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solved assignments for mba 4th sem Q.1 Explain the importance of taxation.


For the worldwide operation of firms, taxation plays a vital role. Taxation has become the core of various financing decisions which includes international investment decisions, international working capital decisions, fund raising decisions and the decisions related to dividend and other payments. The tax decision is also relevant in domestic firms also.


The managing of taxation is an extremely difficult issue for the international corporations. The various reasons are given as follows:
· The firms are supposed to work in several tax jurisdiction or authorities where the tax rates are diverse and also the administration of the tax system is not uniform.
· The ultimate load of tax in the framework of international firms is determined by means of a more complex interaction of varying descriptions of the tax base.
· The difference in tax treatment in different nations will direct to distortions in worldwide trade and investment. The companies which are situated in the low-tax country can have a periphery over other firms in worldwide market. There are possibilities to divert the investment to those countries that have low cost rates.
· The overlapping takes place between the international firms with different tax jurisdictions, utilise the arbitrage opportunities and retain an edge over the domestic firms.

The bases of international tax system are:
· Tax neutrality - The neutrality of international tax system is important because it must not affect the economic efficiency. If the tax is neutral then it will not influence the locality of the investment or nationality of the investor. The capital can shift from a nation with lesser return to a nation with higher return. Therefore, resources will be allocated well, and the gross world output in turn will be high.

· Tax equity - The principle of tax equity states that all equally positioned tax players contribute in the cost of operating the government according to the equal rules. The idea of equity can be understood in two ways. The first one states that the input of each tax player must be consistent with the amount of public services as received. The second idea is that the contribution of each tax player must be in terms of their ability to pay. The ability to pay means the one with greater ability is likely to pay a larger amount of tax.

· Avoidance of double taxation - The avoidance of double income states that one must not be taxed twice for the same income. However, if the post-tax income is sent to the foreign countries then in that case the receiver of such income is taxed again. This implies the same income is subjected to double taxation. As an alternative, the requirements of foreign tax credits may be formed in the domestic tax system.
There also exist some tax laws which prevent the tax through artificial transactions such as transfer pricing. In addition, the corporate structures will help to reduce the overall tax burden to the enterprise.



Q.2 Differentiate between foreign marketing and domestic marketing.

Domestic vs. International marketing
Domestic marketing refers to the practice of marketing within a firm’s home country. Whereas International or foreign marketing is the practice of marketing in a foreign country; the marketing is for the domestic operations of the firm in that country.
Domestic marketing finds the "how" and "why" a product succeeds or fails within the firm’s home country and how the marketing activity affects the outcome. Whereas, foreign marketing deals with these questions and tries to find answers according to the foreign market conditions and it provides a micro view of the market at the firm’s level.
In domestic marketing a firm has insight of the marketing practices, culture, customer preferences, climate and so on of its home country, while it is not totally aware of the policies and the market conditions of the foreign country.

The stages that have led to achieve global marketing are:
· Domestic marketing - Firms manufacture and sell products within the country. Hence, there is no international phenomenon.
· Export marketing - Firms start exporting products to other countries. This is a very basic stage of global marketing. Here, the products are developed based on the company’s domestic market although the goods are exported to foreign countries.
· International marketing - Now, Firms start to sell products to various countries and the approach is ‘polycentric’, that is, making different products for different countries.
· Multinational marketing - In this stage, the number of countries in which the firm is doing business gets bigger than that in the earlier stage. And hence, the company identifies the regions to which the company can deliver same product instead of producing different goods for different countries. For example, a firm may decide to sell same products in India, Sri lanka and Pakistan, assuming that the people living in this region have similar choice and at the same time offering different product for American countries. This approach is termed ‘regiocentric approach’.
· Global marketing - Company operating in various countries opts for a common single product in order to achieve cost efficiencies. This is achieved by analysing the requirements and the choice of the customers in those countries. This approach is called ‘Geocentric approach’.
The practice of marketing at the international stage does not designate any country as domestic or foreign. The firm is not considered as the corporate citizen of the world as it has a home base.
The firm must not have a ’single marketing plan’, because there are differences between the target markets (that is domestic or international markets). There should never be a rigid marketing campaign. A firm that is successful internationally first obtains success locally.
Few approaches that you can consider for an international marketing are:
· Advertise as a foreign product - By doing so, the product will be considered as genuine and original in some countries.
· Joint partnership with a local firm - finding a firm that has already established credibility will benefit a lot. The product will be considered as a local product by following this marketing approach.
· Licensing - You can sell the rights of your product to a foreign firm. Here the problem is that the firm may not maintain the quality standard and therefore may hurt the image of the brand.
Culture is a major factor which influences marketing decisions and practices in a foreign country. For example, in the middle-eastern countries the prior approval of the governing authorities should be taken if a firm plans to advertise a product related to women’s apparel, as showcasing some aspects of women clothing is considered immodest and immoral.

The differences between domestic marketing and international marketing are listed below:
Characteristics
International Marketing
Domestic Marketing
1. Culture
Multi culture
Single culture and in some cases multi culture
2. Data accessibility
Very difficult
Easy
3. Data reliability
Very Low
High
4. Control
Difficult
Relatively easy
5. Consumer preferences
Vary from country to country
Vary in small extent
6. Product mix
Adaptability required
Standardization required
7. Business operation
More than one country
Home country only
8. Currency exposure
Required
Required only if there is importing



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