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.

    Major Objectives of WTO

    • Reduction of trade barriers and tariffs
    • Improves the standard of living
    • Focuses on sustainable development
    • Promotes trading system