Globalization: AIIB, Sony's Competence, and Trade Barriers Report

This report provides a comprehensive analysis of globalization, examining the objectives and functions of the Asian Infrastructure Investment Bank (AIIB), assessing the competitive competence of Sony Corporation using Porter's Five Forces model, and discussing various types of trade barriers. The report delves into the AIIB's role in promoting infrastructure development and economic growth in Asia, outlining its key functions such as providing finance for infrastructure projects and implementing sustainable energy strategies. It then analyzes Sony's competitive landscape, highlighting factors such as competitive rivalry, the threat of substitutes, and the threat of new entrants. Finally, the report explores different types of trade barriers, including regulatory barriers, quotas, and tariffs, and provides examples of their impact on international trade. This report offers valuable insights into the complexities of globalization and its effects on businesses and economies worldwide.

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Contents
Part 1................................................................................................................................................2
Objectives of Asian Infrastructure Investment Bank...................................................................2
Major Functions of Asian Infrastructure Investment Bank.........................................................2
Setup of Asia Infrastructure Investment Bank.............................................................................3
Part 2................................................................................................................................................4
Competence of Company Sony...................................................................................................4
Part 3................................................................................................................................................5
3 Major Trade Barriers................................................................................................................5
Different types of Trade Barriers.................................................................................................6
Example of Trade Barrier............................................................................................................6

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Part 1
Objectives of Asian Infrastructure Investment Bank
The Asian Infrastructure Investment Bank is a multilateral development bank that works with a
mission to improve the social as well as economic outcomes in Asia. The organization has its
headquarter in Beijing and has started its operations in January 2016. The organization has now
become a team of total 97 approved members in the worldwide market. The organization is
aiming to invest in the practices of sustainable infrastructure and other productive sectors in Asia
as well. The objective of the organization is to improve the economic and social conditions of the
Asian region by helping in infrastructure development and other productive sectors in the Asian
region. The objective of the organization is to foster long term economic development by
initiating connectivity in different parts of Asia and driving export in the international market.
The aim of the organization is to increase the level of domestic consumption in the environment
and increase the profitability of the community.
The role of AIIB in the environment is to govern the environmental functions by setting up
institutional activities in the environment. This bank also aims to promote other banks so as to
increase their functions and uplift the level of Asian society as well. The objective of this bank is
to promote the actions of small companies of Asia in the worldwide market and sustain their
growth as well. The bank also works with the mission to provide sustainable infrastructure along
with cross border connectivity and private capital mobilization as well. The foundation of the
bank is built on the concept of Multilateral Financial Institutions (MFI). The bank aims to lean
with a small and efficient management team and highly skilled labour. It also works with an
objective of considering all the ethical aspects and zero tolerance for corruption in the business
environment. It works to build on respect of the Asian environment.
Major Functions of Asian Infrastructure Investment Bank
The key function of the Asian Infrastructure Investment Bank is to provide finance for the
infrastructure projects for the developing countries in the Asian region. The bank works in
different sectors along with the infrastructure sector. Telecom, urban sanitation, transport and
energy are some of the sectors where the bank functions its operations. There are total 26% of

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the total operations that are solely conducted by the bank in the business environment while rest
74% of operations are co-financed with other MFIs. The Sustainable Energy for Asia Strategy of
the bank aims to function the banking activities in such a way that the environment becomes
clean, safe and proper supply of resources is provided to the people in the environment. The
function of the bank is to support the members of the Asian community who are working for the
betterment of the society. The functions of the bank are to create a global impact in the
worldwide market. The areas of operation and the range of instruments offered by the bank are
mentioned below:
 Sovereign Loans: The bank provides sovereign backed loans with an average maturity of
20 years and final maturity of 35 years. The co-financed lending functions are also
promoted by the bank.
 Non- Sovereign backed financing: The bank works with a progressive approach to build
non-sovereign backed financing based on the banking activities. They functions to
provide a range from sub-sovereign public entities to special purpose vehicles for the
concession based financing.
 Equity Investment: The bank also makes investment in equity having clear exit strategies.
They also play the role of minority investor in the target environment.
 Guarantees: The bank also provide guarantee services in the Asian environment.
Sustainable Energy for Asia Strategy, strategic programming, transport sector strategy, strategy
on investing in equity, strategy on financing operations in non-regional members, sustainable
cities strategy and strategy on mobilizing private capital for infrastructure are some of the key
functional areas for the AIIB.
Setup of Asia Infrastructure Investment Bank
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank that has
currently 70 members and 27 prospective members from different parts of the world. The bank
started operating its functions from 25 December 2015 post ratification received from 10
member states. The bank was initiated with the starting capital of $100 billion that was
equivalent to 2/3 of Asian Development Bank and that too half of the World Bank. This bank
was initially proposed by China in the year 2013 and the initiative of this event was launched in
the year 2014. The bank gained the highest credit rating by three biggest rating agencies present

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in the worldwide market. The initial objective of this bank was to increase the foreign currency
reserve of China for the issue of global financial crisis. Talking about the process, it should be
noted that AIIB has an efficient project approval process that define the activities of the financial
projects. The first process is strategic programming under which the projects that meet the
primary criteria of the project are discussed and approved by the executive committee. Further,
the concepts are prepared based on the due diligence confirm the viability of the project. The
internal investment committee review the project and revise the agreement accordingly.
Afterwards, approval is taken by the board of directors and the project is implemented to
complete the objective in the business environment.
Part 2
Competence of Company Sony
Sony Corporation is a Japanese multinational organization that is headquartered in Tokyo. The
company is successfully maintaining its image in the target market. Further, below mentioned
involves the reasons justified through Porter Forces model that helps the company Sony maintain
its competence in the external environment:
Competitive Rivalry: This aspect of porter five forces explain about the intensity of competition
present in the target market. It should be noted that there is high level of industry rivalry in the
target market because there is presence of low switching cost along with moderate number of
firms present in the industry. However, it should be noted that high aggressiveness of firms helps
the company Sony to grow by increasing its competence in the target market. This type of
feature helps the organization to beat the competition and let the customers identify the brand in
the target market. The customers shift towards the best company so that they can attain
maximum level of satisfaction in the target market. This aspect helps the company to effectively
increase their competence by outshining in front of other companies and innovating the products
and services as well.
Threat of Substitutes or Substitution: There is moderate degree of threat of substitution in the
target market. Although there are many substitutes in the market but very few of them are
efficient one. Also is should be noted that there is low switching cost which means that

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customers can easily shift from one organization to other. The efficient products and services of
the company highly attract the interest of the customer and make them stick towards one brand
only. Further, it should also be noted that the company make use technology and innovation in its
products to grow so the customers get to relate with the products and services of the company.
Threat of New Entrants or New Entry: There is presence of low threat of entrants in the target
market which increases the interest of the company Sony to grow and increase its competence in
the industry. It should be noted that high brand development is required in the industry along
with high cost of managing the business which most of the companies are unable to incur at the
initial stage. Resulting in which, the company gains the advantage of increasing their brand
image in the target market by effectively making use of available resources and capital present
with them.
Part 3
3 Major Trade Barriers
In a business environment, trade barriers make the import process more expensive due to which
the demand for the import is reduced. The main purpose of the trade barrier is to impose
restraints on the international flow of goods and services in the environment. The most common
barrier to trade is a tariff that is tax on import. Tariff increases the price of the imported goods
that are relative to the domestic goods present in the environment. Further, below mentioned are
the three reason of why the countries impose trade barriers in the business economic
environment.
 In order to protect the interest of new established domestic industries against the foreign
competitions in the market. The fact should be noted that the high level of import in the
business environment provides the products to the domestic customers easily due to
which they do not find the need to make use of domestic products in the environment
resulting in which, the growth of the domestic industries is paused. So, it should be noted
that in order to save the domestic industry from the high level of competition present in
the external worldwide environment, the government impose trade barriers in the
environment.

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 Secondly, it should be noted that the trade barriers are imposed in the business
environment with an aim to protect the domestic producers from dumping by foreign
companies or the government. Dumping happens when a foreign company provides
product at a slightly lower price that the price provided by the domestic company in the
market due to which the degree of sales of the domestic company is reduced. Thus, it
should be noted that trade barriers are imposed in the environment to uplift the interest of
the domestic company and help them to attain an optimum share of the domestic
environment before the foreign companies comes under the competition.
 Lastly, it should be noted that trade barriers are created in the business environment to
increase the level of revenue for the government. Tariff is one of the best ways for the
government of any country to increase the revenue for them. So, increasing the level of
tariff on export and import will provide greater level of funds to the government in the
target market.
Different types of Trade Barriers
Three different types of trade barriers are mentioned below:
 Regulatory Barrier: It is the legal trade barrier that restricts the process of import in the
business environment. It includes safety standard, product standards etc. that elaborates
that the product should meet the needs of the local government.
 Quota: It refers to the trade barrier that restricts the import of quantity above a certain
limit into a country. Quota and tariff are certainly the same kind of trade barrier except
that the government collect the revenue from the tariff while the exporting companies
collect the extra revenue from the quotas.
 Tariff: a tariff is most common type of trade barrier that refers to the tax imposed on the
import activity of goods in a domestic business environment. It can be a form of specific
or valorem tax that increases the price of imported goods and certainly reduces its level
of consumption as well.
Example of Trade Barrier
The quota on the import of semi-conductor increased the price of memory chips during the
eighties century resulting in which the whole industry was damaged due to lower pay in jobs and

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less sales in the business environment. Secondly, in the year 1981, the US government
voluntarily developed a restraint agreement to the Japanese car makers to limit the export of cars
up to 1.68 million cars per year in US. Resulting in which, limited cars made the Japanese
country more profitable as with limited quantity they started increasing price. This also gave rise
to partnership of Japanese firms with US car manufacturers.