Quick Revision Notes

Class 11 Business Studies

International Business (अंतर्राष्ट्रीय व्यापार): It refers to business activities that involve the cross-border transactions of goods, services, resources, and ideas between two or more nations.
Domestic vs. International Business:
- Domestic business takes place within the boundaries of a single country.
- International business involves multiple countries, differing legal systems, currencies, languages, and business practices.

Why do nations engage in international trade?

Uneven Distribution of Natural Resources: Countries possess different natural endowments (e.g., crude oil in the Middle East, fertile land in India).
Difference in Productivity Costs: Labor, capital, and raw materials are cheaper in some countries compared to others.
Search for New Markets: When domestic markets get saturated, companies expand globally to increase sales and profits.
Division of Labour and Specialization: Countries specialize in producing goods where they have a comparative advantage.

The major forms/modes of international business include:

Merchandise Export and Import: Trade in physical goods (visible items).
Service Export and Import (Invisible Trade): Trade in intangible services like tourism, banking, IT services, and transport.
Licensing and Franchising: Permitting a foreign party to use intellectual property (patents, trademarks, brand names) for a fee (royalty).
Foreign Direct Investment (FDI): Directly investing in properties or business units in a foreign country.
Joint Ventures: Two or more firms coming together to form a new enterprise.

Companies can enter foreign markets through various methods, ranging from low risk/low control to high risk/high control:

Mode of Entry	Description	Level of Risk & Control
1. Exporting/Importing	Selling/buying goods across national borders directly or through intermediaries.	Low Risk, Low Control
2. Contract Manufacturing	Getting goods produced by local manufacturers in foreign countries as per specifications.	Low to Moderate
3. Licensing & Franchising	Giving rights to use intangible assets (trademarks, patents) to a foreign entity.	Low Risk
4. Joint Venture (संयुक्त उपक्रम)	Partnering with a foreign company to share ownership and control of a new business entity.	Moderate Risk
5. Wholly Owned Subsidiary	Setting up a 100% owned company-operated facility in a foreign nation.	High Risk, High Control

Indent: An order placed by the importer specifying goods, quantity, and price.
Letter of Credit (LoC): A guarantee issued by the importer’s bank that the exporter will receive payment upon proper shipping of goods. (Most crucial document for payment security).
Bill of Lading (B/L): Issued by the shipping company acknowledging receipt of goods on board and acts as a title of the goods.
Commercial Invoice: Prepared by the exporter stating details of goods, quantity, and price per unit.
Certificate of Origin: A certificate specifying the country where the goods are produced.
Shipping Bill: The main document on the basis of which customs permission is granted for export.

Import General Manifest (IGM): A document containing details of imported goods carried by a ship or aircraft.
Bill of Entry: Prepared by the importer/customs house agent for assessment of customs duty.
Dock Challan: Used for payment of port dues and charges.

To regulate and promote international trade, several global organizations exist:

World Trade Organization (WTO):
- Established on January 1, 1995 (successor to GATT).
- Headquarters: Geneva, Switzerland.
- Objective: To promote free and fair global trade, reduce tariffs, and settle trade disputes between member nations.
International Bank for Reconstruction and Development (IBRD / World Bank):
- Established to provide long-term capital for the reconstruction and development of member countries.
International Monetary Fund (IMF):
- Established to promote international monetary cooperation, exchange stability, and provide short-term financial assistance to countries facing balance of payment (BOP) crises.

For Nations:
- Earning of foreign exchange.
- Optimum utilization of resources.
- Availability of a wider variety of goods and services.
- Promotes international peace and brotherhood.
For Business Firms:
- Prospect for higher profits.
- Utilization of surplus production capacity.
- Way out of intense domestic market competition.
- Enhanced business reputation globally.