ICSID's Role in Dispute Resolution & Samsung's Brand Building, Study notes of Business Administration

Download ICSID's Role in Dispute Resolution & Samsung's Brand Building and more Study notes Business Administration in PDF only on Docsity! Question Paper International Marketing (MB3H1M) : October 2008 Section A : Basic Concepts (30 Marks) • This section consists of questions with serial number 1 - 30. • Answer all questions. • Each question carries one mark. • Maximum time for answering Section A is 30 Minutes. 1. Since 1973, a “floating” exchange system has been the norm in most of the countries. A floating exchange system is good because I. It allows governments to address their Balance of Payments (BoP) problems by having flexible exchange rates. II. It allows governments to change the exchange value in tune with export policies. III. The government needs to manage its Balance of Payments (BoP) situation. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. <Answer> 2. Pricing decisions cannot be made in isolation because pricing affects other marketing decision variables and determines I. The customer’s perception of value. II. The level of motivation of intermediaries. III. Promotional spending and strategy. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. <Answer> 3. The sensitivity of firms’ cash flows to changes in exchange rates is called exposure. Which of the following is/are true with respect to translation exposure? I. It arises on the basis of accounting for transactions between trading companies. II. The holding company in a country needs to include the accounts of its subsidiary in its balance sheet. III. There is exposure, when transactions are recorded at the historical rates. IV. It involves a subjective projection of future cash flows. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II), (III) and (IV) above. <Answer> 4. If Hewlett Packard (HP) and Microsoft were to agree to partner together to purchase 70% of the largest computer manufacturer and distributor in Korea, it would be an example of which of the following entry mode? (a) Portfolio investment (b) Joint venture (c) Mixed venture (d) Franchising (e) Licensing. <Answer> 5. Adam Smith proposed the ‘Theory of Absolute Advantage’. Which of the following is/are the assumption(s) of this theory? I. The transportation costs involved in selling a commodity in a country other than the one in which it is <Answer> 1 i.exe produced are either non-existent or insignificant. II. Prices are comparable across countries. III. Two countries would trade even when one country has absolute advantage in all products or another country does not have absolute advantage in any products. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. 6. Investment banking is a banking activity specializing in the formation of capital. Which of the following is not an activity executed by an investment banker in International banking services? (a) Project advisory (b) Financial restructuring (c) Mergers and acquisitions (d) Improvement in economy (e) Raising Finance. <Answer> 7. International Monetary Fund (IMF) provides long-term financial assistance facility to the countries with a more protracted Balance of Payments (BoP) problem with roots in the structure of the economy is referred to as (a) Extended fund facility (b) Supplemental reserve facility (c) Compensatory finance facility (d) Emergency finance facility (e) Low fund facility. <Answer> 8. The product mix is the set of all the products that an organization offers to its customers. It has certain characteristic features like product width, length, depth and consistency. Which of the following is/are true with respect to these characteristics? I. The width of the product mix is the total number of items in that mix. II. The length of the product mix is the total number of product lines a company carries. III. The depth of a product mix is the assortment of sizes, colors and variations offered for each product in the product line. IV. Product mix consistency refers to the closeness exhibited by the products lines in production requirements, distribution, end usage etc. (a) Only (I) above (b) Only (II) above (c) Both (III) and (IV) above (d) (II), (III) and (IV) above (e) All (I), (II), (III) and (IV) above. <Answer> 9. The International Centre for Settlement of Investment Disputes (ICSID) provides facilities for the conciliation and arbitration of disputes between member countries and investors who are nationals of other member countries. Apart from this, Which of the following is/are the additional facility rules it administer, certain proceedings beyond the purview of the convention? I. Conciliation and arbitration proceedings where either the state party or the Home State of the foreign national is not a member of ICSID. II. Where a dispute is not an investment dispute and relates to transactions that distinguish it from ordinary commercial transactions. III. ICSID also does certain “fact finding proceedings” for any state or foreign national, who may want an enquiry “to examine and report on facts”. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. <Answer> 10.Ford advertises company’s name prominently along with the products. Which branding strategy does this refer to? <Answer> 2 (a) Only (I) above (b) Only (II) above (c) (I), (II) and (IV) above (d) (I), (II) and (III) above (e) All (I), (II), (III) and (IV) above. 22.As organizations grow globally, they find it difficult to manage their widespread operations. Which of the following is/are not true with regard to formal control methods? I. Companies adopt formal control methods for evaluation. II. It is based on specific plans and targets that are to be achieved. III. It does not use methods as budgeting or planning. IV. It requires face-to-face communication between headquarters staff and subsidiaries staff. (a) Only (II) above (b) Both (I) and (II) above (c) Both (III) and (IV) above (d) (I), (III) and (IV) above (e) (II), (III) and (IV) above. <Answer> 23.Akbar wanted to purchase a Mercedes-Benz car in most of his adult life. He did extensive research on different Mercedes-Benz car models. Finally, at the age of 50, he achieved the income level to be able to purchase one. The Mercedes is an example of a(n): (a) Specialty product (b) Consumer product (c) Convenience product (d) Business product (e) Unsought product. <Answer> 24.Transfer pricing is an issue of major concern for companies operating internationally. Which of the following is/are true with regard to transfer pricing? I. It is also referred to as intra-company pricing. II. It determines the success of the organization by influencing the performance of the subsidiary, the executive compensation, and the taxes paid. III. The objective of transfer pricing (from the point of view of the firm) is to ensure subsidiary efficiency. (a) Only (I) above (b) Only (II) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. <Answer> 25.At the Sundae Sampler, customers place their orders, watch their ice-cream sundaes being prepared, and then quickly eat the sundaes in the store before the ice cream melts. This is an example of which of the following characteristic of services? (a) Inseparability (b) Intangibility (c) Heterogeneity (d) Perishability (e) Dependency. <Answer> 26.There are various constraints in the designing of international channels so that they fit the company’s objectives. Which of the following is not a characteristic relating to customers constraint in distribution channels in different countries? (a) Degree of standardization (b) Income (c) Shopping habits (d) Geographical distribution (e) Reaction to different selling methods. <Answer> 27.A brand is a company’s strategic asset. Which of the following is/are the aspect(s) that have to be taken into consideration while deciding a brand name for the global market? <Answer> 5 I. The brand name should not have any negative connotation. II. It should differentiate the product from other similar products. III. The name must indicate the product’s major benefits. IV. It must not be compatible with other products in the product line. (a) Only (I) above (b) Only (II) above (c) (I), (II) and (IV) above (d) (I), (II) and (III) above (e) All (I), (II), (III) and (IV) above. 28.Publicity is an important variable of the promotional mix. Which of the following is not true with respect to publicity? (a) It is primarily informative (b) It does not identify the sponsor and mostly is free (c) It is more objective that an advertisement (d) Information provided as a part of publicity is repetitive (e) It is more subdued in tone compared to an advertisement. <Answer> 29.Sony, a major electronic goods (TVs, walkman etc.) manufacturing and selling company, introduced ‘walkman’ in the market. Soon after it launched the product in the market, many other electronic goods manufacturing companies launched the similar products. (i.e. with similar trademark and design etc.). This form of brand piracy is an example of (a) Counterfeiting (b) Passing off (c) Reverse engineering (d) Outright piracy (e) Absolute piracy. <Answer> 30.The General Agreement on Trade and Services (GATS) is a voluntary agreement designed to facilitate trade in services. Which of the following service sectors are not covered by GATS? (a) Education business (b) Construction and engineering (c) Distribution (d) Air transport (e) Financial. <Answer> END OF SECTION A Section B : Caselets (50 Marks) • This section consists of questions with serial number 1 – 7. • Answer all questions. • Marks are indicated against each question. • Detailed explanations should form part of your answer. • Do not spend more than 110 - 120 minutes on Section B. Caselet 1 Read the caselet carefully and answer the following questions: 1. Which of the following ways of marketing is better for Levi Strauss & Company – developing a website to sell their jeans online and provide all fulfillment services or through retailers or a combination of both? Justify your answer. ( 6 marks) <Answer> 2. Explain the various aspects that Levi has to consider while designing Internet strategy as an effective marketing tool to sell its jeans. ( 7 marks) <Answer> 3. Levi is finding it increasingly hard to charge different prices in different markets. ( 7 marks) <Answer> 6 Explain the necessity for Levi to maintain different prices for different markets. Levi Strauss & Company approached a website development consultant to assist it in developing a website for Europe. To e-tail or not to e-tail is a question facing many traditional companies in today's rapidly evolving “New Economy.” The answer is not the foregone conclusion it once was. By 2000 over 140 so-called dot-com companies had gone out of business. Even traditional retailers such as Wal-Mart, JCPenney, and others that rushed to embrace e-commerce and launch websites when the Internet first took off later withdrew and relaunched. Although experts insist business-to-consumer e-tailing is here to stay (and may one day prove profitable), some companies have played it more cautiously until Internet penetration attains critical mass and consumer behavior becomes easier to predict. In the United States, Levi ran a six-month experiment of selling the 501 brand of jeans via its U.S. website and providing all the fulfillment services in-house. However, it closed the site when channel friction developed with retailers such as Macy's and JCPenney, who did not like Levi's Web competition. Levi has adopted a “wait and see” approach to the Internet. It revamped all its websites, and in Europe it has concentrated on making the site more product focused. The company now wants to consider the possibility of a full-scale push into e-commerce in Europe on its relaunched website, www.eu.levi.com. The final decision to sell online has not been reached, but the jeans retailer does want to consider the best approach. It is also testing a setup for selling online in the United States through e-tailers such as JCpenney.com and Macys.com. Levi hopes to create a foolproof e-commerce strategy, which could either be to go direct, sell through established e-tailers, or to combine the two approaches. Levi has had problems maintaining sales. Some of the problems can be attributed to changes in market behavior. Young consumers, who regard Levi’s as jeans for their parents or even grandparents, are buying more stylish jeans made by the Gap, Tommy Hilfiger, Polo Ralph Lauren, and a host of newcomers such as Mudd and JNCO. At the same time, lower-priced brands sold by Wal-Mart and Sears are eating into Levi’s sales. JCPenney has built its Arizona brand into a $1 billion business in less than ten years by promoting high style plus Penney’s value. European sales have also suffered another problem-parallel imports. Levi Strauss likes to assure its customers that its 501 jeans in Paris, France, are the same as in Paris, Texas. Well, not exactly the same:, French Sols cost more than twice as much as American ones. The company is suing 24 European retailers, including Tesco, a British supermarket chain, for selling cheap Levi jeans imported from unofficial sources outside the European Union. Companies such as Levi are finding it increasingly hard to charge different prices in different markets. EU legislation outlaws parallel imports of cheap branded goods, such as jeans or CDs, from outside the EU, although it isn’t difficult to skirt the law. Sharp traders can easily buy products where they are cheap and resell them where they are dear. Since parallel trading is legal between countries within the EU’s single market, differential pricing for Levi jeans among countries will have to be addressed because selling on the Internet makes it easy for someone in France to buy jeans in England if the price is less. Levi is interested in what some consider the next big e-commerce wave: custom- built products for markets of one. The mass market “one size fits all” approach is a withering anachronism, and Levi is considering incorporating in its website the capacity to custom build and deliver jeans and Dockers in units of one. For several years Levi has had a handful of brick-and-mortar stores that allow customers to create the jeans they want by picking from six colors, three basic models, five different leg openings, and two types of fly. The customer’s waist, butt, and inseam are measured and a plain pair of test-drive jeans is tried on to make sure the fit is satisfactory before the order is punched into a Web based terminal linked to the stitching machines in the factory. Two to three weeks later the jeans arrive in the mail. Levi is considering putting that capability on the Web. Customers would go to a 7 creating global brands for the companies like Samsung. Samsung was established in 1969 as the flagship company of Samsung Corporation. It was the third largest player in the Korean electronics market after Lucky Goldstar (LG) and Daewoo. Samsung achieved fast growth through exports, which constituted around 70% of its total production. Most of the exports were to the USA on Original Equipment Manufacturer (OEM) basis. It supplied components for high tech industries in the USA. In the early 1970s, Samsung decided to venture into the television market and in 1972 it started production of black & white television sets for the local market. After its success in the television market Samsung set up its home appliances plant in 1973. By 1974 it started manufacturing refrigerators and washing machines. In 1993, as a first step in its globalization drive, Samsung acquired a new corporate identity. It changed its logo and that of the group. In the new logo, the words Samsung Electronics were written in white color on a blue color background to represent stability, reliability and warmth. The words Samsung Electronics were written in English so that they would be easy to read and remember worldwide. The logo was shaped elliptical representing a moving world - symbolizing advancement and change. The first and last letters 'S' and 'G,' broke out of oval shape partially in order to connect the interior with the exterior. According to company sources, this design represented the company's wish to connect itself with the world and serve society as a whole. To change its brand image, Samsung decided to associate itself with global sport events. In 1998, when Seoul hosted the Olympics, Samsung became the official sponsor of the wireless technology to the games. This move helped it to boost its image worldwide. Due to its brand building activities across the world, Samsung reported a net profit of 2.95 trillion won in 2001 on total revenues of 32.4 trillion won. In July 2001, Samsung entered into a marketing alliance with AOL Time Warner to work together on AOLTV set-top box with the TiVo recording service. In return, Samsung products would be promoted in AOL Time Warner's marketing initiatives. Due to this alliance. Samsung products were promoted in People, Entertainment Weekly and Sports Illustrated of AOL Time Warner's magazines. In early 2003, Samsung announced that it would-concentrate on US and European markets, where its brand was considered weak in product categories other than mobile phone handsets. Kim Said, "Our brand is weaker in Europe and the U.S., but in cell phones we're pretty strong. In those regions we'll be even more focused. Wireless and digital TV are the two areas we'll focus on in Europe and the U. S." Samsung emphasized on brand building when entering new markets. When entering India, one of the world's largest markets, Samsung realized that its products were unknown in Indian markets. In India, like elsewhere in the world, Japanese goods were considered to be of better quality than Korean goods. To project itself as a high technology company, Samsung undertook a two-month corporate campaign, which highlighted the company's strengths in semiconductors, colour picture tubes, colour televisions and mobile phone handsets. In addition to strengthening the Samsung brand in specific markets, the company also launched global advertisement campaigns to enhance its brand image worldwide. In 1997, Samsung launched its first corporate advertising campaign - Nobel Prize Series. This ad was aired in nine languages across Europe, the Middle East, South America and CIS countries. The advertisement showed a man (representing a Nobel Prize Laureate) passing from one scene to another. As the man passes through different scenes, Samsung products transform into more advanced models. According to company sources, the idea was to convey the message that Samsung uses Nobel Prize Laureates' ideas for making its products. Samsung also signed an agreement with the Nobel Prize foundation to sponsor the Nobel Prize Series program, worldwide. The program was developed by the Nobel Foundation. Sweden to spread achievements of the Nobel Prize Laureates. 10 Initially, Samsung's advertising activities were decentralized. The company employed various ad agencies to design campaigns for its products. However, in 1999, Kim forfeited Samsung's agreements with around 55 advertising firms and signed a $400 million contract with a US based ad agency, Foote, Cone & Belding (FCB). FCB created global campaigns for the company (featuring models carrying the company's gadgets), which highlighted the superior technology of Samsung products. In 1999, Samsung unveiled a new campaign in the US with a new slogan – ‘Samsung DIGITall; Everyone's invited - on the eve of its 30th anniversary. Samsung redesigned its logo to convey its objective: making life filled with convenience, abundance and enjoyment through innovative digital products. The new slogan, Samsung DigitAll, expressed the company's aim of providing digital products ‘For all generations, For all customers and For all products.’ In April 2001, Samsung launched its new brand campaign, which was created by True North Communications' FCB Worldwide. This campaign was aired in around 30 countries with a budget of $400 million. As part of the brand campaign, the company advertised an 30-second TV spots on various channels such as CNN, VH1, ESPN, TNT and NBC during NBA games. The first advertisement in the series - 'Anthem’ -was set in U.K. The advertisement showed different Samsung products - flat screen TV monitor, MP3 Player, watch phone being used by people from different ethnic backgrounds. The voice over was: "There is a world where you see, hear and feel things like never before, where design awakens all your senses. This is the world of Samsung and everyone's invited." At the end of the commercial the company's tagline ‘DigitAll, Everyone's invited’ appeared The 'DigitAll' campaign was launched across all countries where the company had a presence and across all product lines. The campaign involved the sponsorship of events at global and regional levels. Reportedly around 30 people from Samsung's Seoul and North America offices worked with FCB on the campaign. In 2001, Samsung added the word 'WOW' to its marketing campaigns to show the admiration of consumers for its innovative but affordable products. It was reported that Samsung's 2001 global brand campaign increased consumer awareness about Samsung from 83.7% in 2000 to 91.2% in 2001, and in the US, brand awareness and preference for Samsung increased from 56.4% to 74.1% for the same period. In April 2002, Samsung adopted Internet marketing to reach high-profile consumers. It concentrated on increasing brand awareness, web traffic, and give product information with every advertisement. It bought ad space on more than 50 websites such as Fortimc.com, Forbcs.com and BusinessWeek.com. At same time, Samsung continued to advertise in the print and television. END OF CASELET 3 END OF SECTION B Section C : Applied Theory (20 Marks) • This section consists of questions with serial number 8 - 9. • Answer all questions. • Marks are indicated against each question. • Do not spend more than 25 -30 minutes on Section C. 8. The International Monetary Fund (IMF) was conceived of by members of the united nations at the Bretton Woods Conference, New Hampshire, U.S.A., in July 1944, and was established the following year. Explain the main operations performed by IMF. ( 10 marks) <Answer> 9. Before selecting a specific channel for distribution of products or services in international markets, a firm evaluates channel alternatives on the basis of various criteria. In this light, explain the criteria for evaluating channel ( 10 marks) <Answer> 11 alternatives. END OF SECTION C END OF QUESTION PAPER 12 • The objective of transfer pricing (from the point of view of the firm) is to ensure corporation-wide efficiency. 25.D Services cannot be stored for future consumption. < TOP > 26.A Constraints relating to customers: • The number of customers • Geographical distribution • Income • Shopping habits • Reaction to different methods < TOP > 27.D The following are the aspects that have to be taken into consideration while deciding on a brand name for the global market: • The brand name should not have any negative connotation. • It should not differentiate the product from other similar products. • The name must indicate the product’s major benefits. • It must be compatible with other products in the product line. < TOP > 28.D Information provided as a part of publicity is not repetitive. < TOP > 29.B In passing of piracy, products are modified, and trade marks are adapted. The pirated product is similar in appearance, phonetic quality or meaning (of its name) to the original product. < TOP > 30.D Air transport services excluded by GATS – These services are controlled by a country’s air traffic rights are not covered by GATS. < TOP > 15 Section B : Caselets 1. In the United States, Levi ran a six-month experiment of selling the 501 brand of jeans via its U.S. website and providing all the fulfillment services in-house. However, it closed the site when channel friction developed with retailers such as Macy's and JCPenney, who did not like Levi's Web competition. Levi has adopted a "wait and see" approach to the Internet. It revamped all its websites, and in Europe it has concentrated on making the site more product focused. The company now wants to consider the possibility of a full-scale push into e-commerce in Europe on its relaunched website, www.eu.levi.com. The internet is a global network of many networks connecting millions and millions of computers together. Currently, almost 30 million computers around the globe are connected to the internet. Today the internet is an integral part of business, of our environment, and even of our personal lives. Some people in rural areas are unable to purchase goods online. For these type of people direct selling through retailes is beneficial. It is better to maintain both online and direct selling (through retailers). If it maintains both channel to sell jeans there is more chanse to capture the wide market area. Through internet marketing customer can order goods directly to manufactures and this ultimately reduce the channel length. If the channel length is very small the profit margin to the company is very high. This is exact opposite in case of good marketing through retailers. Here the profit margin is very less for companies. Companies should not fully depend on either internet marketing or direct marketing (through retailers). < TOP > 2. Companies are now incorporating Internet marketing strategies in their overall marketing plan to be able to take advantage of the opportunities that e-business has to offer. While designing a strategy, Levi must consider that. 1. The Internet can be used to reduce marketing costs. It should not be viewed as just another advertising medium. It can help business by streamlining operations, reducing costs, forging customer relations, and generating revenues. E-business can create value for organizations if they continuously use new technology to improve upon their marketing system and if customer expectations are continuously met. The Internet can be used to build long-term relationships with customers. 2. The Internet can be integrated into an organization's marketing and communication plan and can be used to build brands. If it is used in combination with other distribution and media channels, it can contribute significantly in brand building. 3. Conventional marketing channel partners must be appreciated. With the Internet, it can directly reach the consumer. But it should not isolate other channel partners. It must try to use the Internet to build business for himself and for his distributors. 4. With the evolution of the Internet, the customer has become more knowledgeable. It must recognize the fact that most consumers can compare prices of products from various companies within minutes on the Internet. Therefore, it can either compete on price or convince the user of superior quality, but under all circumstances, it must aim to deliver what it promised. 5. To use the Internet potential to the optimum, organizational heads must understand and believe in its capability and the uses to which it can be put. Only then will they be able to creatively tap its potential. It is also important for them to identify the products and services and the facets of the organization that they want highlighted on the Internet. < TOP > 3. Companies such as Levi are finding it increasingly hard to charge different prices in different markets. EU legislation outlaws parallel imports of cheap branded goods, such as jeans or CDs, from outside the EU, although it isn’t difficult to skirt the law. Sharp traders can easily buy products where they are cheap and resell them where they are dear. Since parallel trading is legal between countries within the EU’s single market, differential pricing for Levi jeans among countries will have to be addressed because selling on the Irtternet makes it easy for someone in France to buy jeans in England if the price is less. Pricing refers to the value determination process for a good or service, and encompasses the determination of interest rates for loans, charges for rentals, fee for services, and prices for goods. Pricing decisions are difficult to make even when a company operates only in a < TOP > 16 domestic market, and the difficulty is still greater in international markets. Multiple currencies, trade barriers, additional cost considerations, and longer disribution channels make price determination more complex in international markets. Globalization of business has put increased pressure on the pricing systems of companies which enter international markets. These companies have to adopt their pricing structures as they graduate from being purely domestic players to exporters, and then to overseas manufacturers. The earlier pricing structures used by them may no longer be appropriate in the complex international environment characterised by high competition, more global players, rapid changes in the technology, and high speed communication between markets. Pricing decisions cannot be made in isolation because pricing affects other marketing decision variables and determines: • The consumer’s perception of value. • The level of motivation of intermediaries. Promotional spending and strategy. 4. Efforts made by Tata Group to make VSNL a global leader in wholesale voice Once upon a time, there was a government-owned Indian telecom company called Videsh Sanchar Nigam Ltd (VSNL). Then, it became a part of the Tata Group. Five years later, it's still an Indian company, but it is the world's largest player in wholesale voice, carrying nearly 20 billion minutes of traffic annually, has operations in 30 countries, and is able to offer voice data and mobile value-added services in 240 countries and territories.  VSNL after became one of the companies under Tata group it acquired so may firms both inside and outside the country. Tata group helped VSNL while acquiring the firms. Mergers and acquisitions are not a simple task. VSNL was a government-owned company and its operations were limited to India only. It did not acquire any firm before it was merged with Tata Group.  VSNL, as a sleeping public sector unit it was not customer-oriented. Tata group changed the entire culture of VSNL and identified the customer focus and made VSNL a customer- oriented firm.  Technology is one of the important aspects to provide better service to the customer with a lesser cost. With the help of Tata group VSNL adopted latest technologies to provide better services to the customers.  With the help of Tata group VSNL identified more opportunities both inside and outside the country. VSNL utilized those opportunities and became a global player in wholesale voice.  Tata group has so many firms under its corporate umbrella like TCS, TTSL etc. TCL helps VSNL with information technology, TTSL helps VSNL with domestic wireless network etc.  Tata group encouraged long term group strategy and made VSNL to take right decisions at the right time.  Beefing up the infrastructure in terms of strengthening the core processes followed. Tata ran a special programme called 'Confluence' at the Tata Management Training Centre (TMTC) for the top 40 officers of the senior management team.  Tata launched a participative organisation restructuring exercise, first at the headquarters and then at the regional and branch offices of VSNL, where the employees themselves took on part of the responsibility of identifying people for specific positions.  With the active assistance of the Tata Group VSNL acquired the business of Gemplex (US) in July 2003, Dishnet DSL from Sterling Infotech for Rs 270 crore in march 2004, Tyco Global Network (TGN) in mid-2005 and, Canada-based Teleglobe for $239 million in 2006. It immediately turned VSNL into the third-largest carrier of voice minutes in the world. The acquisitions have also enabled VSNL to build a significant presence in the enterprise business in India and arm it with the wherewithal to take the same services to the global market. < TOP > 5. Buying companies is easy enough; integrating operations and leveraging the projected synergies is an extremely difficult and challenging task. A merger can happen when two companies decide to combine into one entity or when one company buys another. An acquisition always involves the purchase of one company by another. The functions of synergy < TOP > 17 market confidence, leading to outflow of capital from the countries. The IMF, with its SRF facility stepped in to provide finance to these countries on a large scale. The borrowing countries have to return the loan in two to two and a half years. - Compensatory Financing Facility (CFF) is to assist countries experiencing either a sudden shortfall in export earnings or an increase in the cost of cereal imports caused by fluctuating world commodity prices. - Emergency assistance. The IMF provides emergency assistance to countries that have experienced a natural disaster or are emerging from conflict. Each member nation maintains a certain "quota" of reserves, in the form of gold or its own currency with the IMF. Technical Assistance: The IMF provides countries with technical assistance and training in its areas of expertise such as • Fiscal Policies • Monetary and Exchange Matters • Legal Issues • Statistical Data Collection and Analysis • Training The objective of IMF technical assistance, as described in its Articles of Agreement, "is to contribute to the development of the productive resources of member countries by enhancing the effectiveness of economic policy and financial policy”. The IMF provides support to member nations through staff missions of limited/extended duration, training courses, seminars, workshops, and "on-line" advice and support from its headquarters in Washington, D.C. Since demand for technical assistance from IMF is more than what can be fulfilled; IMF gives priority in attending to low income countries first, and provides them assistance in their main policy areas like crisis prevention, debt reduction and poverty reduction. In March 2003, Sub-Saharan Africa was the biggest beneficiary of IMF technical assistance. In addition to the above activities, the IMF also builds up a database of economic data, research and statistics; the motive is to understand the effect of policies better in order to be able to provide better assistance to member nations. It also publishes a number of bulletins, periodicals and survey reports making its research and surveys available to all. 9. Evaluating Channel Alternatives Before selecting a specific channel for distribution of products or services in international markets, a firm evaluates channel alternatives on the basis of three criteria - economic, control and adaptation. Economic criteria While evaluating channel alternatives, the first question a firm needs to ask is. which channel member can produce more sales? Although the company's sales force might be better equipped and trained to sell the company's products, it is possible that a specialized sales agency might be able to sell more. The reason can be the customers' willingness to deal with sales representatives dealing in several brands of the same product rather than a specialized sales representative dealing in a single brand. By giving commissions to specialized agencies, the company can increase sales. The next question to be asked is what are the relative costs involved in selling different amounts through the two intermediaries? The fixed costs incurred in using a sales agency are lower than those for developing a company's sales force. However, these costs go up as sales increase, owing to higher commissions paid out. From the graph, it is evident that selling costs are the same for both channels at the level (Se). Therefore, we can infer from the graph that for sales volume that is below Se, it is better to use a sales agency and for sales volume above Se it is belter to use the company's sales force. In other words, companies should use an external sales force when the sales volume is lower. Control criteria Usually, firms are not self-sufficient. They need to depend on the services of external agencies. However, the more the dependence, the less it can control strategic planning. Therefore, while selecting an intermediary, a company has to strike a balance between the need to control important functions and to get market share with external agencies' help < TOP > 20 at a given expenditure level. Thus, control becomes a major issue while evaluating a channel alternative. Adaptive criteria The last criterion in evaluating channel alternatives is the adaptive nature of the relationship between manufacturer and distributor. There should be agreed commitment levels from both sides before business begins. If the channel member is committed, then he or she will try to maintain the relationship with the manufacturer. Channel members who operate in a turbulent atmosphere will try to structure the channel so that they can adapt to changes by altering channel strategy. < TOP OF THE DOCUMENT > 21