Examination Paper of Export Import Management
IIBM Institute of Business Management
Examination Paper MM.100
Export Import Management
Section A: Objective Type (30 Marks)
This section consists of Multiple Choice Questions with single response and Short questions
Answer all the questions
Part one carries 1 mark each and Part 2 questions carry 4 marks each.
Part One
Multiple Choices
1. In case of goods being rejected or wrong shipments which section of customer act provides
drawback facility on the customer’s duty?
a. Section 47
b. Section 88
c. Section 74
d. Section 40
2. Risks arising out of foreign law due to________________.
a. Lack of knowledge about foreign market
b. Expensive and complex litigation
c. A & B both
d. None of these
3. Import LC is also known as ______________________.
a. Letter of Debt
b. Bills of exchange
c. Open account
d. Letter of credit
4. How much digits are there in IEC number?
a. 8
b. 10
c. 12
d. 15
5. What is the full form of RFID?
a. Rural fund information development
b. Request for international development
c. Radio frequency identification system
d. Radio frequency internal system
6. The Export Inspection Council is a _____________________.
1
IIBM Institute Of Business Management
Examination Paper of Export Import Management
a. Support the export corporation
b. Responsible for the enforcement of QC
c. Administrative control of the ministry of Commerce & industry
d. Provides consultancy to export organization
7. The World Trade Organization was formed in_________________.
a. 1994
b. 1995
c. 1996
d. 1997
8. Government policies are related to__________________________.
a. Income tax
b. Sales tax
c. A & B both
d. None
9. Clearing and forwarding agents are an important link between_______________.
a. The exporter and various other agencies
b. The importer and various other agencies
c. Import and export of goods
d. All of the above
10. Which Regional issues are important to commercial success?
a. Taxation matters
b. Importance of negotiations
c. Degree of market risk
d. All of the above
Part Two
1. Define EDI procedure?
2. Differentiation between “Measurement Rules” and “Pallet Rules”?
3. Explain the Benefits of Electronic Procurement?
4. What is DGCI$S?
5. Define the role of intermediaries in Shipping Industry?
END OF SECTION A
2
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each Case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Case let 1
“Large Package Meal” is a full-package meals service company, a large hotel by the Shanghai Li Yang
couple of laid-off workers, was founded in 1994 and now has developed into a small Suxichang and
Hangjiahu area famous food service businesses.“Popular Package Meal” service is divided into two
categories: lunch and package delivery services. Lunch mainly by the meat dish, vegetables, Lu Cai,
popular soup and fruit composition of normal. Available for customers to choose menu: six kinds of meat
dish, vegetables, 10 species of Lu Cai 4, three kinds of soup and the general public three kinds of fruit can
also be adorned with custom-made drinks. Despite little change in the menu, but the annual report on
the point of view, the overall level of demand for this service fairly stable, the old customers will call to
order a day usually. However, as facilities and equipment reasons, the “public packet meals” will ask the
customers at 10 am before the telephone booking, in order to ensure that the day of delivery in place.
In the package of services, the company’s core competency is to provide enterprises buffet
reception, large gatherings, as well as the average family feast and celebration dinner. Customers need a
variety of food and services can be pre-booking, but because of the service highly seasonal, but also with
a variety of community festivals and national holidays related to the demand fluctuated, with high season
and low season, so ask the customer a few weeks or even a month ahead of schedule to come to book.
Volkswagen meal package layout is similar to the company’s facilities in a processing plant. There are five
work areas: thermal system for food work areas, cold dish work area, Lu Cai preparation area, soups and
fruit preparation area, as well as a work area catering specifically for the installation of the sets of dishes
lunch box and book Zhuangpen share. In addition, there are three small refrigerators for storing frozen
foods, a large dry storage rooms for non-perishable materials. As the facilities and equipment limitations
and the risk of food spoilage constrained plant mass the size of the company’s development package
meals. While the drinks and fruit can be purchased, and some stores are willing to deliver door, but the
overall package on the limits of human congregation offers flexible meal service. Li Yang couples
employed 10 staff: two chefs and eight food preparation workers, part-time employment during the peak
season other attendants.
Packet meals sector, competition is very intense, high-quality food products, reliable delivery, flexible
service and low-cost carriers are all in this line of survival and development is fundamental. Recently, the
public packet meals from the company has began to feel more and more discerning customers and
several new packages meal providers of professional competition. Customers increasingly need to
diversify the menu of services, flexible, and the response-time. Li Yang wife recently attended knowledge
of modern logistics training courses, on the time of the operation and the concept of third-party logistics
services, was impressed by careful consideration of these concepts is the public packet meals company to
maintain its competitiveness need. But they are puzzled, popular package Meals Company’s ability to
help third-party logistics services.
3
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Questions
1. The public package meal companies implement service-time availability of difficulties, please
explain?
2. The introduction of third-party logistics services to the public packet meals would you put
forward any firm recommendations?
Case let 2
UPS is a large international express delivery company, has hundreds of planes in addition to its own cargo
planes, he also rented hundreds of aircraft cargo aircraft, the transport capacity of more than 1,000 a
day. UPS in this world has established more than 10 air transport transit center in more than 200
countries and regions of the tens of thousands of delivery centers. UPS’s employees to reach hundreds of
thousands. Annual turnover of the amount could reach tens of billions of dollars; express delivery
companies in the world enjoy a high reputation.
UPS Company is engaged in correspondence, documents and parcel delivery business, the company
quickly. It is the world’s countries and regions have made access to the air traffic rights. In the China,
which established a number of delivery centers. A company to take advantage of high-tech means to
achieve rapid and safe, is a wide range of logistics services, image perfect.
Questions
1. Why do we say UPS is an international logistics business, and general transport logistics
Company?
3. To describe the international express logistics enterprises in the development prospects?
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. Discuss the role of Banks in an export-import transaction?
END OF SECTION B
2. Describe briefly the steps involved in export business to succeed in the era of
Globalization?
END OF SECTION C
4
IIBM Institute Of Business Management
Examination Paper of Export Import Management
IIBM Institute of Business Management
Examination Paper MM.100
International Trade
Section A: Objective Type (30 marks)
This section consists of Multiple Choice Questions with Single Response & Short Questions
Answer all the questions
Part one carries 1 mark each and Part two questions carry 5 marks each.
Part One:
Multiple Choices:
1. _________is beneficial between two nations that have strong markets in two different sectors.
a. Economic Growth
b. International Trade
c. Trade Integration
d. Trade Diversion
2. What is the full form of UNCTAD?
a. United Nation Conference on Trade and Development
b. Union Nations Committee of Trade and Development
c. Union Nations Conference on Trade and Development
d. None of the above
3. ______is fixed through negotiation between the importing country and the exporting country.
a. Tariff Quota
b. Bilateral Quota
c. Mixing Quota
d. Unilateral Quota
4. Under which Act Reserve Code Number is required?
a. Foreign Exchange Regulation Act
b. Custom Act
c. Export Import Control Act
d. Foreign Trade Act
5. Which policy of the government will have a direct bearing on the exchange rate of the country?
a. Fiscal Policy
b. Instrument of Trade Policy
c. Monetary Policy
d. A and C both
5
IIBM Institute Of Business Management
Examination Paper of Export Import Management
6. Which scheme helps the exporters in procuring imported raw materials?
a. IES
b. C.C.S.
c. IRS
d. None of the above
7. Which of the following factor affecting the Exchange rate?
a. Purchasing power Parity
b. Exchange Control
c. Balance of Payments
d. All of the above
8. The system of permitting the currencies to move within a band is called___________
a. Snake in the tunnel
b. Turtle Device
c. UNCTAD
d. None of the above
9. Periodic, as often as daily devaluations of pre-announced magnitude means________
Managed Float Regime
b. The crawling Peg Regime
c. Single currency Peg
d. Composite currency Peg
10. The Export Policy of Government of India can be divided into_______ distinct phases.
a. 2
b. 3
c. 4
d. 5
Part Two:
1. Write a brief note on “INTERNATIONAL MONETARY FUND”?
2. Write the components of the Uruguay Round Agreement?
3. Differentiate between Export Expansion and Import Substitution.
4. Explain the Term:-
a. Bill of Landing
b. Marine Insurance Policy
END OF SECTION
A
6
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Case let 1
India’s tea export rose to 46.74 million kg during the first quarter of the current financial year from 35.47
million kg in the previous comparable period. Export earnings from this item aggregates Rs. 81.61 crores
during April-June 1981, against Rs. 68.03 crores in the corresponding period last year. Thus, although in
terms of quantity our tea exports have looked upon this year, the unit value realization dropped from Rs.
19.8 per kg, to Rs 17.46 per kg.
The drop in unit value realization is attributed to the slackness in the international tea market due to the
global oversupply in this commodity. Since 1975, world tea production has gone up by 41 percent
whereas increase in consumption by the tea importing countries has been only of the order of the 9
percent. Naturally, the prospects of a revival in international tea price are dim at least in the immediate
future. The recommendations made by the recent national meet on tea; ‘revitalize’ the tea industry in
the country have to be viewed in this context.
The national meet on tea, organized by the Union Commerce Ministry, was held in the first week of
August to take a close look at the various problems confronting the tea industry the meeting which was
attended by the representatives of the Central Government, tea producing states, planter’s associations
and small growers, has recommended a package of fiscal reliefs –both at the Central and State levels.
The package includes, among other things, a substantial reduction in excise duty on tea, refund of
indirect taxes paid on tea exports, simplification of drawback procedures, substantial reduction or
removal of the exercise duty on packet tea until further review,, suspension of sales tax an auction teas,
concessional credit and a significant cut in the agriculture income tax and other local taxed by the
respective state governments. It was also recommended that the state government should consider
grant of exemption from rural employment cess to all export sales of tea and teas used for packaging by
the procedures themselves. According to the available information these recommendations are being
considered by the central and states concerned by the central and states concerned for implementation.
The basic problem that confronts the tea industry in the international sphere is one of depressed price.
More and more black tea is coming into the international markets from several new tea producing export
countries leading to oversupply, lower realization. Among the tea producing nations area realizing
without greater cooperation among them, to bring a better equilibrium between demand and supply,
they cannot get incentives for tea exports. Because of lower production cost, some of our competitors
have an edge over us in export makers, and incentives may be necessary to an extent for offsetting this
price disadvantage. Similarly, assistance for exports of non-traditional items such as tea bags and packet
tea would be advantageous for establishing markets for these high value added items whose share in our
overall a tea exports is small at present.
7
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Questions
1. Discuss the problem that comforts the Tea Industry in the International sphere?
2. How you asses would the Tea producing states has recommended a package of fiscal reliefs.
Case let 2
August 12, 1992 was a really bad day for John Martin. That was the day Canada, Mexico and the United
States announced an agreement, in principle, to the North America Free Trade Agreement (NAFTA).
Under the plan, all tariffs between the three countries would be eliminated within the next 10 to 15
years, with most being cut in five years. What disturbed Martin most was the plan’s provision that all
tariffs on trade of textiles among the three countries are to be removed within 10 years. Under the
proposed agreement, Mexico and Canada would also be allowed to ship a specific amount of clothing and
textiles made from foreign materials to the United States each year, and this quota would raise slightly
over the first five years of the agreement. “My God!” thought Martin.
Martin is the CEO of a New York based textile company, Martin’s Textiles. The company has been in the
Martin family for four generations, having been founded by his great grandfather in 1910. Today, the
company employs 1500 people in three New York plants that produce cotton based clothes, primarily
underwear. All production employees are union members and the company has a long history of good
labour relations. The company has never had a labour dispute and Martin, like his father, grandfather,
and great -grandfather before him, regards the workforce as part of the "Martin family". Martin prides
himself not only in knowing many of the employees by name, but also in knowing a great deal about the
family circumstances of many of the long time employees.
Over the past 20 years the company has experienced increasingly tough competition, both from overseas
and at home. The mid 1980s was particularly difficult. The strength of the dollar on the foreign exchange
market during that period enabled Asian producers to enter the US market with very low prices. Since
then, although the dollar has weakened against many major currencies, the Asian producers have not
raised their prices in response to the falling driven by wage rates and labour productivity. Not
surprisingly, most of Martin’s competitors in the north-eastern United States respond to the intense cost
competition by moving production south, first to states such as South Carolina and Mississippi where non
–union labour could be hired for significantly less than in the unionized North-east, and then to Mexico,
where labour costs for textile workers were less than $2 per hour. In contrast, wage rates are $12.50 per
hour at Martin’s New York plant and $8 to $10 per hour at non-union textile plants in the south eastern
United States.
The last three years have been particularly tough at Martin’s Textiles. The company has registers a small
loss each year, and Martin knows the company cannot go on like this. His major customers, while praising
the quality of Martin’s products, have worried him that his prices are getting too high and they may not
be able to continue to do business with him, His long-time banker has told him he must get his labour
costs down. Martin agrees, but he knows of only one surefire way to do that, to move production south,
way south, to Mexico. He has always been reluctant to do that, but now he seems to have little choice.
8
IIBM Institute Of Business Management
Examination Paper of Export Import Management
He fear as that in a5 years the Us market will be flooded with cheap imports from Asian, US and Mexican
companies, all producing in Mexico. It looks like the only way for Martin’s Textiles to survive is to close
the New York plant and move production to Mexico. All that would be left in the United States would be
the Sales force.
Martin’s mind was spinning. How could something that throws good honest people out of work be good
for the country? The politicians said it would be good for trade, good for economic growth and good for
the three countries. Martin could not see it that way. What about Mary Morgan who has worked for
Martin’s for 30 years? She is now 54 year as old. How will she and others like her find another job? What
about his moral obligation to his workers? What about the loyalty his workers have shown his family over
the years? Is this a good way to repay it? How would he break the news to his employees, many of whom
have worked for the company for 10 to 20 years? And what about the Mexican workers? Could they be
as loyal and production in Mexico, he had heard stories of low productivity, poor workmanship high
turnover and high absenteeism. Is this true? If so, how could be ever cope with that? Martin has always
felt that the success of Martin’s textiles was partly due to the family atmosphere, which encourages
worker loyalty, productivity and attention to quality, an atmosphere that has been built up over four
generations. How could he replicate that in Mexico with a bunch of foreign workers who speak a
language he doesn’t even understand?
Questions
1. What are the social costs of benefits to Martin’s Textiles of shifting production to Mexica?
2. What seems to be the most ethical action?
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. Describe the current issues affecting the Exchange Rate of India?
2. Explain briefly “New Trade Theory”?
END OF SECTION B
IIBM Institute of Business Management
Examination Paper MM.100
Export Import Management
Section A: Objective Type (30 Marks)
This section consists of Multiple Choice Questions with single response and Short questions
Answer all the questions
Part one carries 1 mark each and Part 2 questions carry 4 marks each.
Part One
Multiple Choices
1. In case of goods being rejected or wrong shipments which section of customer act provides
drawback facility on the customer’s duty?
a. Section 47
b. Section 88
c. Section 74
d. Section 40
2. Risks arising out of foreign law due to________________.
a. Lack of knowledge about foreign market
b. Expensive and complex litigation
c. A & B both
d. None of these
3. Import LC is also known as ______________________.
a. Letter of Debt
b. Bills of exchange
c. Open account
d. Letter of credit
4. How much digits are there in IEC number?
a. 8
b. 10
c. 12
d. 15
5. What is the full form of RFID?
a. Rural fund information development
b. Request for international development
c. Radio frequency identification system
d. Radio frequency internal system
6. The Export Inspection Council is a _____________________.
1
IIBM Institute Of Business Management
Examination Paper of Export Import Management
a. Support the export corporation
b. Responsible for the enforcement of QC
c. Administrative control of the ministry of Commerce & industry
d. Provides consultancy to export organization
7. The World Trade Organization was formed in_________________.
a. 1994
b. 1995
c. 1996
d. 1997
8. Government policies are related to__________________________.
a. Income tax
b. Sales tax
c. A & B both
d. None
9. Clearing and forwarding agents are an important link between_______________.
a. The exporter and various other agencies
b. The importer and various other agencies
c. Import and export of goods
d. All of the above
10. Which Regional issues are important to commercial success?
a. Taxation matters
b. Importance of negotiations
c. Degree of market risk
d. All of the above
Part Two
1. Define EDI procedure?
2. Differentiation between “Measurement Rules” and “Pallet Rules”?
3. Explain the Benefits of Electronic Procurement?
4. What is DGCI$S?
5. Define the role of intermediaries in Shipping Industry?
END OF SECTION A
2
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each Case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Case let 1
“Large Package Meal” is a full-package meals service company, a large hotel by the Shanghai Li Yang
couple of laid-off workers, was founded in 1994 and now has developed into a small Suxichang and
Hangjiahu area famous food service businesses.“Popular Package Meal” service is divided into two
categories: lunch and package delivery services. Lunch mainly by the meat dish, vegetables, Lu Cai,
popular soup and fruit composition of normal. Available for customers to choose menu: six kinds of meat
dish, vegetables, 10 species of Lu Cai 4, three kinds of soup and the general public three kinds of fruit can
also be adorned with custom-made drinks. Despite little change in the menu, but the annual report on
the point of view, the overall level of demand for this service fairly stable, the old customers will call to
order a day usually. However, as facilities and equipment reasons, the “public packet meals” will ask the
customers at 10 am before the telephone booking, in order to ensure that the day of delivery in place.
In the package of services, the company’s core competency is to provide enterprises buffet
reception, large gatherings, as well as the average family feast and celebration dinner. Customers need a
variety of food and services can be pre-booking, but because of the service highly seasonal, but also with
a variety of community festivals and national holidays related to the demand fluctuated, with high season
and low season, so ask the customer a few weeks or even a month ahead of schedule to come to book.
Volkswagen meal package layout is similar to the company’s facilities in a processing plant. There are five
work areas: thermal system for food work areas, cold dish work area, Lu Cai preparation area, soups and
fruit preparation area, as well as a work area catering specifically for the installation of the sets of dishes
lunch box and book Zhuangpen share. In addition, there are three small refrigerators for storing frozen
foods, a large dry storage rooms for non-perishable materials. As the facilities and equipment limitations
and the risk of food spoilage constrained plant mass the size of the company’s development package
meals. While the drinks and fruit can be purchased, and some stores are willing to deliver door, but the
overall package on the limits of human congregation offers flexible meal service. Li Yang couples
employed 10 staff: two chefs and eight food preparation workers, part-time employment during the peak
season other attendants.
Packet meals sector, competition is very intense, high-quality food products, reliable delivery, flexible
service and low-cost carriers are all in this line of survival and development is fundamental. Recently, the
public packet meals from the company has began to feel more and more discerning customers and
several new packages meal providers of professional competition. Customers increasingly need to
diversify the menu of services, flexible, and the response-time. Li Yang wife recently attended knowledge
of modern logistics training courses, on the time of the operation and the concept of third-party logistics
services, was impressed by careful consideration of these concepts is the public packet meals company to
maintain its competitiveness need. But they are puzzled, popular package Meals Company’s ability to
help third-party logistics services.
3
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Questions
1. The public package meal companies implement service-time availability of difficulties, please
explain?
2. The introduction of third-party logistics services to the public packet meals would you put
forward any firm recommendations?
Case let 2
UPS is a large international express delivery company, has hundreds of planes in addition to its own cargo
planes, he also rented hundreds of aircraft cargo aircraft, the transport capacity of more than 1,000 a
day. UPS in this world has established more than 10 air transport transit center in more than 200
countries and regions of the tens of thousands of delivery centers. UPS’s employees to reach hundreds of
thousands. Annual turnover of the amount could reach tens of billions of dollars; express delivery
companies in the world enjoy a high reputation.
UPS Company is engaged in correspondence, documents and parcel delivery business, the company
quickly. It is the world’s countries and regions have made access to the air traffic rights. In the China,
which established a number of delivery centers. A company to take advantage of high-tech means to
achieve rapid and safe, is a wide range of logistics services, image perfect.
Questions
1. Why do we say UPS is an international logistics business, and general transport logistics
Company?
3. To describe the international express logistics enterprises in the development prospects?
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. Discuss the role of Banks in an export-import transaction?
END OF SECTION B
2. Describe briefly the steps involved in export business to succeed in the era of
Globalization?
END OF SECTION C
4
IIBM Institute Of Business Management
Examination Paper of Export Import Management
IIBM Institute of Business Management
Examination Paper MM.100
International Trade
Section A: Objective Type (30 marks)
This section consists of Multiple Choice Questions with Single Response & Short Questions
Answer all the questions
Part one carries 1 mark each and Part two questions carry 5 marks each.
Part One:
Multiple Choices:
1. _________is beneficial between two nations that have strong markets in two different sectors.
a. Economic Growth
b. International Trade
c. Trade Integration
d. Trade Diversion
2. What is the full form of UNCTAD?
a. United Nation Conference on Trade and Development
b. Union Nations Committee of Trade and Development
c. Union Nations Conference on Trade and Development
d. None of the above
3. ______is fixed through negotiation between the importing country and the exporting country.
a. Tariff Quota
b. Bilateral Quota
c. Mixing Quota
d. Unilateral Quota
4. Under which Act Reserve Code Number is required?
a. Foreign Exchange Regulation Act
b. Custom Act
c. Export Import Control Act
d. Foreign Trade Act
5. Which policy of the government will have a direct bearing on the exchange rate of the country?
a. Fiscal Policy
b. Instrument of Trade Policy
c. Monetary Policy
d. A and C both
5
IIBM Institute Of Business Management
Examination Paper of Export Import Management
6. Which scheme helps the exporters in procuring imported raw materials?
a. IES
b. C.C.S.
c. IRS
d. None of the above
7. Which of the following factor affecting the Exchange rate?
a. Purchasing power Parity
b. Exchange Control
c. Balance of Payments
d. All of the above
8. The system of permitting the currencies to move within a band is called___________
a. Snake in the tunnel
b. Turtle Device
c. UNCTAD
d. None of the above
9. Periodic, as often as daily devaluations of pre-announced magnitude means________
Managed Float Regime
b. The crawling Peg Regime
c. Single currency Peg
d. Composite currency Peg
10. The Export Policy of Government of India can be divided into_______ distinct phases.
a. 2
b. 3
c. 4
d. 5
Part Two:
1. Write a brief note on “INTERNATIONAL MONETARY FUND”?
2. Write the components of the Uruguay Round Agreement?
3. Differentiate between Export Expansion and Import Substitution.
4. Explain the Term:-
a. Bill of Landing
b. Marine Insurance Policy
END OF SECTION
A
6
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Section B: Case lets (40 marks)
This section consists of Case lets.
Answer all the questions.
Each case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 200 to 250 words).
Case let 1
India’s tea export rose to 46.74 million kg during the first quarter of the current financial year from 35.47
million kg in the previous comparable period. Export earnings from this item aggregates Rs. 81.61 crores
during April-June 1981, against Rs. 68.03 crores in the corresponding period last year. Thus, although in
terms of quantity our tea exports have looked upon this year, the unit value realization dropped from Rs.
19.8 per kg, to Rs 17.46 per kg.
The drop in unit value realization is attributed to the slackness in the international tea market due to the
global oversupply in this commodity. Since 1975, world tea production has gone up by 41 percent
whereas increase in consumption by the tea importing countries has been only of the order of the 9
percent. Naturally, the prospects of a revival in international tea price are dim at least in the immediate
future. The recommendations made by the recent national meet on tea; ‘revitalize’ the tea industry in
the country have to be viewed in this context.
The national meet on tea, organized by the Union Commerce Ministry, was held in the first week of
August to take a close look at the various problems confronting the tea industry the meeting which was
attended by the representatives of the Central Government, tea producing states, planter’s associations
and small growers, has recommended a package of fiscal reliefs –both at the Central and State levels.
The package includes, among other things, a substantial reduction in excise duty on tea, refund of
indirect taxes paid on tea exports, simplification of drawback procedures, substantial reduction or
removal of the exercise duty on packet tea until further review,, suspension of sales tax an auction teas,
concessional credit and a significant cut in the agriculture income tax and other local taxed by the
respective state governments. It was also recommended that the state government should consider
grant of exemption from rural employment cess to all export sales of tea and teas used for packaging by
the procedures themselves. According to the available information these recommendations are being
considered by the central and states concerned by the central and states concerned for implementation.
The basic problem that confronts the tea industry in the international sphere is one of depressed price.
More and more black tea is coming into the international markets from several new tea producing export
countries leading to oversupply, lower realization. Among the tea producing nations area realizing
without greater cooperation among them, to bring a better equilibrium between demand and supply,
they cannot get incentives for tea exports. Because of lower production cost, some of our competitors
have an edge over us in export makers, and incentives may be necessary to an extent for offsetting this
price disadvantage. Similarly, assistance for exports of non-traditional items such as tea bags and packet
tea would be advantageous for establishing markets for these high value added items whose share in our
overall a tea exports is small at present.
7
IIBM Institute Of Business Management
Examination Paper of Export Import Management
Questions
1. Discuss the problem that comforts the Tea Industry in the International sphere?
2. How you asses would the Tea producing states has recommended a package of fiscal reliefs.
Case let 2
August 12, 1992 was a really bad day for John Martin. That was the day Canada, Mexico and the United
States announced an agreement, in principle, to the North America Free Trade Agreement (NAFTA).
Under the plan, all tariffs between the three countries would be eliminated within the next 10 to 15
years, with most being cut in five years. What disturbed Martin most was the plan’s provision that all
tariffs on trade of textiles among the three countries are to be removed within 10 years. Under the
proposed agreement, Mexico and Canada would also be allowed to ship a specific amount of clothing and
textiles made from foreign materials to the United States each year, and this quota would raise slightly
over the first five years of the agreement. “My God!” thought Martin.
Martin is the CEO of a New York based textile company, Martin’s Textiles. The company has been in the
Martin family for four generations, having been founded by his great grandfather in 1910. Today, the
company employs 1500 people in three New York plants that produce cotton based clothes, primarily
underwear. All production employees are union members and the company has a long history of good
labour relations. The company has never had a labour dispute and Martin, like his father, grandfather,
and great -grandfather before him, regards the workforce as part of the "Martin family". Martin prides
himself not only in knowing many of the employees by name, but also in knowing a great deal about the
family circumstances of many of the long time employees.
Over the past 20 years the company has experienced increasingly tough competition, both from overseas
and at home. The mid 1980s was particularly difficult. The strength of the dollar on the foreign exchange
market during that period enabled Asian producers to enter the US market with very low prices. Since
then, although the dollar has weakened against many major currencies, the Asian producers have not
raised their prices in response to the falling driven by wage rates and labour productivity. Not
surprisingly, most of Martin’s competitors in the north-eastern United States respond to the intense cost
competition by moving production south, first to states such as South Carolina and Mississippi where non
–union labour could be hired for significantly less than in the unionized North-east, and then to Mexico,
where labour costs for textile workers were less than $2 per hour. In contrast, wage rates are $12.50 per
hour at Martin’s New York plant and $8 to $10 per hour at non-union textile plants in the south eastern
United States.
The last three years have been particularly tough at Martin’s Textiles. The company has registers a small
loss each year, and Martin knows the company cannot go on like this. His major customers, while praising
the quality of Martin’s products, have worried him that his prices are getting too high and they may not
be able to continue to do business with him, His long-time banker has told him he must get his labour
costs down. Martin agrees, but he knows of only one surefire way to do that, to move production south,
way south, to Mexico. He has always been reluctant to do that, but now he seems to have little choice.
8
IIBM Institute Of Business Management
Examination Paper of Export Import Management
He fear as that in a5 years the Us market will be flooded with cheap imports from Asian, US and Mexican
companies, all producing in Mexico. It looks like the only way for Martin’s Textiles to survive is to close
the New York plant and move production to Mexico. All that would be left in the United States would be
the Sales force.
Martin’s mind was spinning. How could something that throws good honest people out of work be good
for the country? The politicians said it would be good for trade, good for economic growth and good for
the three countries. Martin could not see it that way. What about Mary Morgan who has worked for
Martin’s for 30 years? She is now 54 year as old. How will she and others like her find another job? What
about his moral obligation to his workers? What about the loyalty his workers have shown his family over
the years? Is this a good way to repay it? How would he break the news to his employees, many of whom
have worked for the company for 10 to 20 years? And what about the Mexican workers? Could they be
as loyal and production in Mexico, he had heard stories of low productivity, poor workmanship high
turnover and high absenteeism. Is this true? If so, how could be ever cope with that? Martin has always
felt that the success of Martin’s textiles was partly due to the family atmosphere, which encourages
worker loyalty, productivity and attention to quality, an atmosphere that has been built up over four
generations. How could he replicate that in Mexico with a bunch of foreign workers who speak a
language he doesn’t even understand?
Questions
1. What are the social costs of benefits to Martin’s Textiles of shifting production to Mexica?
2. What seems to be the most ethical action?
Section C: Applied Theory (30 marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
1. Describe the current issues affecting the Exchange Rate of India?
2. Explain briefly “New Trade Theory”?
END OF SECTION B
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