access of cr from mfg stage n to buy raw materials • Suppliers crfacility.

  29. Project cr facility. • SME s schemes • Rural grass root promotion (RGR) • Funding for overseas exporting • Funding for overseas acquisition. • Fiscal concession for exports.

  30. Target plus support – duty free credit – pro rata based. • Web chat : Facilitator for queries or clouts • for exporters.

  31. Documents for Shipping • Shippers export declaration • Shipping bill - Cess /duty if any • Commercial invoice • Origin certificate • Insurance certificate • Packing list • ATA CARNET • Dock receipt n ware house receipt.

  32. Shipping bill needs • GR forms duplicate. • Contents copy qua triplicate ( size , content , qty weight , etc., ) • Four copies of invoice • Copy of Contract , L/C , purchase order of importer. • Inspection certificate

  33. IEC /RCMC • Import export code no: first legal step in EXIM – DGFT director genl of foreign trade • Registration cum membership certificate number : thro Federation of indian exporters organization FIEO.

  34. FOREX • Macro aspects: • a. Forex meaning • b. Uniform currency codification • c. Exchange rate determination • d. Dynamics of FX rates • e. Fluctuation in Fx rate ( brickbats n bouquets )

  35. FX rate types • Inter bank mkts - parties banks • Merchant deal mkts – parties dealers • Wholesale mkt - size large corporations r inter banks. • Retail mkt – size deals less than $1000 • OTC mkt : ORGN - direct parties no IMAs • Exchange mkt : ORGN -thro exchanges of clearing house.

  36. Transactional mkt : Type of deal : Trade or finance exchange • Hedging mkt : Risk cover deal • Speculation : Wait n pegg deal to gain profit.

  37. Spot mkt : based on shedules: in two days • FWD mkt : scheduled for future delivery . • Arbitrage mkt : simultaneous exchange • Options mkt : Open schedule in call / put • Futures mkt : scheduled with stdzd agents LIFFE / TIFFE( londonintnlfncl futures exchange ) • SWAPS mkt : Temporary schedules

  38. Types of Forex rate : • Telegraphic transfer • Direct n indirect rates • Bid and ask rates • Spot n fwd rates • Cross rates pound vs dollar thro rupee

  39. Determinants – Ex rates • GDP • Inflation rates • Interest rates • Demand n supply mapping • Exim trends • Forex reserves • Natural resource Vs policies

  40. Political system • Market trends.

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