Page 260 - DMGT545_INTERNATIONAL_BUSINESS

Unit 13: Basics of International Accounting and Financial Management

13.3 summary notes

This unit attempts to give an overview of the functions in as simple manner as possible.

l z The intersection is the result of the process of internationalization.
l z Many American and European authors see international marketing as a simple extension
of exporting, whereby the marketing mix 4P’s is simply adapted in some way to take into
account differences in consumers and segments.
l z It then follows that global marketing takes a more standardized approach to world markets
and focuses upon sameness, in other words the similarities in consumers and segments.

l z The advent of GDRs in India has been mainly due to the balance payments crisis in the
early 90s. At that time India did not have enough foreign exchange balance even to meet
the requirements of fortnight imports. International institutions were not willing to lend
because of non-investment credit rating of India.
l z Out of compulsions, rather than choice, the government (accepting the World Bank
suggestions on tiding over the financial predicament) gave permission to allow
fundamentally strong private corporates to raise funds in international capital markets
through equity or equity related instruments.

13.4 keywords

Euro Currency: It is the time deposit of money in an international bank located in a country
different from the country that issued the currency.
Foreign Currency Option: The right (but not the obligation) to purchase foreign currency at a
specific exchange rate for a specified period of time.

Forward Contract: This is an obligation to exchange foreign currency at a date in the future,
typically 30, 60 or 90 days.
Inter-market Segmentation: This involves the detection of segments that exist across borders.
International Marketing: It is the multinational process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational objectives.
Intra-market Segmentation: This involves segmenting each country’s markets.

13.5 review Questions

1. Critically examine the growth of the global capital market.

2. What are the features of global capital market?
3. What are the features of Eurocurrency market?
4. What are the different types of global bond market? Discuss each of them.
5. What do you understand by global equity market?

6. What are the instruments of global equity market?
7. Examine the factors which contributed to the growth of the Eurodollar market.
8. Enumerate the different types of debt instruments.
9. What are the advantages and dangers associated with the Eurocurrency market?
10. Write a short note on hedging.

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