MGT602 Current Midterm Dec 2012 Subjective Solved

MGT602= Current Midterm Dec 2012 Subjective Solved

By::: YASIR JAVAED

Difference of indirect and direct export

Exporting

As a general rule, an entrepreneur starts doing international business through exporting.

Indirect exporting involves a foreign purchaser in the local market or using an export management firm. For certain commodities, foreign buyers seek out sources of supply. Export management firms, another indirect method, are located in many commercial centers.

Direct exporting through independent distributors or through one’s own overseas sales office is another entry method. An independent foreign distributor directly contacts foreign customers and takes care of all technicalities. Entrepreneurs who do not wish to give up control over marketing can open overseas sales offices and hire their own salespeople.

3 successes and 2 failures of GATT (The General Agreement on Tariffs and Trade (GATT 1947)

GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.

Problems with GATT

• GATT has failed in significantly liberalizing trade of agricultural products. This was one of the major goals at the Uruguay Round.
• It has been partially successful in the regulation of trade practices adopted by member countries in response to BP difficulties. For example, the United States in 1971 imposed a 10% additional charge on its imports, thereby doubling its average duties.
• Steady erosion of the MFN principle by the EC. Article 24 permits member countries to form a CU or a FTA. The EC adopted VILs to keep out agricultural products, lowered duties to many African and Mediterranean countries, which are not extended to other GATT contracting parties.
• GATT condoned managed trade for textiles, largely due to US pressure, and automobiles (VERs).
• GATT is an executive agreement under the Protocol of Provisional Application. What this means is that the contracting parties are not obligated to abide by those rules that were inconsistent with their domestic laws at the time of entry of the contracting party into GATT. Many countries bypass or sidestep rules and provisions by deliberately narrowly defining commodities because of tariff purposes.

Opportunity analysis

Opportunity analysis, or an opportunity assessment plan, should focus on the opportunity and provide the basis to make the decision, including:

a. A description of the product or service

b. An assessment of the opportunity

c. Assessment of the entrepreneur and the team

d. Specifications of all the activities and resources needed

e. The source of capital to finance the initial venture

The most difficult aspect of opportunity analysis is the assessment of the opportunity.

Copyright and limitations

The exclusive right to make and dispose of copies of a literary, musical, or artistic work

Limitations

All other uses require permission and copyright owners can license or permanently transfer or assign their exclusive rights to others. Copyright does not protect ideas, only their expression or fixation. Without the permission of owner you cannot have a right to copy.

How is inventor different from entrepreneur?

An Entrepreneur is someone who starts up a business and has all the necessary resources to implement his/her business idea.
However Inventor is someone actually creates something new for the society and/or world as a whole. Inventors can not always be good in implementing or commercializing his/her invention for the good of society or even when it comes to serving the whole world. On the other hand Entrepreneurs strive to implement their ideas and make it good for the society.

Q2.Why creating a venture with corporation is not better than independent entrepreneur.3 marks

Q3.Describe different kinds of claims and choose a claim about certain given scenario.5 marks

Claim (patent)

Patent claims are the part of a patent or patent application that defines the scope of protection granted by the patent. The claims define, in technical terms, the extent of the protection conferred by a patent, or the protection sought in a patent application. The claims are of the utmost importance both during prosecution and litigation.
For instance, a claim could read:

• "An apparatus for catching mice, said apparatus comprising a base for placement on a surface, a spring member..."
• "A chemical composition for cleaning windows, said composition comprising 10–15% ammonia, ..."
• "Method for computing future life expectancies, said method comprising gathering data including X, Y, Z, ..."

A patent is a right to exclude others from making, using, selling or offering for sale the subject matter defined by the claims. In order to exclude someone from using a patented invention in a court, the patent owner, or patentee, needs to demonstrate that what the other person is using falls within the scope of a claim of the patent. Therefore, it is more valuable to obtain claims that include the minimal set of limitations that differentiate an invention over what came before, i.e. the so-called prior art. On the other hand, the fewer the limitations in a claim, the more likely it is that the claim will cover or "read on" what came before and be rejected during examination or found to be invalid at a later time for lack of novelty.

Q5.Environment Factor facing by international entrepreneurship. 3 marks

The entrepreneur should first conduct an environmental analysis to identify trends and changes occurring on a national and international level that may impact the new venture. Examples of environmental factors are:

Economy Culture Technology Legal concerns All of the above external factors are generally uncontrollable Next the entrepreneur should conduct an industry analysis that focuses on specific industry trends. Some examples of industry factors include: Industry demand Competition The last part of this section should focus on the specific market. This would include such information as who the customer is and what the business environment is like. The market should be segmented and the target market identified

Q2. importance of top management commitment to Intrapreneure? 3 marks

The first step is to secure a commitment to intrapreneurship in the organization by top,

upper, and middle management. Without top management commitment, the organization will never be able to make the necessary changes. Once top management has committed to intrapreneurship for a sufficient length of time, the concept is introduced throughout the organization. This is effectively accomplished through seminars. General guidelines need to be established for intrapreneurial venture development. Next, intrapreneurial leaders need to be identified, selected, and trained.

Q3. Benefits of registering trade mark? 3 marks

A trademark may be a word, symbol, design, or some combination that identifies the source of certain goods. A trademark can last indefinitely, as long as it continues to perform its indicated function. The trademark is given a 20-year registration with 20-year renewable terms. In the fifth to sixth year, you must file an affidavit with the PTO indicating that the patent is in commercial use. Today the law allows filing a trademark solely on the intent to use the trademark in interstate commerce. There are benefits to registering a mark that has already been in use.

 Categories of trademarks:

Coined marks denote no relationship between the mark and the goods and afford the possibility of expansion.

An arbitrary mark is one that has another meaning in our language.

A suggestive mark is used to suggest certain features or characteristics of a product or service.

A descriptive mark must have become distinctive and gained recognition before it can be registered. Registering a trademark can offer significant advantages to the entrepreneur.

Business plan importance to entrepreneur

Business plan is significant because, In running or starting a business, the learning curve is short before you run out of resources and are forced to close. Therefore, a business plan helps you set up a sound framework, model and system ahead of time, as well as, treat potential problems and threats, so that you can capably run a business. A funding business plan will save you a lot of time and money. The beautiful thing about a business plan is that it actually creates the future of your business, as you want it to be. It gives you more control over what future success will come. More importantly, it gives you a great process to grow the future business you desire, whether that is a start up, acquisition, expansion or build out.

Role of Export management Firm in Indirect Exports

Export management firms, another indirect method, are located in many commercial centers. For a fee, these firms will provide representation in foreign market. Typically, they represent a group of non-competing manufactures from the same country who have no interest in becoming directly involved in exporting. The expert management handles all of selling, marketing and delivery, in addition to any problem technical problems involved in the export process.  

Factors that involves problems in starting International business

·         Economics

·         Balance of Payments

·         Political-Legal Environment

·         Cultural Environment

·         Technological Environment

1.   Why corporate Entrepreneurs are more successful than Independent Entrepreneurs? (3 marks)

2.   What is GATT? Write is purpose of GATT? (5 marks)

GATT is a multilateral agreement with the objective of liberalizing trade by eliminating tariffs and import quotas. In each round, mutual tariff reductions are negotiated between member nations. Members can ask for investigation of violations. While GATT has helped develop more unrestricted trade, its voluntary membership gives it little authority.

General Agreement on Tariffs and Trade. Treaty organization affiliated with the United Nations whose purpose was to facilitate international trade. The primary actions of the organization were to freeze and reduce tariff levels on various commodities. GATT was created in 1947, and was originally intended to become a part of the International Trade Organization (ITO); however, the ITO failed to be created, so the GATT was left as an independent organization. In 1994, GATT was superseded by the WTO.

3.   What is written in Description of the Venture section of Business Plan? (5 marks)

The description of the venture should be detailed in this section. This should begin with the mission statement or company mission, which describes the nature of the business and what the entrepreneur hopes to accomplish. The new venture should be described in detail, including the product, location, personnel, background of entrepreneur, and history of the venture. The emphasis placed on location is a function of the type of business. Maps that locate customers, competitors, and alternative locations can be helpful. If the building or site decision involves legal issues, the entrepreneur should hire a lawyer.

4.   While starting new foreign business, what things should Entrepreneur consider?  (3 marks)

Strategic Planning offers ideas on how to match the organization’s design to its products and capabilities, goals and resources. This process is much easier to execute once you have obtained a basic knowledge of exporting value-added food products, understand the marketing research process, and analyzed the elements of the marketing mix. Proper organization, both internally and externally, allow the firm to become more efficient in its operations and expansion.

After the information the first step in building a successful export strategy is determining the firm’s readiness to export. The following are guidelines on preparing an export business plan, developing export marketing skills, designing a template for an export marketing plan and considering marketing tools prior to engaging directly in promotional activities.

5.   In what situation Entrepreneur will involve in Joint Venture, in case of International business? (3 marks)

Joint ventures

Two firms get together and form a third company in which they share the equity.

Joint ventures have been used by entrepreneurs in two situations:

1. When the entrepreneur wants to purchase local knowledge and an established facility.

2. When rapid entry into a market it needed. The keys to success of joint ventures have not been well understood. Reasons for forming a joint venture today are different than those in the past. Originally, joint ventures were used for trading purposes and were one of the oldest ways of transacting business. Joint ventures in the U.S. took the form of vertical joint ventures used by mining concerns and railroads. Motives for the significant increase in the use of joint ventures:

a. To share the costs and risks of an uncertain project.

b. To gain synergy between the two firms.

c. To obtain a competitive advantage.

d. To enter markets that pose entrance difficulties.

2 - Education as a entrepreneur characteristic (3Marks)

Education appears important in the upbringing of the entrepreneur, in the level of education obtained and in playing a major role in coping with problems. Although formal education is not necessary for starting a new business, it does provide a good background. In education, female entrepreneurs previously experienced some disadvantage, with few having degrees in engineering, science, or math. The ability to deal with people and communicate clearly in written and spoken work is also important.

3 - Pakistan is running Indian movies in local cinemas local market is dying, If you are Commerce minister what would you suggest to revive local market. write 5 points (5Marks)