What went wrong when the king rode under the arch?

It was too low and knocked off his crown

How does the chain of blame unfold in the poem?

Each accused person blames another, ending with the king's own changes

Differentiate between international trade and international business.

International trade covers only the exports and imports of goods, while international business is broader and includes services, investments, licensing and franchising across borders.

What is the major reason underlying trade between nations?

Nations cannot produce equally well or cheaply all that they need, owing to the unequal distribution of resources and differing productivity, leading to geographical specialisation.

Name the modes of entry into international business.

Exporting and importing, contract manufacturing, licensing and franchising, joint ventures and wholly owned subsidiaries.

Differentiate between contract manufacturing and a wholly owned subsidiary.

In contract manufacturing a firm gets goods produced by a local manufacturer abroad, while a wholly owned subsidiary is fully owned and controlled through 100% equity investment.

Foreign Direct Investment is investment made directly in plant and machinery abroad that gives the investor a controlling interest.

What is a letter of credit and why does an exporter need it?

A letter of credit is a guarantee by the importer's bank to honour payment; the exporter needs it to be assured of payment for the goods exported.

What is a bill of lading and how does it differ from a bill of entry?

A bill of lading is issued by the shipping company as a document of title for exported goods, while a bill of entry is a form filled by an importer for customs clearance of imported goods.

Why is pre-shipment inspection necessary for an export firm?

It ensures that only good-quality goods are exported, maintaining the reputation of the country and complying with quality control laws.

State any two benefits firms derive from international business.

Prospects for higher profits and increased capacity utilisation through economies of scale (along with growth and improved vision).

What is portfolio investment?

Portfolio investment is the acquisition of shares of, or the provision of loans to, a foreign company to earn dividends or interest, without direct involvement in production or marketing.

International Business

Class 11 Business Studies · Business Studies · Chapter 11

163 members in the CBSE community

View all

CBSE Class 11 · Business Studies

Every merit and limitation of 11 chapters

Marks booster + cheatsheet: key concepts in 2 lines each, common traps
20 marks: finance and MSME units
20 marks: internal and international trade
Five comparison tables, insurance to retail
Case cues for each chapter
Common traps, corrected

Page 1 free about 8 min read, Full kit about 55 min read

₹159See the full kit

CBSE Class 11 · Business Studies

Every merit and limitation of 11 chapters

Marks booster + cheatsheet: key concepts in 2 lines each, common traps
20 marks: finance and MSME units
20 marks: internal and international trade
Five comparison tables, insurance to retail
Case cues for each chapter
Common traps, corrected

Page 1 free about 8 min read, Full kit about 55 min read

₹159See the full kit

View all 44 amazing Marks Booster kits →

Summary

International business refers to business activities that take place across national frontiers, involving the movement of goods, services, capital, personnel, technology and intellectual property; it is broader than international trade, which covers only the exports and imports of goods. Nations trade because they cannot produce equally well or cheaply all that they need, owing to the unequal distribution of natural resources, differing productivity and factor availability, leading to geographical specialisation. International business differs from domestic business in the nationality of buyers, sellers and stakeholders, mobility of factors of production, customer heterogeneity, business systems, political risk, regulations and the currency used. Its scope covers merchandise exports and imports, service (invisible) trade, licensing and franchising and foreign investments, both direct (FDI) and portfolio. It benefits countries through foreign exchange earnings, efficient use of resources, growth and employment and a higher standard of living, and benefits firms through higher profits, capacity utilisation, growth prospects, escape from domestic competition and improved business vision. Firms enter international markets through exporting and importing, contract manufacturing (outsourcing), licensing and franchising, joint ventures and wholly owned subsidiaries, each with its advantages and limitations. The export procedure involves receiving enquiries and orders, obtaining a licence and pre-shipment finance, producing and inspecting goods, customs clearance, obtaining a bill of lading and securing payment through a letter of credit, while the import procedure involves enquiry, licence, foreign exchange, indent, letter of credit and customs clearance.

Meaning of international businessReasons and benefits of international businessInternational vs domestic businessScope and foreign investment (FDI and portfolio)Modes of entry — exporting and contract manufacturingLicensing, franchising and joint venturesWholly owned subsidiariesExport and import procedures and documents

Key terms

International business

Business activities that take place across national frontiers, involving the movement of goods, services, capital, personnel and technology.

Invisible trade

The export and import of services such as tourism, transport, banking and insurance, which are intangible.

Foreign Direct Investment (FDI)

Investment made directly in plant and machinery abroad, giving the investor a controlling interest.

Contract manufacturing

A mode of entry, also called outsourcing, in which a firm contracts local manufacturers abroad to produce goods to its specifications.

Letter of credit

A guarantee issued by the importer's bank to honour payment up to a certain amount, used to assure the exporter of payment.

Bill of lading

A document issued by the shipping company acknowledging receipt of goods on board and serving as a document of title to the goods.

Extra questions & answers

Try one from this chapter

International business refers to business activities that take place:

Flashcards & interactive practice