eva global trade final (1)

8/9/2019 Eva Global Trade Final (1)

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Letter of TransmittalLetter of Transmittal

2nd August 2008

Mr. Ahmed Reyad ChowdhuryCourse TeacherGlobal TradeSchool of BusinessAmerican International University-Bangladesh (AIUB)

Subject: Trade between Bangladesh & India.

Sir,

With a great pleasure, we are informing you that we have prepared a project on trade

between two countries. For the project completion, we have selected the countries

Bangladesh & India.We feel great pleasure for submitting this report to you, which

will definitely help us to be successful in our future life and to complete the BBA

program.

During the preparation of this report, we have experienced a lot that will greatly help

us in our further studies and carrier life. It has enlightened our practical knowledge

about trade between these two countries, the strategies they follow and the impact of

the policies of WTO. We tried our level best to develop a good report.

We would like to thank you for giving us such an opportunity to do this report on this

topic.We enjoyed working on this project.

Thank you.

Sincerely,

Ahmed Faria

Banik Prianka

Shobnom Nusrat

Eva Bilkis Masud


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Executive Summary

Trade occurs when citizens from one country can buy from another country or sell toanother country what they can produce. This allows a country to specialize in themanufacture and export of products that can be produced most efficiently in thatcountry. Trade between Bangladesh and India is playing a vital role in both thecountries economy. This report will give you some idea about the current scenariosof the trade between these two countries.

To complete this report we have tried to analyze different strategies these twocountries have been following. Here we discussed the trade theories. We also tried toanalyze how the macro environmental factor affects this trade, the effects of the WTO

policies, and the strategic management of this type of trade and also the internationalhuman resource management in these two countries. Todays trade scenarios are also

described here.The description of all the above-summarized information is written in the report fromwhich one might be able to get a good idea about the Trade between Bangladesh &

India.

Trade Creates Unity 2


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Table of Contents

SI Topic Page

1.0 Introduction 3-4

2.0 Profile 5-8

3.0 Product 9-13

4.0 Macro EnvironmentalFactor

14-17

5.0 Trade Theories 18-20

6.0 International StrategicManagement

21-23

7.0 IHRM 24-27

8.0 WTO 28-29

9.0 Compare and Contrast 30-31

10.0 Conclusion 32-33

11.0 Justification 34-35

12.0 Recommendation 36-37

13.0 References 38-39



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INTRODUCTION

Our respected teacher Mr. Reyad Ahmed Chowdhury asked us to select two countries

to make a comparison and also contrast between the trade of these two countries. We

have to apply the theories and concepts that we covered in our Global Trade course to

complete the report. After a brain storming session within our group, we have decided

to select Bangladesh & India.

Bangladesh & India are in business operation for a very long period of time. The trade

between these two countries has significant contribution to the economy. Bangladesh

has efficiency in producing some products and India is also efficient in some sectors.

So Bangladesh exports those goods where they are efficient and imports the goods

from India where India has absolute advantage and so does India. The economies of

both the countries depend on the trade between them. Both the countries mission is to

meet the needs of the people of those countries. By trading, the products both the

countries can maximize the wealth of their countries. The companies of these

countries are facilitated with maximum profit. And the people can achieve their

maximum satisfaction level because of the trade between Bangladesh & India.



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Country Profile

Bangladesh

GeographyLocation: Southern Asia, bordering the Bay of

Bengal, between Burma and IndiaArea: total: 144,000 sq km

land: 133,910 sq kmwater: 10,090 sq km

PopulationPopulation: 153,546,901 (July 2008 est.)Population growth rate: 2.022% (2008 est.)Literacy: definition: age 15 and over can read and

writetotal population: 43.1%male: 53.9%

female: 31.8% (2003 est.)

EconomyGDP (purchasing power parity): $$206.7 billion (2007 est.)GDP (official exchange rate): $72.42 billion (2007 est.)GDP - real growth rate: 5.6% (2007 est.)



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GDP - per capital (PPP): $1,300 (2007 est.)GDP - composition by sector: Agriculture: 19%

industry: 28.7%services: 52.3% (2007 est.)

Inflation rate (consumer prices): 8.4% (2007 est.)

Investment (gross fixed): 26% of GDP (2007 est.)Agriculture - products rice, jute, tea, wheat, sugarcane, potatoes,

tobacco, pulses, oilseeds, spices, fruit;beef, milk, poultry

Industries: cotton textiles, jute, garments, tea

processing, paper newsprint, cement,chemical fertilizer, light engineering,sugar

Exports - commodities: garments, jute and jute goods, leather,frozen fish and seafood

Currency (code): taka (BDT)

OthersNationality: BangladeshiCountry name: conventional long form: Peoples

Republic of BangladeshFiscal year:

1 July - 30 June

India

GeographyLocation: Southern Asia, bordering the Arabian



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Sea and the Bay of Bengal, betweenBurma and Pakistan

Area: total: 3,287,590 sq kmland: 2,973,190 sq kmwater: 314,400 sq km

PopulationPopulation: 1,095,351,995 (July 2006 est.)

Population growth rate: 1.38% (2006 est.)

Literacy: Definition: age 15 and over can readand writetotal population: 59.5%

male: 70.2%female: 48.3% (2003 est.)

EconomyGDP (purchasing power parity): $4.042 trillion (2006 est.)

GDP (official exchange rate): $796.1 billion (2006 est.)

GDP - real growth rate: 8.5% (2006 est.)

GDP - per capital (PPP): $3,700 (2006 est.)

GDP - composition by sector: Agriculture: 19.9%industry: 19.3%services: 60.7% (2005 est.)

Inflation rate (consumer prices): 5.3% (2006 est.)

Investment (gross fixed): 29.2% of GDP (2006 est.)

Agriculture - products rice, wheat, oilseed, cotton, jute, tea,sugarcane, potatoes; cattle, waterbuffalo, sheep, goats, poultry; fish

Industries: textiles, chemicals, food processing,steel, transportation equipment,cement, mining, petroleum, machinery,software

Exports - commodities: textile goods, gems and jewellery,engineering goods, chemicals, leathermanufactures

Currency (code): Indian rupee (INR)

OthersNationality: IndianCountry name: conventional long form: Republic of

Indiaconventional short form: India

Fiscal year: 1 April - 31 March



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Products that are traded

India is a supplier of staple foods such as rice and live animals which helpskeep their prices affordable for the masses of Bangladesh.

Most of differences are of sharing water resources between the two countries.

On the other hand, Bangladesh is a supplier of Jute, RMG products to India.

Automobiles & Auto Parts

Diesel engines TireChemical Products

Activated Carbon Sulphuric acidConstruction

Railing Fitting in Timber doormetal Brass

Electrical Supplies

Wire BatteryElectronic Components

http://www.alibaba.com/countrysearch/IN/India/category/34/Automobiles_%2526_Auto_Parts.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/8/Chemical_Products.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/13/Construction.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/5/Electrical_Supplies.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/502/Electronic_Components.htmlhttp://www.alibaba.com/product-gs/203643079/LED_Digit_Display.htmlhttp://www.alibaba.com/product-gs/205089121/Mobile_phone_MB_N95_2_6.htmlhttp://huari.en.alibaba.com/product/50145010/50669069/Two_Way_Radio_Interphones_Accessories/battery_eliminator_ELIM_328_.htmlhttp://www.alibaba.com/product-tp/12007982/Copper_Clad_Aluminium_Wire_Cca_Wire_.htmlhttp://www.alibaba.com/product-gs/51489977/Bathroom_Door.htmlhttp://www.alibaba.com/product-free/100625226/Construction_Hardware.htmlhttp://www.alibaba.com/product-tp/101500775/Sulphuric_Acid_98_Min_.htmlhttp://www.alibaba.com/product-tp/205905709/Activated_Carbons.htmlhttp://www.alibaba.com/%20http:/www.alibaba.com/activities/superdeals/automobile_products.html#automobile_1http://www.alibaba.com/product-free/11345150/Automobile_Diesel_Engine_Pumps_Motor_Generator_.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/34/Automobiles_%2526_Auto_Parts.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/8/Chemical_Products.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/13/Construction.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/5/Electrical_Supplies.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/502/Electronic_Components.html


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Hand phone Led digit displayEnergy & Petroleum

CharcoalNeckties & FashionAccessoriesFood & Beverages

Aloe Vera Juice Green Tea Beverage

Furniture & Decoration

Silver Bed Wooden chairCrafts & Gifts

Flower Ring Valentine GiftHealth & Medical Products

Aloe Vera Cream Mans Fairness CreamHousehold Appliances

Gas Stove With Oven Air Cooler

http://www.alibaba.com/countrysearch/IN/India/category/10/Energy_%2526_Petroleum.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/339/Neckties_%2526_Fashion_Accessories.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/339/Neckties_%2526_Fashion_Accessories.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/2/Food_%2526_Beverages.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Aloe_Vera_Juice.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/1503/Furniture_%2526_Decoration.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/17/Crafts_%2526_Gifts.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/16/Health_%2526_Medical_Products.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/6/Household_Appliances.htmlhttp://www.alibaba.com/product-tp/11139957/Keruilai_Energy_Saving_Air_Conditioner.htmlhttp://www.alibaba.com/product-free/11678267/Gas_Stove_With_Oven.htmlhttp://www.alibaba.com/product-free/12201561/Fair_One_Man_Men_s_Fairness.htmlhttp://www.alibaba.com/product-tp/101421254/Aloe_Vera_Moisturizing_Cream.htmlhttp://www.alibaba.com/product-gs/200328021/porcelain_snowman_white_porcelain_santa_deco.htmlhttp://florr.en.alibaba.com/offerdetail/58195271/Sell_New_Fashion_brooches.htmlhttp://www.alibaba.com/product-free/100637075/Handicraft_Furniture_wooden.htmlhttp://www.alibaba.com/product-free/11466939/Silver_Bed.htmlhttp://www.alibaba.com/product-free/11541173/Canned_Green_Tea_Beverage.htmlhttp://www.alibaba.com/product-free/10836077/Aloe_Vera_Lemon_Juice.htmlhttp://www.alibaba.com/product-free/100700152/Charcoal.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/10/Energy_%2526_Petroleum.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/339/Neckties_%2526_Fashion_Accessories.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/339/Neckties_%2526_Fashion_Accessories.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/2/Food_%2526_Beverages.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Aloe_Vera_Juice.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/1503/Furniture_%2526_Decoration.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/17/Crafts_%2526_Gifts.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/16/Health_%2526_Medical_Products.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/6/Household_Appliances.html


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Household Goods

Apron Bath Mats

Lights

Lamps Garden Lamp

Bags

Cotton Bag Hand BagSecurity

Network Camera IP CameraFootwearSport & Entertainment

BatTelecommunication

Hand Phone

http://www.alibaba.com/countrysearch/IN/India/category/15/Household_Goods.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/39/Lights.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/1524/Bags.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/30/Security.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/322/Footwear.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/18/Sport_%2526_Entertainment.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/509/Telecommunication.htmlhttp://www.alibaba.com/product-gs/203582851/CE_3_0_PDA_touch_screen.htmlhttp://www.alibaba.com/product-free/100740070/Dual_SIM_Mobile_Phone_With_Special.htmlhttp://www.alibaba.com/product-free/11923950/Cricket_Kit_Bat_Gloves_Balls.htmlhttp://www.alibaba.com/product-free/11448982/Cricket_Set.htmlhttp://www.alibaba.com/product-free/100550359/IP_Cameras.htmlhttp://www.alibaba.com/product-free/100809438/Network_Camera_With_GSM_Alarm.htmlhttp://www.alibaba.com/product-free/12290514/Hand_Bags.htmlhttp://www.alibaba.com/product-free/11438852/Cotton_Hand_Bags.htmlhttp://www.alibaba.com/product-free/11265866/Garden_Lamp.htmlhttp://l-bright-lighting.en.alibaba.com/product/50003986/200095021/Energy_Saving_Lamps/lights.htmlhttp://www.alibaba.com/product-free/12302350/Bath_Mats.htmlhttp://www.alibaba.com/product-tp/100870035/Apron.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/15/Household_Goods.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/39/Lights.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/1524/Bags.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/30/Security.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/322/Footwear.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/18/Sport_%2526_Entertainment.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/509/Telecommunication.html


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Leather & Textiles

Bed Spreads AcrylicJewellery, Watches & Glasses

Diamond Jewellery Fashion Jewelry

Toys & Dolls

Dolls and ToysTransport

Bicycle Oil Container

Shipping Container

http://www.alibaba.com/countrysearch/IN/India/category/4/Leather_%2526_Textiles.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Acrylic.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/36/Jewellery%252C_Watches_%2526_Glasses.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Diamond_Jewellery.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Fashion_Jewelry.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/26/Toys_%2526_Dolls.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/12/Transport.htmlhttp://www.alibaba.com/product-tp/100855818/Shipping_Container.htmlhttp://www.alibaba.com/product-tp/202355747/Oil_Container_cum_strainer.htmlhttp://www.alibaba.com/product-tp/101225463/Complete_Bicycle.htmlhttp://tfhk.en.alibaba.com/offerdetail/57521673/Sell_Toy_Bug.htmlhttp://www.alibaba.com/product-gs/201650654/Necklace.htmlhttp://www.alibaba.com/product-gs/207009721/Ring_LR00161.htmlhttp://www.alibaba.com/product-free/11114501/Cushion.htmlhttp://www.alibaba.com/product-free/11111640/Quilts_Cushions_Bed_Spread.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/4/Leather_%2526_Textiles.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Acrylic.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/36/Jewellery%252C_Watches_%2526_Glasses.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Diamond_Jewellery.htmlhttp://www.alibaba.com/countrysearch/IN-suppliers/Fashion_Jewelry.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/26/Toys_%2526_Dolls.htmlhttp://www.alibaba.com/countrysearch/IN/India/category/12/Transport.html


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Macro Environmental Factor

There are some major forces in the companys macro environment. These forces

always have remarkable effect on trade in any country. So a countrys macro

environment factors are needed to be considered while doing business; specially when

the trade is between two countries.

The forces of macro environment are uncontrollable forces. But still these elements

must be adapted.

Factor Could include:

Political e.g. EU enlargement, the euro, international trade, taxation policy

Economic e.g. interest rates, exchange rates, national income, inflation,unemployment, Stock Market

Demographic e.g. ageing population, attitudes to work, income distribution

Technological e.g. innovation, new product development, rate of technologicalobsolescence

Natural e.g. global warming, environmental issues

Cultural e.g. forces that affect a countrys basic values, perceptions,preference and behavior.

4.1 Political Environment

The political environment consists of laws, government agencies and pressure groups

that influence or limit various organizations and individuals in a country. The lawsaffect the major trends of political environment in a country. Some organizations have

made some rules and regulations for trading. These organizations include WTO,

SAFTA, and NAFTA and so on. Trade is highly affected by the rules and regulations

of these organizations.

The political condition is not under control of any country. Still, India has stable

political environment compared to Bangladesh.



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4.2 Economic Environment

Trades require consumers demand, buying power, income, wealth, willingness to pay

and also people. The economic environment consists of factors that affect consumer

purchasing power and spending patterns. Nations vary greatly in their levels and

distribution of income. Some countries consume most of their own agricultural and

industrial output. Bangladesh has efficiency in agricultural sector and India has

efficiency in industrial sector relative to each other.

Changes in income and change in consumer spending pattern are the major economic

trend.

Economic environment is controlled in India compared to Bangladesh.

4.3 Demographic Environment

Demography is the study of human population in terms of size, density, location, age,

gender, race, occupation and other statistics. This demographic environment is

important as it involves people and people make up the markets. So, demographic

environment is very important for any type of trade within or outside the country.

In case oftrade between Bangladesh & India, demographic environment should be

cautiously considered. Because these trades are dependent on the change in age

structure of the population and all other factors related to the population. Trade is

entirely dependent on the people or population of a country.

This environment is almost uncontrollable for both the countries.

4.4 Technological Environment

The technological environment is the most dramatic force that is shaping the destiny

of a country. New technologies create new markets and opportunities. The country

that is technologically advanced can easily cope up with the changes in any type of

environment.



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India is very much advanced in technology compared to Bangladesh. So India has

comparative advantage and control over Bangladesh in the telecommunication

sector.

4.5 Natural Environment

The natural environment involves the natural resources that are needed as inputs for

producing outputs, which are traded later. If the natural resources are scarce in any

country, the production will be less for sure.

The major trends of natural environment are shortage of raw material, increased

pollution, increased government intervention.

Bangladesh has some control over natural resources. Only because of shortage of

money, these cannot be utilized properly.

4.6 Cultural Environment

The cultural environment is made up of institutions and other forces that affect a

countrys basic values, perceptions, preference and behavior. This environment shows

long- term trend toward a lessening trust of institution, increasing patriotism, greater

appreciation for nature, a new spiritualism and the search for more meaningful and

enduring values.

The cultures of the two countries are similar; in particular India's West Bengal state

and Bangladesh are both Bengali speaking.



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Trade Theory

When we talk about the trade between two countries, there must be application of

some trade theories. In case of Bangladesh & India, there are also some trade theories

that are applied.

In case of Trade between Bangladesh & India, the Country- based theory, i.e.

Absolute Advantage, Comparative Advantage, Rivalry theory and Endowment. are

applied. And in some of these trades, Firm-based theory is not that much applicable.

Country- based theory

5.1 Absolute Advantage

When one country is fully efficient in producing one product, in that products

production, the country has absolute advantage.

In Ready-made garments (RMG) business, Bangladesh has absolute advantage, when

India has absolute advantage on industrial product.

5.2 Comparative Advantage

When one countrys efficiency rate of producing a product is much higher than

another countrys efficiency rate, then this highly efficient country has Comparative

advantage.

Bangladesh has comparative advantage on the agricultural sector compared to that

of India.

5.3 Rivalry Theory



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When one country has some competitive advantage over another country, this is

known as Rivalry Theory.

This competitive advantage includes technological advancement, differentiation

strategies, operational excellence and so on.

So India in producing many products can also be fall under this theory. India has

competitive advantage on toiletries, cosmetics, food items, electrical alliances and

telecom sectors.

5.4 Relative Factor Endowment

Bangladesh has many natural resources that can be utilized to have a tremendousproduction. Mainly in the agricultural sector, Bangladesh has many resources thatshould be utilized properly.In addition, India does not have that many natural resources but they can utilize theirlimited resources in a very effective manner.



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Strategy

Strategy is the action that managers must take to attain the goals of the firm. We

have chosen mainly four products for finding out the strategic implication. These

products are:

Shipping container from India

Cosmetics & toiletries from India

Leather product of Bangladesh

ready made garments of Bangladesh

Businesses use Strategic Alliance to:

achieve advantages of scale, scope and speed increase market penetration

enhance competitiveness in domestic and/or global markets

enhance product development

develop new business opportunities through new products and services

expand market development

increase exports

diversify

create new businesses

reduce costs.



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Choosing a Strategy:

International Strategy:

Create value by transferring valuable core competencies to foreign markets.

Weak pressure for local responsiveness and cost reduction is needed to be effective.Here, Shipping Container falls under this strategy.

Multidomestic Strategy:

Main aim is to maximize local responsiveness.

Customize product offering, market strategy including production & R&D.

Here Leather products and cosmetics falls under this strategy.

Transnational Strategy:

Firms aim to reduce cost, transfer core competencies while paying attention to

pressure for local responsiveness.



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Ready-made garments (RMG) fall under this strategy.



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Choosing an Approach

There can be three different IHRM orientations in MNCs:

Adaptive, exportive and integrative. These orientations determine the company's

overall HR approach to managing the tension between integration or the pressure

for internal consistency and differentiation or the pressure for external consistency.

An adaptive IHRM orientation is one in which each affiliate develops its own HRM

system, reflecting the local environment.

The second, an exportive IHRM orientation is one in which the parent firm's HRM

system is being transferred to its different affiliates. This approach emphasizes

integration across all affiliates, developing a highly internal consistent MNC.

The third, an integrative IHRM orientation attempts to take 'the best' HRM

approaches and uses them throughout the organization in the creation of a

worldwide system. The focus here is on substantial global integration with an

allowance for some local differentiation.

The three orientations of an adaptive, exportive or integrative approach represent

three basic choices for IFIR managers, reflecting an overall approach towards

IHRM. However, in practice, IHR managers may have the option to choose for a

mix of the three approaches. Because the LHR function consists of several tasks andis oriented towards different types of employees, choices may differ for the different

tasks or employee groups.

Countries that trade together can choose the mixture of these three approaches to be

successful by sharing core competencies and innovative ideas with each other.



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Necessary Skills and Abilities for International Manager

When an expatriate goes for work in a foreign country, he needs to have

adaptability skill; so that he can easily cope up with that culture.

An expatriate should learn the language of that foreign country to mix up with

the foreign people.

When Bangladeshi labor goes to India or an Indian labor is hired for

Bangladesh, those expatriates face many difficulties that include:

o Differing Culture

o Legal systems of the countries

o Training & development in an international firm is more complex than a

domestic firm

o Compensation system is also different



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7.2. Managing & Selecting Expatriates

For both India and Bangladesh, its very much important to consider the cost while

its a matter of IHRM.

o Bangladesh selects expatriates from India mainly on technical

competence.

o India selects expatriates from Bangladesh based on functional skill and

ability of acclimate.



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WTO (World Trade Organization)

WTO plays a key role in the trade between Bangladesh & India.

o It encourages trade between member nations,

o Administers global trade agreement and

o Resolves disputes when they arise.

WTO mainly focuses on__

o Agriculture

o Textile & Clothing

o Trade related investment measure

o Dispute Settlement

Principles of the trading system:

Transparency

Non discrimination within countries

Free trade principle: Optimal utilization of resources

Decreasing trade barrier

Fair competition

These policies are applicable for trade between Bangladesh & India. Both the

countries have to maintain this.

Bangladesh will sign a deal with India on duty-free export of eight million pieces of

Bangladeshi readymade garments (RMG) to India annually.

A meeting of the country's council of advisers of Tuesday approved a proposal forsigning the Memorandum of Understanding on duty-free import of the RMG products

by Indian government through Tariff Rate Quota (TRQ) system under the purview ofthe South Asia Free Trade Agreement (SAFTA).

A meeting of the country's council of advisers of Tuesday approved a proposal forsigning the Memorandum of Understanding on duty-free import of the RMG products

by Indian government through Tariff Rate Quota (TRQ) system under the purview ofthe South Asia Free Trade Agreement (SAFTA).



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Compare and Contrast between Bangladesh and India

Criteria Bangladesh India

1. Export10.5 billion US$ $125 billion (Financial Year

2006-2007)

2. FDI inflow $850 billion for 2007-08 reported as

$25bn

3. Inflation 7.17% 3.5% (2008 est.)

4.Trade Balance -362 (Billion Tk.) 534(billion TK.)



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Conclusion



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All the countries want to be wealthy and economically developed toenjoy the moment when anything seems possible. And that's justwhat trade between two countries gives.

Trade between Bangladesh & India can be successful, if the tradebarriers are reduced. The focus of bilateral cooperation should be onIndian investment in Bangladesh. Indian investment in the country

would largely help reduce Dhakas trade deficit with India. So, Indiantrade with Bangladesh should take place in a mutual manner.



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Justification

From the analysis, we can say that trade between two countries can be very much

lucrative, if there is less trade barrier. Moreover, the trade between Bangladesh &

India can also be successful. But there exists some lacking. These are:

There is a wide gap between the two countries with Indias exports of $1,100

million to Bangladesh and Bangladeshs exports of only $70 million to India.

The inflation rate of Bangladesh is also high compared to India.

Although there are many types of trade are being done, there still exists a trade

imbalance between these two countries.

Should adopt an approach to tariff allowance to resolve the trade imbalance,

which is heavily in Indias favor.

These two countries are very successful in trading different products since many years

and we are hopeful that they will continue their success if they try to implement their

innovative and co-operative ideas.



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Recommendation

Further trade liberalization and for adopting a fast track approach to tariffconcessions to rectify the trade imbalance, which is heavily in Indias, favor.

The focus of bilateral cooperation should be on Indian investment inBangladesh.

The laws and incentives for foreign investment in Bangladesh were amongthe most attractive in the world and Indian investment in the country would

largely help reduce Dhakas trade deficit with India.

There is a wide gap between the two countries with Indias exports of$1,100 million to Bangladesh and Bangladeshs exports of only $70 millionto India. So it should be taken into concern.

To promote exports from Bangladesh and reduce the trade gap, there is aneed to revise and relax the rules of origin. WTO can play a tremendous rolein this regard.

It can be recommended that India should provide zero tariff access to

Bangladesh to reduce the trade gap.

Bangladesh should opt for selling its services, allowing Indian traders to useits roads, waterways and ports to fill the gap in trade.

Transit facilities for India would immensely benefit both countries. Notusing Bangladeshs port facilities to transport goods to its northeastern stateswas costing India about Rs 8,000 crore annually. Of the estimated 3.5million tons of goods transported to the northeastern states from the rest ofIndia, less than one per cent passed through Bangladesh.

Further easing of visa restrictions and promoting tourism and travel betweenthe two countries.

Both countries recommend up gradation of infrastructural facilities,including

o provision of improved rail links,

o creation of warehousing facilities,

o easier cross-border movement of vehicles and

o Improved shipping infrastructure.



39/40

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40/40

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Bibliography

1. www.google.com

www.imdb.comwww.trade me.co.nzwww.thedailystar.net/story.www.oecd.orgwww.ingentaconnect.comwww.ingentaconnect.comwww.ficci.comwww.AIFoundation.orgwww.Alibaba.comwww.newstoday-bd.

www.unescap.orgwww.atimes.comwww.tradeforum.orgwww.discoverybangladeshwww.NationalAcademies.orgwww.bangla2000.com/www.economywatch.comwww.indianchild.com/economywww.iloveindia.comwww.economist.com

2. McGraw-Hill (2005) International Trade. London; Norton Publication
http://www.google.com/http://www.imdb.com/http://www.trademe.co.nz/http://www.trademe.co.nz/http://www.thedailystar.net/storyhttp://www.oecd.org/http://www.ingentaconnect.com/http://www.ingentaconnect.com/http://www.ficci.com/http://www.aifoundation.org/http://www.alibaba.com/http://www.newstoday-bd/http://www.newstoday-bd/http://www.unescap.org/http://www.atimes.com/http://www.tradeforum.org/http://www.tradeforum.org/http://www.tradeforum.org/http://www.tradeforum.org/http://www.discoverybangladesh/http://www.discoverybangladesh/http://www.discoverybangladesh/http://www.nationalacademies.org/http://www.bangla2000.com/http://www.economywatch.com/http://www.economywatch.com/http://www.economywatch.com/http://www.economywatch.com/http://www.indianchild.com/economyhttp://www.indianchild.com/economyhttp://www.indianchild.com/economyhttp://www.indianchild.com/economyhttp://www.indianchild.com/economyhttp://www.indianchild.com/economyhttp://www.iloveindia.com/http://www.iloveindia.com/http://www.iloveindia.com/http://www.economist.com/http://www.google.com/http://www.imdb.com/http://www.trademe.co.nz/http://www.thedailystar.net/storyhttp://www.oecd.org/http://www.ingentaconnect.com/http://www.ingentaconnect.com/http://www.ficci.com/http://www.aifoundation.org/http://www.alibaba.com/http://www.newstoday-bd/http://www.unescap.org/http://www.atimes.com/http://www.tradeforum.org/http://www.discoverybangladesh/http://www.nationalacademies.org/http://www.bangla2000.com/http://www.economywatch.com/http://www.indianchild.com/economyhttp://www.iloveindia.com/http://www.economist.com/

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