National Institute of Technology 2009-1st Sem M.B.A International Business IV Sem - - Question Paper

a few of the factors which affect the option of FDI for sales expansion are:

1. Transportation:
When companies add the cost of transportation to production costs a few products become impractical to ship over great distances a few of those products and those investing companies are newspapers, magazines, dynamite and soft drinks. These companies must produce abroad if they are to sell abroad.
2. Excess capacity:
It leads to exporting rather than direct investment. It may be competitive because of variable cost pricing.
3. Scale economics and product attritions:
In large scale process technology companies’ exports decrease costs by spreading fixed costs over more units of output.

In small scale process technology companies’ country by country production decreases costs by minimizing transportation expenses.

4. Trade restrictions:
If imports are highly restricted companies
• Often produce locally to serve the local market.
• Are more likely to produce locally if market potential is high relative to scale economics

5. Country of origin effects:
Consumers sometimes prefer domestically produced goods because of
o Nationalism
o A belief that these products are better.
o A fear that foreign made goods may not be delivered on time.

6. Changes with comparative costs:
The lowest cost production location modifications because of inflation, regulation and productivity.

Q: six (A) Is TKM’s ambition of capturing 33percent of the Indian car market reliable? If yes, how? If no, why?

Ans:

Yes, it’s Reliable.

The power of empowering others:
My sore Kirloskar, a Rs. 16 crore loss making company, had been focusing on making high technology machines without proper tech. expertise. Instead of managing customer complaints and warrant claims, CEO TKM decided to go in for simple lathes where the company had the expertise. This kept the workshop buzzing, while the services part phone stopped ringing.

With an accountant’s precision he revamped the systems and procedures in the company, but at the identical time he decided to empower officials down the line, opening up internal communication channels. “I believe in the power of empowering others,” says CEO TKM.

The change in business focus and the internal revamp coupled with a Rs. 160 crore order to chum out simple lathes turned Mysore Kirloskar’s fortunes around. The 1st year of CEO TKM’s stewardship saw the company booking a Rs. one crore profit. This went up to Rs. five crore and Rs. nine crore in the 2nd and the 3rd year, respectively.

Earning:   Approval pending.