Table of Contents
1. Define and give an example of each of the five main characteristics of business groups.
- A business group is a combination of parent and subsidiary corporations that operate together with a common goal and hence form a single entity. It is controlled by a common source.
- Main characteristics of business groups are: they have a common goal and objective, business entities are innovative, they have a common constitution that states their rules and regulation, they make their decisions together.
2. A related-constrained level of diversification advantages over unrelated diversified companies are:
- Economies of scope; this is because the business is able to transfer some of its developed competencies and resources to other subsidiary businesses whereas unrelated diversified business cannot fully utilize competences since they might be producing different products.
- related-constrained level of diversified businesses can share activities to improve or create value unlike unrelated diversified business
3. How do business groups help overcome weaknesses in institutions in developing countries and emerging markets?
- businesses in developing countries overcome weaknesses in institutions through sharing of ideas in form of innovations and technologies
- Business groups in developing countries also overcome these weaknesses by merging with other companies from developed countries.
4. Does diversification create value for the Birla group in India?
- For instance, merging of Grasim and Hindalco led to formation of a main business unit in AB Nuvo 2005. As the parent company Birla shareholders benefited by getting larger profits since they were the main shareholders in the market.
5. License raj helped Birla because:
- The maximum production of one product was restricted, but gaining license to produce in various areas the company was able to produce maximally on these areas, therefore, gaining maximum returns.
6. How does being diversified give multinational companies competitive advantage?
- Multinational companies such as Birla are conglomerates which mean they are diversified in unrelated diversified manner. Such companies have competitive advantage over companies diversified in the same type of business because once one type of product falls out of market the multinational company can still make profits from other type of products it produces.
- For instance Birla deals with metal, fiber, cement, telecommunication, financial and IT services. If fiber produced does not get good market the business can still make money from telecommunication, metal or cement.
7. How did Birla leverage the Indian Diaspora?
- Birla leveraged its returns by making profits from other countries compensating for the losses by home companies.
8. Diasporas are small scattered organizations in other countries away from their country of origin.
- For example, Aditya Birla minerals limited, Birla resources pty ltd are companies located in Australia but are operated by their parent company (Birla business group) in India.
9. Diaspora direct investment- is where a company invests an identical company in the Diaspora
- For example, Birla putting up a new cement company in Netherlands.
- Diaspora portfolio investment is a short term investment where a company invests in a foreign company but it does not have direct control over the company. Investment is mainly in terms of bonds and securities. For example, Birla may invest in a manufacturing company in the US yet it does not have direct control over it.
10. How does a typical foreign investor differ from a diaspora investor?
- Diaspora investors are advantaged over foreign investors since they pay less in terms of licensing, registration and taxes.
11. Describe Marcus Lee Hansen’s Law of Migrants’ 3rd Generation Return. How have changes in migration patterns affected its applicability to today’s environment?
- Marcus Lee Hansen’s Law of Migrants’ 3rd Generation Return states that once a family migrates to a foreign country the first and second generation tend to be assimilated in the country while the third generation seeks to follow the culture of their original countries. This law might not apply in the current trend of migration since most of the immigrates go back to their local countries and they invest in their local countries
12. Why might a diasporan make an investment that earned a zero percent rate of return?
- Diaspora individuals can make an investment with zero return in cases where they want to create good relations with the country where they are investing and hence create a good base.
13. Define and give an example of an institutional acculturation.
- Institutional acculturation is the change of customs, culture and social institutions due to interactions with other cultures
14. Ways that Bal Joshi served as an institutional announcer in Nepal
- He created thermal.com; a website that was meant for advertising
- He started a new business in his local community and marketed a guide that would attract tourists to Nepal
- He launched Nepal’s first web-learning and mapping tools.
- He developed a network of 500 local businesses with the aim of attracting customers and they marketed their products on the web
15. How do IntEnt’s service offerings help their diaspora clients fill these institutional voids or weaknesses in their countries of origin?
IntEnt’s service offerings help their diaspora client through transmission of learnt technologies and new ideas and innovations that might be lacking in their country
16. What is “Lebanon’s greatest export”?
Lebanon’s greatest export is people who move to different countries in search of employment
17. What is a social entrepreneur?
Social entrepreneur is a person who has innovative interest on social needs of people. These entrepreneurs are ambitious and persistent in solving issues that are pressing to the society.
18. What is Ashoka?
Ashoka is a network of social entrepreneurs that consists of over 3000 members in 70 countries. For instance, there work is to equip young people with skills that can enable them to solve problems in the society and individual life.
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