International Business Class 11 Notes Business Studies Chapter 10 - CBSE

Chapter : 10

What Are International Business ?

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International Trade

Business transactions taking place beyond the boundaries of one’s own country refers to as International trade. It helps people to improve their living standards by accessing various goods and services.

Scope of International Trade/Business

Merchandise exports and imports
Licensing and franchising
Service exports and imports
Foreign investments

Benefits of International Trade/Business

Benefits to Countries

Earning of foreign exchange
Improved Living standard
Adequate use of resources
Advancement of employment potentials

Benefits to Firms

Enhancement of capacity utilisation
Prospects for higher profits
Improves the vision of business
Prospects for growth

Modes of Entry Into International Trade

Exporting and Importing
Contract Manufacturing
Licensing and Franchising
Joint Ventures
Wholly Owned Subsidiaries

Export

In this trade, goods and services manufactured in domestically, and traded in a foreign company. It can be done in two ways: direct or indirect.

The Procedure of Export Trade

Step 1: Receipt of enquiry and sending quotations
Step 2: Receipt of order or indent
Step 3: Assessing the importer’s creditworthiness and securing a guarantee for payments
Step 4: Obtaining export licence
Step 5: Obtaining pre-shipment finance
Step 6: Production or procurement of goods
Step 7: Pre-shipment inspection
Step 8: Excise clearance Excise clearance
Step 9: Obtaining certificate of origin
Step 10: Reservation of shipping space
Step 11: Packing and forwarding
Step 12: Insurance of goods
Step 13: Customs clearance
Step 14: Obtaining mates receipt
Step 15: Payment of freight and issuance of bill of lading
Step 16: Preparation of invoice
Step 17: Securing payment

The Procedure Of Import Trade

Step 1: Trade enquiry

Step 2: Procurement of import licence

Step 3: Obtaining foreign exchange

Step 4: Placing order or indent

Step 5: Obtaining letter of credit

Step 6: Arranging for finance

Step 7: Receipt of shipment advice

Step 8: Retirement of import documents

Step 9: Arrival of goods

Step 10: Customs clearance and release of goods

Documents used in the International Trade

Proforma Invoice
Import Order or Indent
Export Invoice
Packing List
Certificate of Origin
Certificate of Inspection
Mate’s Receipt
Shipping Bill
Bill of lading
Airway Bill
Marine Insurance Policy
Cart Ticket
Letter of Credit
Bill of Exchange
Bank Certificate of Payment
Bill of Entry
Shipment Advice
Trade Enquiry
Sight Draft
Usance Draft
Dock Challan
Import General Manifest

International Trade Institutions

World Bank
International Monetary Fund (IMF)
World trade Organisation (WTO)

World Trade Organisation (WTO)

WTO was established in the year 1995. It was a successor to the General Agreement on Tariffs and Trade. It does business with the trading of goods and services and in IPRs. The WTO is a permanent organisation created by an international treaty ratified by the governments and legislatures of member states. India is a founding member of WTO.