Assignment-I International Business

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ALLIANCE BUSINESS SCHOOL
SUBJECT- GLOBAL DIMENSIONS OF INTERNATIONAL BUSINESS
ASSIGNMENT NO.-1
DATE: 02/03/11
SUBMITTED TO: Prof. M V NARASIMHAN
SUBMITTED BY: Akshay Shah

Answer: 1
IMPACT OF POLITICAL TURMOIL IN EGYPT ON GLOBAL BUSINESS:

Political turbulence in Egypt in casting a poll on world financial markets driving up the prices of crude oil & food and creating new risks for the shaky world economy in the months ahead. Following are the impacts of political turmoil in Egypt on global business: •

Oil prices reached last week their highest 110 dollar per barrel of raw oil since 2008 & investors sold off both stocks and bonds of many developing nations, particularly in the middle east.



The turbulence on financial markets shows how political upheaval in one place- first Tunisia, now Egypt- can set off hard to predict reverberations around the world, possibly undermining the global economic recovery.



Investors are most concerned that other Muslim nations, particularly those of autocratic leadership & vast oil reserves, will soon see their ruling regimes threatened as well.



International organizations also trying to monitor more urgent concerns, what’s going on in Egypt has again reminded world that the world economy is not out of the woods & that things we do not anticipate can have a significant negative effect on global markets & risk sentiment.



Because of political & business instability in Egypt- lead with the problems with foreign receipts & currency.



Economist & Investors all around the world have fear that political developments could disrupt oil exports from Saudi Arabia or other oil reserved nations.



The greatest threat for global economy- absent a spread of popular revolt to other nations in the middle east or beyond – is the disruption of shopping through the Suez Canal.



In forthcoming days, it will be challenge for government to keep the political stability in Egypt, for smooth business functioning throughout the world & controlling oil prices which are on their peak.

Answer 2:
IMPORTANCE OF PROPERTY RIGHTS IN GLOBAL BUSINESS ECONOMY:
In a legal sense, term property refers to a resource over which an individual or business holds a legal title; that is a resource that it owns. Resource include land, building, equipment, capital, minerals rights, business and intellectual property.

Property Rights refer to the bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource. Property Rights are important in the global business economy because:•

The philosophy behind protecting property rights in the global business economy, as it is reward to the originator of a new invention, books, musical record, clothes design, restaurant chain and the like; for his or her idea & effort.

Such property rights are very important stimulus to innovation and creative work. They provide An incentive for people to search for novel ways of doing things and they reward creativity.

e.g. - Consider an innovation in automobile industry; say a use of non conventional fuel to be used

in all kinds of vehicles with maximum efficiency and low cost of fuel. This gives automobile firms an incentive to undertake the expensive, difficult and time consuming basic research required to generate new fuel. (It can cost $800 million in R & D and take 10 years to set a new fuel in the market)



Also economic evidences suggests that high levels of corruption i.e. theft of property rights significantly reduce the foreign direct investment, level of international trade, & economic growth rate in a country. By siphoning off profits corrupts politicians & bureaucrats reduce the returns to business investment and hence reduce the incentive of both domestic and foreign businesses to invest in that country.

Because of all the above reasons explained it is important to protect property rights to...
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