PART A

1. Full form of GDP and what is the difference between GDP and GDP per Capita

 GDP is gross domestic product, the total economic output of a country, the amount of money a country
makes.
 GDP per capita is the total output (GDP) divided by the number of people in the population, which is
average output of each person, the average amount of money each person makes.

2. Define or explain Purchase Power Parity in two lines,

 Purchase Power Parity or PPP is a method of measuring the relative purchasing power of different countries’
currencies for same basket of goods and services.
 It determines how much money is needed to purchase the same goods and services in two countries and
using that information to calculate an implicit foreign exchange rate that reflects the same purchasing power,
per unit of currency in different countries.

3. Which of these are Formal Institutions and Informal Institutions

a. Laws - Formal Institutions

b. Ethics - Informal Institutions

c. Culture - Informal Institutions

d. Regulations - Formal Institutions

e. Norms - Formal Institutions

f. Rules - Formal Institutions

4. Name two countries under Theocratic Laws

Theocracy is a form of government in which a deity is the source from which all authority derives. A system of

government in which priest’s rule in the name of God or a god.

a. Saudi Arabia - an Islamic theocratic monarchy, one of the most tightly controlled governments in the world.
The country is also home to two of Islam’s most holy sites, the cities of Mecca and Medina. Although law does
not directly forbid other religions to be practiced in the country, the practice of religions other than Islam is
disliked by the Saudis' Islamic-dominant society. Anyone in the country caught in an attempt to insult Islam or
promoting any other faith there is subjected to strict punishment, which may go as far as death.
 b. Iran - The Islamic Republic of Iran is a theocracy government. This means that the constitution denotes that
the ruler of the state is best qualified to interpret Islam and ensure that the people of the state strictly adhere to
its principles.

5. Name at least two of the three kinds of economies

a. Capitalist economy - is an economic system in which capital goods are owned by private individuals or
businesses. The production of goods and services is based on supply and demand in the general market (market
economy).

b. Socialist economy - A command economy is a system where the government, rather than the free market,
determines what goods should be produced, how much should be produced and the price at which the goods are
offered for sale.

PART B

6. Name two characteristics each of Low Context and High Context cultures

High-context culture and low-context culture are terms used to describe cultures based on how explicit the
messages exchanged are and how much the context means in certain situations.

High-context culture

 Long term relationships- Societies or groups where people have close connections over a long period of
time.
 Less verbally explicit communication, less written/formal information - Cultural behaviour are not made
explicit because most members know what to do and what to think from years of interaction with each
other.
 Strong boundaries- who is accepted as belonging vs who is considered an "outsider"

Low-context culture

 More interpersonal connections of shorter duration - Societies where people tend to have many
connections but of shorter duration or for some specific reason.
 Rule oriented, people play by external rules - Cultural behaviour and beliefs may need to be spelled out
explicitly so that those coming into the cultural environment know how to behave.
 Knowledge is more often transferable.

7. Expand SWOT and VRIO

SWOT - is Strength, Weaknesses, Opportunities and Threats.

 VRIO - four question framework asked about a resource or capability.

The question of Value, the question of Rarity, the question of Imitability and the question of Organization

8. Name at least two out of 3 each of the Classic Based Theories and Firm Based Theories

Classic Based Theories:

1. Mercantilism
2. Absolute Advantage

Firm Based Theories:

1. Product Life cycle

2. Country similarity

9. Difference between Horizontal and Vertical FDI

Horizontal Vertical

1 A company investing in the same business If a company invests in a business that

abroad that it operates domestically
Direct investment between industrialized
2 countries as ways to avoid trade barriers such
as tariffs and import quotas, gain better
access to the local economy.
3 In horizontal FDI World Economy the aim is
how best to serve the host market
plays the role of a supplier or a distributor.
When a firm in an industrial country builds
or purchases a plant in a developing
country to lower production, by hiring low-
wage workers and using low-cost materials
In vertical FDI models, the question is typically
how best to serve the domestic market.

10. In foreign exchange terminology what is spot and forward

A spot foreign exchange is the rate of a foreign exchange contract for immediate delivery (usually within two
days). The spot rate represents the price that a buyer expects to pay for a foreign currency in another currency.
These contracts are typically used for immediate requirements, such as property purchases and deposits,
deposits on cards, etc.

A forward foreign exchange is a contract to purchase or sell a set amount of a foreign currency at a specified
price for settlement at a predetermined future date (closed forward) or within a range of dates in the future
(open forward).

PART C

11. Draw a 5 point VRIO chart for Swiggy

  Swiggy has got is its operations right, the company ensured it had total control over the logistics. Which is
not the case with the competition.
 Swiggy started operations in August 2014, its main proposition was to ensure it delivered food not only from
high-end restaurants, but also pocket-friendly joints, and everything in between. Which is unique. And it
served it customers well.
 Swiggy has one big factor in its favor - the first mover’s advantage they have taken a solid position in the
mind-space of the urban Indian populace. Which could serve well in long term and would be difficult to
replicate by the competitors.
 As order volumes through Swiggy keep increasing, restaurants factor in that demand and work on adding to
their daily (raw material) procurements. To counter this Swiggy today also works with small restaurant
owners who form a big part of the restaurant business. For many small restaurants, Swiggy is the primary
route through which orders flow in. Which show an organization with enough resources to handle it
customers and well organized.

12. Explain the impact both negative and positive on a strong rupee on Indian Economy

Positives:
  The appreciating (Strong) rupee will result in lower crude oil prices for the Indian basket, keeping both
wholesale and retail inflation under check in the near term.
 Sectors like aviation and select consumer durables companies which import crude oil or crude oil
derivatives are likely to benefit from a strong rupee.
 Stronger currency attracts more foreign flows and more foreign investors and investments.
 Students looking to study abroad are will be happy as they need not shell out more rupees to meet the
cost.
 It may help those Indian companies who have raised debt abroad, help pay off some debts when
rupee is strong.
 More foreign Travel may help struggling travel industry.

Negatives:

 Indian software, automobile and ancillaries, pharmaceutical companies and textiles will be affected the
most since a significant portion of their revenues is dollar denominated.
 A strong rupee also hurts small and mid-sized export-oriented companies operating in labor intensive
sectors as they lose competitive advantage over other emerging market peers.
 The rupee's rise against the dollar would mean that Indian goods would be more expensive in dollar
terms. India's export earnings may suffer.

 Those working abroad will have to take burden on remitting money to their homeland.
 Travel to India gets costlier.

13. Explain the role of informal institutions in the growth of business in any country
Informal institutions are of especial significance in emerging economies where the functioning of formal
corporate governance institutions, such as corporate ownership rights or relations with external investors, are
not transparent nor well-enforced. Informal institutions are usually unwritten and are created and enforced
outside the official channels.

 Informal institutions determine the costs of economic transactions: they spur development in the form of
contracts and contract enforcement, common commercial codes, and increased availability of information, all
of which reduce the costs of transactions, risk, and uncertainty.
 Informal institutions lie at the basis of an economy. They include public agencies, trade unions, community
structures and professional associations. They make up the fabric which determines the response to laws and
government decisions. Most often they shape these outcomes themselves.
 Institutions which are conducive to development ensure greater self-expression, allow the free flow of
information and encourage the formation of associations and clubs. These form prosperous social
relationships, which are conducive to greater economic interaction by increasing levels of trust and wider
availability of information.
 Informal Institutions also determine the scope for oppression and expropriation of resources by elites:
unequal institutions which allow the dominance of powerful elites over economic exchange strongly limit
development, as can be seen in the case of many ex-colonial countries.
 Informal institutions can help determine the degree to which the environment is conducive to cooperation
and increased social capital; inclusive and participatory institutions increase the flow of information and the
extent to which resources can be pooled to reduce risk and ensure sustained levels of wealth.
 In some countries, steady rates of economic growth are associated with an increase in informal employment.
Certain forms of informal employment expand during downturns in the economy – including both informal
survival activities and sub-contracted and outsourced activities due to formal firms trying to cope with
recession.

Institutions strongly affect the economic development of countries and act in society at all levels by determining
the frameworks in which economic exchange occurs. They determine the volume of interactions available, the
benefits from economic exchange and the form which they can take.