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BUSINESS STUDIES

PRESENTATION

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INTERNATIONAL BUSINESS

Class-XI Commerce

Presented By :-

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Chapter - 11

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ContentsMeaning & Types of International Trade

Features

Internal V/S External trade

Reasons

International Business V/S Domestic Business

Scope of International Business

Importance

Modes of Entry

Export Procedure

Import Procedure

Documents Section

World Trade Organization3

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Meaning

&

Type of

International

Trade4

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INTER

5

NATIONALTRADE

Import Export

EntrepotPradhyumn Somani

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Australia Americ

a

India

Africa

Import & ExportEntrepot

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Features of International

Business

1)Involvement of Two Countries

2)Payment in Foreign Currency

3)Legal Procedure

4)Restrictions

5)High Risk

6)Different Languages7

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Internal Trade

V/S

External Trade

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Point of Difference

Internal Trade External Trade

1. Meaning Trade within geographical limits of a country .

Trade beyond geographical limits of a country .

2. Countries Involved

Only one country . Minimum two countries .

3. Risk Less degree of risk . High degree of risk .

4. Currency Used Home currency only . Foreign currency only .

5. Procedure Involved

No long procedure or formalities .

Long procedure & many formalities .

6. Mode of Payment Cash or cheques . Bill of Exchange , letter of credit or by bank .

7. Legal Rules & Regulations

National laws International laws

8. Mode of Transport Road or Railway transport .

Sea or Air transport .

9. Cost Involved Low operating cost . High operating cost due to long distance .

10.

Effect on Foreign Reserves

No effect . Direct impact .9

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Reasons for International Business

1)Productive Quality

2)Scattered Natural Resources

3)Factors of Production

4)Difference in Operating Cost

5)Lack of Perfect Production

6)Efficient Production & Trade IdeaPradhyumn Somani

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V/S Domestic Business

International Business

1. Nationality of buyer and seller .

2. Nationality of other stake holders .

3. Mobility of factors of production .

4. Customer heterogeneity across the market . Pradhyumn Somani

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V/S Domestic Business

International Business

5. Differences in business practices .

6. Political system & risk

7. Business regulation & policies .

8. Currency used in transaction . 12Pradhyumn Somani

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Scope 1) Merchandise exports &

Imports .

2)Service export & import .

3)Licensing & Franchising .

4)Foreign investment .

I.Direct investment .

II.Portfolio

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Importance of International Business

Benefits to Nations

1)Earning of Foreign Exchange .

2)Efficient Use of Resources .

3) Improving Growth Prospects &

Employment Potential .

4) Increases Standard of Living .Pradhyumn Somani

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Importance of International Business

Benefits to Firms

1)Prospects for Higher Profits .

2)Increased Capacity Utilization .

3)Prospects for Growth .

4)Way out from Intense Competition .

5)Improved Business Visits .Pradhyumn Somani

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Modes of

Entry

1)Licensing .

2)Franchising .

3)Joint Venture .

4)Exporting & Importing

INTERNATIONAL

BUSINESS

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Licensing

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1) A agreement between Licensor &

Licensee .

2) Permit for using patent right ,

trade secret & technology of

licensor .

3) Licensor – Home Country

Licensee – Foreign Country

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Franchise

1) A agreement between Franchisee & Franchiser .

2)Royalty – A fees paid for the brand name .

3)Franchisee – Independent unit .

Franchiser – Parent company .

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Franchise Benefits of Franchise

1) Franchiser allows franchisee to use his trade or service

mark

2) Payment for license makes the franchisee part of network .

3) Franchiser provides all marketing support & equipments .

4) Franchisee follows all policies of parent company .

5) Franchiser may give training to personnel working under

franchisee .

Benefits of Franchiser

6) Expansion 2) Direct Feedback

3) Enhancing the GoodwillPradhyumn Somani

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Franchise Merits

1)Established Brand

2)Quality Product

3)Advertisement

4)Financing

5)Training

6)Technological

upgradation

7)Uniform Control System

8)Better Start

Demerits

9)High Royalty Payment

10)No Independence

11)Limited Varity

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Joint Venture1) Companies contribute capital &

share profit .

2) Firms join together to establish new

enterprise called JOINT VENTURE .

3) Purpose

I. Produce a product using

technical know-how .

II. Managerial expertise by foreign

company

III. Market the product of foreign

company

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Joint Venture Merits

1)Reduce Competition

2)Reduce Risk

3) Protection for Small

Companies

4) Advance Technology

5) Better Competence

6) Large Capital

7) Reduction in Cost

Demerits

8) Problem of Sharing

Capital

9) Legal Restriction

10)Conflicts

11)Mergers & Monopolies

12)Lack of CoordinationPradhyumn Somani

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Exporting & Importing1) Export & Import of goods &

services .

2) Exporting can be done in two

ways:-

I. Direct

II. Indirect

3) Most popular method of

international trade .

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Exporting & Importing Merits

1) Easiest way to get entry

in foreign country .

2) Comparatively less

investment .

3) Risk involved is very less

or comparatively nil .

Demerits

4) Physically movement of

goods involves huge

cost .

5) Import restrictions

&trade barriers .

6) Far locality of exporter

creates lack of customer

support services .

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Obtaining Export License

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Pre – Requisites of Export License

1) Obtaining IEC Number (Import-Export code)

2) Obtaining RCMC (Registration Cum Membership

Certificate )

3) Registration with ECGC ( Export Credit Guarantee

Corporation)

Export Procedure

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5) Obtaining Pre-Shipment Finance

6) Production and Procurement of goods

7) Pre-shipment Inspection

Export Procedure

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Pre-shipment Inspection

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Quality Control & Inspection Act

1) Consignment wise Inspection

2) In Process Quality Control

3) Self - Certification

Export Procedure

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8) Excise Clearance

9) Obtaining Certificate of

Origin

10)Reservation of Shipping

Space

11)Packing and Forwarding

12)Insurance of Goods

Export Procedure

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13)Custom Clearance

14)Obtaining Mate’s Receipts

15)Payment of Freight and Insurance of Bill of Lading

16)Preparation of invoice

17)Securing Payment

Export Procedure

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Import Procedure

1) Trade Enquiry

2) Procurement of Import License

3) Obtaining Foreign Exchange

4) Placing Order or Indent

5) Obtaining Letter of Credit

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Import Procedure

6) Arranging of Finance

7) Receipt of Shipment Advice

8) Retirements of Import Documents

9) Arrival of Goods

10)Custom Clearance

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Import ProcedureCustom ClearanceCustom Officer

Appraiser Officer

ImporterDock

Superintendent

Port Manager

Importer

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Import – Export Documents

1) Commercial Invoice

2) Bill of Lading

3) Certificate of Inspection

4) Certificate of Origin

5) Bill of Exchange

Principal Export Documents

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Import – Export Documents

1) Proforma Invoice

2) Intimation of Inspection

3) Shipping Instructions

4) Shipping Order

5) Mate’s Receipt

6) Application for

Certificate of Origin

Auxiliary Export Documents

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Import – Export Documents

1) Bill of Entry

I. Bill of Entry for Home Consumption

II. Bill of Entry for Warehousing

III. Ex – Bond Bill of Entry

Import Documents

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Important Terms

1) Free on Board (FOB)

2) Cost and Freight (CFR)

3) Cost Insurance and Freight (CIF)

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WTO{World Trade

Organization}

1)Trade b/w nations at global level .

2)Limits the trade policies of nations .

3)Purpose of Liberalizing trade .

4)Settle disputes with neutral procedure .

5)Ensures smooth & free flow of trade .

Nature of WTO

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WTO{World Trade

Organization} Benefits of WTO

1)Promotes International Peace .

2)Settle disputes among member nations .

3)Frame common rules & regulations .

4)Helps in economic growth of developing nations .

5)Improved – Quality products & standard of living .

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