KSLU Solved Question Papers
International Business
Previous Year Question Paper with Solution
B.Com. LL.B. (Five Years) · Sem 4
2021 Mar Examination
munotes.in
Mumbai
B.Com. LL.B. (Five Years) Sem 4 International Business 2021 Mar Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2021 Mar examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2021 Mar examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2021 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 100 · 13 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1Explain Internationalization stages.[16]
Answer
For full marks, cover: the meaning of internationalisation and why it usually happens in stages; the stages from a purely domestic firm to a transnational network, each with its mode of entry, organisation, risk and an example; the Uppsala model and its establishment chain; how the organisation structure changes along the way; the factors that decide the speed of movement; the exceptions (born global firms, leapfrogging, withdrawal); an Indian illustration; a table; and a conclusion.
Meaning
Internationalisation is the growing involvement of a firm in business outside its home country. It covers selling abroad, buying abroad, investing abroad and finally organising the whole business on a world scale.
Most firms do not jump straight into foreign markets. They move in stages, because going abroad is uncertain and costly. Managers know little at first about foreign customers, laws and competitors. They therefore start with small, low-risk steps, learn from them, and then commit more money and people. Each stage is a level of commitment and control.
The stages of internationalisation
Stage 1: Domestic firm
The firm produces and sells only in its home country. Foreign markets are outside its thinking, and it may ignore enquiries from abroad. Its structure, products and people are built for the home market.
Example: a Belagavi foundry that supplies castings only to Indian machine makers.
Stage 2: Occasional or indirect exporting
The firm begins to sell abroad, but passively. It answers unsolicited orders from foreign buyers or sells through a merchant exporter or export house in India, which handles all the foreign work. The firm invests almost nothing and bears little risk, but it also learns little about the foreign market.
Example: the foundry sells a batch of castings to a Gulf buyer through a Mumbai trading house.
Stage 3: Active direct exporting
Exporting becomes a planned activity. The firm sets up an export department, studies foreign markets, attends trade fairs and appoints its own agents or distributors abroad. It obtains its Importer-Exporter Code and registers with an export promotion council. It now deals directly with buyers and handles foreign exchange, documents and shipping itself.
Example: the foundry appoints a distributor in the UAE and exhibits at an international engineering fair.
Stage 4: Contractual entry and sales subsidiaries
To get closer to customers, the firm opens a sales office or subsidiary abroad for marketing and after-sales service. Where production abroad is attractive but the firm does not want to invest, it may use licensing, franchising or contract manufacturing. A foreign firm then makes or sells the product under the Indian firm's name, technology or system for a fee.
Example: the foundry opens a sales office in Dubai and licenses its process to a partner in East Africa.
Stage 5: Production abroad
The firm now makes products in the foreign country. It may assemble there, form a joint venture with a local partner, or own a wholly owned subsidiary, built new or bought. Tariffs, transport costs, local content rules or the need to be near customers usually push it to this step. It becomes a true multinational company, with units in several countries, each adapted to its market.
Example: the foundry forms a joint venture to cast parts near a car plant in South-East Asia.
Stage 6: Global and transnational integration
At the last stage, the firm stops treating each country separately. It plans for the world as one market and buys inputs wherever they are best. It places research and production in the most suitable countries and moves people and ideas across its network. Bartlett and Ghoshal (1989) called the most advanced form the transnational. It combines global efficiency, responsiveness to local needs and learning across the whole network.
Example: Indian IT firms such as Infosys, which worked from 292 locations in 59 countries in 2025, serve clients worldwide through linked centres.
The Uppsala model
Researchers at Uppsala University in Sweden gave the stage idea its best-known form. Johanson and Wiedersheim-Paul (1975) and Johanson and Vahlne (1977) found that firms internationalise gradually, through learning:
- The establishment chain. In each foreign market, a firm usually starts with no regular exports and then exports through an agent. Later it opens a sales subsidiary, and finally a production subsidiary.
- Psychic distance. Firms enter first the markets that feel close, with similar language, culture and business habits, and move to distant ones later.
- Learning and commitment. Knowledge gained in one step reduces uncertainty and leads to a larger commitment in the next.
The authors revised the model in 2009 to give more weight to networks of business relationships, through which firms learn and find opportunities.
Organisation structure along the stages
As a firm moves through the stages, its structure changes too. Stopford and Wells (1972) observed this path:
- an export department within the home organisation;
- an international division that manages all foreign business;
- area divisions or worldwide product divisions, as foreign sales and the variety of products grow; and
- a global matrix, combining area and product responsibility.
Support for Indian firms at each stage
Public bodies in India help a firm climb these stages:
- First exports. The Niryat Bandhu scheme under the Foreign Trade Policy mentors new exporters, and export promotion councils guide members on markets and procedures.
- Active exporting. Export credit from banks, insurance from ECGC against non-payment, and remission schemes such as RoDTEP make exporting safer and cheaper. Exporters with star status get priority handling and self-declaration facilities.
- Meeting buyers. The Export Promotion Mission of 2025 supports trade fairs, buyer-seller meets and delegations abroad.
- Investing abroad. Under section 10 of its Act, the EXIM Bank may lend to Indian firms for their joint ventures and subsidiaries abroad. It may also finance their equity in such ventures.
Benefits and limits of moving in stages
Moving in stages keeps risk low at first, lets the firm learn before it commits, and spreads investment over time. Its limit is speed: in fast-moving industries, a firm that moves too slowly may lose markets to rivals that enter boldly or are born global.
Factors that decide the speed
- Size and resources of the firm, in money, people and technology.
- Experience gained from earlier steps.
- Attitude of top managers, whether cautious or global in outlook.
- Nature of the product, as software can be sold abroad faster than heavy goods.
- Government policy, such as export incentives, trade agreements and rules on investment abroad.
- Competition, which may force a firm to follow rivals abroad.
- Barriers abroad, such as tariffs, which may push a firm to produce locally sooner.
Exceptions to the stage pattern
- Born global firms. Some firms, especially in software and online services, sell in many countries from the start, with no long domestic phase.
- Leapfrogging. A firm may skip stages, for example by buying a foreign company outright instead of exporting first.
- Different stages in different markets. A firm may have a factory in one country while it only exports to another.
- Withdrawal. A firm may also move backwards, closing a foreign unit after losses or political trouble.
The stages are therefore a common pattern, not a fixed law. A manager should use them as a guide to the next sensible step, not as a rule to be followed blindly.
Stages at a glance
| Stage | Mode of entry | Commitment and risk | Typical structure |
|---|---|---|---|
| Domestic | None | None | Home organisation |
| Occasional exporting | Indirect exports, unsolicited orders | Very low | No special unit |
| Active exporting | Own agents and distributors | Low | Export department |
| Contractual entry | Licensing, franchising, sales subsidiary | Moderate | International division |
| Production abroad | Joint venture, wholly owned subsidiary | High | Area or product divisions |
| Global or transnational | Integrated worldwide network | Highest | Global matrix or network |
Conclusion. Internationalisation is the step-by-step growth of a firm's involvement in foreign markets. It moves from a domestic firm to occasional and then active exporting, contractual entry, production abroad and finally a global or transnational network. The Uppsala model explains this as learning that builds commitment, market by market. Structures change alongside, from an export department to a global matrix. Born global firms and leapfrogging show that the pattern can vary, but the stages remain a useful guide to planning expansion abroad.
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