International Business Class 11 Notes CBSE Business Studies Chapter 11 (Free PDF Download)

International Business- Introduction and Meaning

• The manufacturing and trading beyond the boundaries of a county geographically is known as international business. 

• The new modes of communication and development of faster and efficient means of transportation has made it possible to do international business efficiently for most of the countries.

• The international or external business can, therefore, be defined as those business activities that take place across the national frontiers.

• Different types of things are moved internationally, such as capital, personnel, technology, and intellectual property like patents, trademarks, know-how and copyrights.

Reason for International Business

• Unequal Distribution of Natural Resources: Countries cannot manufacture the same level of quality and at the same cost. This is due to the unequal distribution of natural resources and differences in productivity levels among different geographical places.

• Varied Differences: There is a disparity between labour productivity and manufacturing costs. Because of varied socioeconomic, geographical, and political factors, it varies in each country.

• Specialization Advantage: The principle of territorial division of labour can be applied internationally as well. Most developing countries with plenty of labour, for example, specialise in producing and exporting clothing.

• Price Differences: Firms also engage in the export and import of goods due to the difference in prices of products. They import cheaper things from other countries and export goods to other countries where they can fetch better prices for their products.

International Business Versus Domestic Business

Scope of International Business

Scope of international business is much wider. It includes the following:

1. Merchandise Exports and Imports:

• Merchandise export and import implies the export and import of tangible goods to and from abroad.

• Merchandise export and import is also known as trade in goods, including only tangible goods and excluding trade in services.

2. Service Exports and Import:

• It is also called invisible trade.

• Include, transportation, communication, warehousing, distribution and advertising, banking, tourism etc.

• Service exports and imports involve trading of intangible goods.

3. Licensing and Franchising

• Licensing is defined as a contractual arrangement in which one firm (licensor) grants access to its patents, copyrights, trademarks, or technology to another firm in a foreign country for a fee called royalty.

• Franchising is also similar to licensing. It is a term used in context with the provision of services.

4. Foreign Investments

• Foreign investments involve investments of funds abroad in exchange for financial return.

• Foreign investments are of two types namely, 

• Foreign Direct Investment: When a firm invests directly in properties such as plants and machinery in foreign countries with the intention of producing and distributing goods and services in those countries, this is known as Foreign Direct Investment.

• Portfolio Investment: A portfolio investment, on the other hand, is an investment made by one company into another by the acquisition of shares or the provision of loans, with the latter earning income through dividends or interest on loans.

Benefits of International Business

Benefits to Nations

• Foreign Exchange: International business facilitates foreign exchange within a country that aids in the payment of imported goods expenses.

• Efficient Use of Resources: Every country is specialised in the production of goods and services, leading to efficient utilisation of resources.

• Growth: Exporting and flourishing in international trade helps in improving the economic growth of the country and creates opportunities for employment of people. 

• Stability: It also helps in bringing stability in prices of domestic products.

• Better Living Standards: Due to International business people in the world community are able to consume and enjoy a higher standard of living.

Benefits to Firms

• More Profitable: International business can be more profitable than domestic business. When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high enough.

• Improved Profitability: A firm can make use of its surplus production capacity and thereby improve the profitability of the operations.

• Growth Prospects: When demand in the home country gets saturated in the domestic market, the company can think of growth prospects in developing countries.

• Facing Competition: When competition in the domestic market is very intense, internationalism seems to be the only way to achieve significant growth.

• Self- Improvement: When a country visualizes becoming international, then it develops the urge to be more competitive, more diversified, and more strategically strong. 

Modes of Entry Into International Business 

1. Exporting and Importing

Meaning

• Exporting is defined as the sending of goods and services from the home country to a foreign country.

• Importing is defined as the purchase of foreign products and bringing them into one's home country.

• There are two ways of exporting and importing namely 

• Direct Exporting/Importing: Direct exporting/importing, a firm itself approaches the overseas buyers/ suppliers and looks after all the formalities related to exporting/ importing activities including those related to shipment and financing of goods and services.

• Indirect Exporting/Importing: Indirect exporting/importing, means when most of the import/export tasks are performed by the middlemen, and the firm’s participation is very less.

Merits

• Facilitates easy entry into international markets.

• Less investment of time, effort and money required.

• The export/import does not require much of investment in foreign countries, exposure to foreign investment risks is nil or much lower.

Limitations

• Expenses and payments like custom duty, transportation and other charges substantially increase product costs and make them less competitive

• When there are import restrictions in foreign countries, exporting becomes difficult and less feasible. Hence, opting licensing or franchising in that case proves to be a better option.

• Most of the export firms work and operate from their home country. Few visits are made to promote the product which lags them in understanding and serving the customer better.

2. Contract Manufacturing

Meaning

• Contract manufacturing is a type of business where a firm or company enters into a contract with one or a few local manufacturers in foreign countries to get goods produced as per the requirement.

• Contract manufacturing is also called Outsourcing. 

• It can take three major forms: 

• Production of certain components, 

• Assembly of components into final products, 

• Complete manufacture of the products such as garments.

Merits

• They make use of the production facilities that already exist in the foreign countries.

• As no investment is required so there is no investment risk.

• It gives advantage to international companies to manufacture or assemble the products at lower costs.

• Ready market is available for products, when manufacturing jobs are provided on contract basis to those companies who have idle production capacities.

Limitations

• Non adherence to production design and quality standards causes product quality problems to the international firms.

• Local manufacturers lose their control over the manufacturing process because goods are produced strictly as per the terms and specifications.

• They are not free to sell the contracted output as per its will. It has to sell the goods to the international company at a predetermined price.

3. Licensing and Franchising

Meaning

• It is a contractual arrangement in which a firm provides access to its technology, patents or trade secrets to some other firm in a foreign country against the payment of a fee called royalty.

• Cross Licensing, that facilitates the mutual exchange of knowledge, technology and patents between the firms 

• Franchising adheres to service business.

• The franchisers set ground rules and regulations as to how the franchises should operate while running their business.

Merits

• The licensor/franchisor has to virtually make no investments abroad.

• It is considered a less expensive mode of entering into international business.

• Very little foreign investment is involved.

• Licensor/franchiser do not participate in the losses.

• There are lower risks of business takeovers and government interventions.

• The licensor's/franchisor's, patents, brand names and copyrights are used.

Limitations

• The major risk is that the licensee can start marketing an identical product under a slightly different brand name. If not taken care of, the trade secrets can be passed on to the foreign markets.

• Conflicts over maintenance of accounts, payments of royalty, and non-adherence to norms relating to production of quality products.

4. Joint Ventures

Meaning

• A joint venture means establishing a firm that is jointly owned by two or more independent firms.

• The three major ways a joint venture can happen are:

• Foreign investor buying an interest in an interest in a local company.

• A Local firm taking interest in an existing foreign firm.

• The foreign and a local firm jointly creating a new enterprise.

Merits

• With the local firm contributing equity finance,  it becomes less financially difficult to expand globally.

• Large projects can be executed easily that require large capital and manpower.

• Cost sharing and avoiding the risks.

Limitations

• The dual ownership arrangements can lead to conflicts, which then result in a battle for control between the investing firms.

• The sharing of technology and trade secrets poses a threat of disclosing it to others.

5. Wholly Owned Subsidiaries.

Meaning

• Those companies which want to exercise full control over their overseas operations, set up a wholly owned subsidiary in an overseas country.

• It can be established in two ways: 

• Setting up a new firm.

• Acquiring an already settled and established firm in the foreign country and further using it to manufacture as well as promote the products within the host country. 

Merits

• A company can exercise full control over its operations.

• Not necessary to share or disclose its technology or trade secrets with anyone else. 

Demerits

• Not suitable for small and medium size firms as they do not have enough funds with them to invest abroad.

• Has to bear the entire loss resulting from failure of its foreign operations.

Export Import Procedures and Documentation

Export Procedure

1. Receipt  of  Enquiry  and  Sending  Quotation

• Exporters can be notified of a request for information even if the importer places an advertisement in the press.

• The exporter responds to the inquiry with a quotation, often known as a proforma invoice.

• The proforma invoice comprises information about the price at which the exporter is willing to sell the goods, as well as information about the quality, grade, size, weight, mode of delivery, packing type, and payment terms.

2. Receipt  of  Order  or  Indent 

• It sets an order for the items to be sent if the export price and other terms and conditions are acceptable.

• Also referred to as indent, contains  the details of the goods ordered, and other information in respect to price, delivery, packing, marking etc.

3. Determining the Creditworthiness of the Importer and Obtaining a Payment Guarantee

• The importer's creditworthiness is investigated by the exporter.

• A  letter of credit is asked from the importer to reduce the extent of risk. 

• A letter of credit is a guarantee issued by the importer's bank that it will honour payment of export invoices to the exporter's bank up to a specific amount.

4. Obtaining  Export  Licence 

• In India, exporting commodities is governed by customs laws, which require that an export firm obtain an export licence before proceeding with exports.

• Prerequisites  for  getting  an  export  licence: 

• Opening a bank account with any bank that has been approved by the Reserve Bank of India;

• Getting an Import Export Code (IEC) from the Directorate General of Foreign Trade (DGFT) or a Regional Import Export Licensing Authority;

• Creating an account with the right export promotion council. 

• To protect against non-payment risks, you should register with the Export Credit and Guarantee Corporation (ECGC).

• A company must submit an exporter/importer profile, a bank receipt for the required fee, a certificate from the banker, two copies of photographs attested by the banker, details of non-resident interest, and a declaration about the application to obtain an IEC number to the Director General for Foreign Trade (DGFT).

• It is a legal requirement for all exporters to register with the proper export promotion council.

• To secure international payments from political and commercial interference, you must register with the ECGC.

5. Obtaining  Pre-Shipment  Finance 

• To begin pre-production, the exporter asks his banker for pre-shipment financing.

• Pre-shipment finance is the funding required by an exporter to purchase raw materials and other components, process items, and transport goods to the port of shipment.

6. Production or Procurement of Goods

• The exporter then gets the goods ready according to the importer's specifications.

• Either the company produces the commodities itself or it purchases them from the market.

7. Pre-shipment Inspection

• Inspection of some products by a competent agency recognised by the government is required.

• For this aim, the government created the Export Quality Control and Inspection Function in 1963 and authorised specific entities to act as inspection agencies.

• At the time of export, the pre-shipment inspection report is required to be submitted along with other export paperwork.

8. Excise Clearance

• The materials used to make the items are subject to excise duty.

• The exporter must submit an invoice to the relevant Excise Commissioner in the region.

• The Excise Commissioner issues the Excise clearance if he is satisfied with the invoice.

• The refund of an excise duty is known as a duty drawback.

• This scheme of duty drawback is administered by the Directorate of drawback under the ministry of finance which fixes the rates of drawback for different products.

9. Obtaining Certificate of Origin

• To avail the   trade  concessions  and  other  benefits,  the  importer  has to  ask  the  exporter  to send  a  certificate  of  origin.

• The certificate of origin issued by the importer acts as a proof that the goods are manufactured in the country from where the export is taking place.

10. Reservation of Shipping Space

• The exporting company submits a request for shipping space to the shipping company. 

• It must specify the types of commodities to be exported, the expected shipment date, and the final destination port. 

• The shipping business issues a shipping order after accepting the application for shipping.

11. Packing and Forwarding

• The items are then properly packed and labelled with relevant information such as the importer's name and address, gross and net weight, shipping port and destination, country of origin, and so on.

• The exporter then arranges for the transportation of the goods to the port.

• The railway authorities issue a "railway receipt" when commodities are loaded into a railway waggon, which serves as a title to the items.

• To enable his agent to take delivery of goods at the port of shipping, the exporter endorses the railway receipt in his favour.

12. Insurance of Goods

• During transit, items are covered for loss with an insurance company to safeguard against the danger of loss or damage due to the perils of the sea.

13. Custom Clearance

• Before the products can be loaded into the ship, they must first be cleared from customs.

• The exporter prepares the shipping bill in order to gain custom clearance.

• The main document on which the customs office grants export permission is the shipping bill.

• Five copies of the shipping bill are subsequently presented to the Customs Appraiser at the Customs House, together with the following documents:

• Export Contract or Export Order

• Letter of Credit

• Commercial Invoice

• Certificate of Origin

• Certificate of Inspection

• Marine Insurance Policy 

• Following the submission of these documents, the Superintendent of the relevant port trust is contacted to acquire a carting order. 

• The command to the workers at the port's gate to allow the goods to enter the dock is known as a carting order.

14. Obtaining Mates Receipt

• A mate receipt is a receipt that is provided by the ship's commanding officer when the cargo is loaded on board. 

• The receipt contains information such as the vessel's name, berth, date of shipping, package description, marks and numbers, cargo condition at the moment of receipt on board the ship, and so on.

• The port superintendent gives the C&F agent the mate's receipt after receiving the port dues.

15. Payment of Freight and Bill of Lading

• The C&F agent hands along the mate's receipt to the shipping business for freight calculation.

• The shipping company issues a bill of lading after receiving the freight, which acts as proof that the goods have been accepted for transport to the specified destination.

• This document is referred to as an airway bill when goods are being shipped by air.

16. Preparation of Invoice 

• The invoice specifies the quantity of products shipped as well as the money due from the importer. 

• The C&F representative arranges for it to be duly authenticated by customs.

17. Securing Payment

• The importer will require a variety of documentation in order to claim ownership of goods upon their arrival in his or her nation and get them customs cleared.

• In this case, a certified copy of the invoice, a bill of lading, a packing list, an insurance policy, a certificate of origin, and a letter of credit is needed.

• The submission of necessary documents to the bank for the purpose of receiving payment from the bank is referred to as "document negotiation."

• When the bill of exchange is received, the importer either releases the money in the event of a sight draught or accepts the usance draught for payment on the bill of exchange's maturity date. 

• The payment is collected by the exporter's bank through the importer's bank and credited to the exporter's account. 

• The exporter can receive immediate payment from his/her bank upon submission of documentation by signing a letter of indemnity.

Import Procedure

1. Trade Enquiry

• With the use of a trade inquiry, an importing firm contacts export firms to learn about their export pricing and terms of export.

• A trade enquiry is a formal request from an importing company to an exporter for information on the price and other terms and conditions under which the latter is willing to export products.

• A quotation is always prepared by the exporter. It is sent to the importer.

• Proforma invoice is the term for a quotation.

2. Procurement of Import Licence

• To determine whether the items he or she wishes to import are subject to import licencing, the importer should review the current Export Import (EXIM) policy.

• If items can only be imported with a permit, the importer must get a permit.

• Every importer (and exporter) in India is required to register with the Directorate General Foreign Trade (DGFT) or the Regional Import Export Licensing Authority and get an Import Export Code (IEC) number.

3. Obtaining Foreign Exchange

• Payment in foreign currency necessitates the conversion of Indian currency into that of the foreign country.

• The Reserve Bank of India's (RBI) Exchange Control Department regulates all foreign exchange transactions in India.

• Every importer is required to obtain foreign exchange sanctions under the current laws.

• To acquire such a sanction, the importer must apply to a bank that is authorised by the RBI to issue foreign exchange.

4. Placing Order or Indent

• The import order which is also called indent comprises information about the price, amount, size, grade, and quality of items requested. It also includes the instructions related to packing, shipping, ports of shipment and destination, delivery schedule, insurance, and mode of payment.

5. Obtaining Letter of Credit

• If the importer and the overseas supplier agreed on a letter of credit as payment terms, the importer should get the letter of credit from its bank and send it to the overseas supplier.

6. Arranging for Finance

• Importers should plan ahead of time to pay the exporter when the items arrive at the port.

• Import finance should be planned ahead of time to prevent large penalties.

7. Receipt of Shipment Advice

• The overseas supplier sends the shipment advice to the importer after loading the products onto the vessel.

• A shipment advice is a document that contains information on the products being shipped.

8. Retirement of Import Documents

• The overseas supplier creates a set of required documents in accordance with the terms of the contract and the letter of credit, and then gives them to his or her banker for transmission and negotiation to the importer in the manner described in the letter of credit.

• A bill of exchange, commercial invoice, bill of lading/airway bill, packing list, certificate of origin, maritime insurance policy, and other documents are usually included in the package.

9. Arrival of Goods

• The person in command of the carrier (ship or airline) notifies the officer in charge at the dock or airport when goods arrive in the importing country.

• He gives an import general manifest. An import general manifest is a document that contains information on the products being imported.

10. Custom Clearance and Release of Goods

• To begin, the importer must get a delivery order, often known as an endorsement for delivery. 

• The importer usually obtains the endorsement on the back of the bill of lading when the ship arrives at the port. The shipping firm in question is responsible for this endorsement. 

• The shipping company may issue a delivery order instead of certifying the bill in some instances. This order allows the importer to accept items for delivery.

• The importer must submit two copies of a completed "application to import" form to the "Landing and Shipping Dues Office." 

• The ‘Landing and Shipping Dues Office' imposes a fee for dock authorities' services, which must be paid by the importer. The importer receives one copy of the application as a receipt after paying the dock fees. The receipt is referred to as a "port trust dues receipt."

• The importer then completes a ‘bill of entry' form for customs duty assessment.

• The bill of entry must be delivered to the dock superintendent after the import duty has been paid.

• The bill of entry is presented to the port authority by the importer or his representative. The port authority issues the release order after obtaining the relevant charges.

Foreign Trade Promotion: Incentives And Organisational Support

Foreign Trade Promotion Measures And Schemes

1. Duty Drawback Scheme 

• Duties paid on export products are repaid to exporters upon presentation of proof of these commodities' exports to the appropriate authorities. Duty drawbacks are the term for such returns.

• Refund of excise duties paid on items intended for export, as well as refund of customs duties paid on raw materials and machines imported for export manufacturing, are some of the key duty drawbacks. The latter is also referred to as a "customs drawback."

2. Export Manufacturing Under Bond Schemes

• This facility allows businesses to make goods without having to pay excise and other taxes.

• Firms wishing to use this service must provide an assurance (i.e., a bond) that they are making items for export.

3. Exemption from Payment of Sales Taxes

• Sales tax does not apply to goods intended for export.

• For certain years, this benefit of income tax exemption is only available to 100% Export Oriented Units (100% EOUs) and units established in Export Processing Zones (EPZs)/Special Economic Zones (SEZs).

4. Advance License Scheme

• The exporter is permitted duty-free access to domestic and imported inputs for the production of export goods.

• As a result, the exporter is exempt from paying customs tax on goods imported for the purpose of making export goods.

• Advance licences are accessible to both regular and irregular exporters.

5. Export Promotion Capital Goods Scheme (EPCG)

• Allows export enterprises to import capital goods with no or low customs taxes, subject to real user conditions and the fulfilment of specific export obligations.

• This scheme is especially useful to industrial units looking to modernise and upgrade their existing plant and machinery.

6. Scheme of Recognising the Export Firms and Trading Houses. 

• The government provides the designation of Export House to a firm that has achieved a stipulated average export performance in previous select years, with the goal of promoting established exporters and assisting them in marketing their products in foreign markets. 

• Apart from achieving a minimum of previous average export performance, such export enterprises must also meet other requirements outlined in the import-export policy.

7. Export of Services

• The goal is to increase service exports.

• The service houses are set up and awarded based on the service providers' export performance.

• Service Export House, International Service Export House, and International Star Service Export House are some of the terms used to describe them.

8. Export Finance

• Exporters require funds to manufacture their goods.

• Authorized banks make two types of export financing available to exporters.

• Pre-shipment Finance: Also known as packing credit is money given to an exporter to help them finance the acquisition, processing, manufacturing, or packaging of products for export.

• Post-shipment Finance: Under this plan, funds are made available to the exporter from the time the loan is extended until the items are delivered to the destination country.

9. Export processing zones

• Export Processing Zones are industrial estates that emerge from the Domestic Tariff Areas (DTA) to form enclaves .

• They're generally found around airports or ports.

• They're designed to provide a low-cost, internationally competitive duty-free environment for export production.

• EPZs have recently been upgraded to Special Economic Zones (SEZs), which are a more advanced version of export processing zones. All laws and regulations controlling imports and exports are waived in these SEZs.

10. 100 Percent Export Oriented Units (100 percent EOUs)

• EOUs were created with the goal of increasing export production capacity by providing an adequate policy framework, operational flexibility, and incentives.

• It follows the same production process as before, but it gives you more options for where you want to make your product.

Organisational Support

1. Department of Commerce

• This department is responsible for foreign trade, and issues relating to it.

• It formulates foreign trade policy.   

• It also sets the tone for the country's overall import and export policies.

2. Export Promotion Councils (EPCs)

• They are non-profit organisations that are registered under the Companies Act or the Societies Registration Act with the goal of promoting and developing the country's exports of specific items.

• There are 21 EPCs currently active. 

3. Commodity Boards

• These boards are supplemental to Export Promotion Councils (EPCs) and perform the same functions as EPCs in the development of conventional commodity production and its exports.

4. EIC- Export Inspection Council

• The Export Quality Control and Inspection Council was established by the Government of India under Section 3 of the Export Quality Control and Inspection Act 1963, with the goal of sound development of the export trade using quality control and pre-shipment inspection.

5. Indian Trade Promotion Organisations

• On 1 January 1992, the Ministry of Commerce, Government of India, established it under the Companies Act 1956.

• New Delhi is where the headquarters  of Indian Trade Promotion Organisations is located.

• It helps the industry by organising trade fairs and exhibitions both within and outside the country.

• It is a service organisation that maintains regular and close engagement with trade, industry, and government.

6. Indian Institute of Foreign Trade (IIFT)

• It provides training in international trade, conducts research in areas of international business, and analyses and disseminates data relating to international trade and investments. 

• It is an autonomous body established by the Government of India and is registered under the Societies Registration Act with the foremost objective of professionalising the country's foreign trade management.

7. Indian Institute of Packaging 

• In 1966, the Ministry of Commerce, Government of India, and the Indian Packaging Industry and Allied Interests established the Indian Institute of Packaging as a national institute. 

• Mumbai is where the company's headquarters and principal laboratory are located. 

• The three other regional laboratories are in Kolkata, Delhi, and Chennai. 

• It is a training and research institute that focuses on packaging and testing. 

• It offers good infrastructure to meet the diverse needs of the packaging manufacturing and user industries.

• Also training, education and consultancy services regarding packaging development is provided by this institute.

8. State Trading Organisations (STC)

• Existing trade channels were insufficient for promoting exports and diversifying commerce with countries other than European countries, necessitating the establishment of State Trading Organizations.

• The STC's, which was set up in 1956 has a major goal to promote international trade, particularly export trade, among various trading partners across the world.

International Trade Institutions And Trade Agreements

• In Bretton Woods, New Hampshire representatives of forty-four nations who were under the leadership of a famous economist J.M. Keynes came together to find out the ways and measures to rekindle the peace in the world which has been lost due to World War I and World War II.

• They saw three organisations as foundations of global economic development:

• International Monetary Fund (IMF), 

• International Bank for Reconstruction and Development (IBRD), 

• International Trade Organisation. 

• While the World Bank was tasked with rebuilding war-torn economies, particularly those in Europe, the IMF was tasked with maintaining exchange rate stability in order to facilitate global trade expansion.

• As far as they could tell at the time, the ITO's major goal was to promote and ease international trade among member countries by removing different barriers and discriminations.

• However, due to strong resistance from the United States, the idea of establishing an ITO was never realised. 

• Instead of forming an organisation, an agreement was reached to free international trade from high customs tariffs and other sorts of limitations.

• India was one of the original members of these three international bodies, which became known as the General Agreement for Tariffs and Trade (GATT).

World Bank

• The Bretton Woods Conference led to the formation of the International Bank for Reconstruction and Development (IBRD), which is also referred to as the World Bank.

• The main goals were to aid in the reconstruction of Europe's war-torn economies and to aid in the development of the world's disadvantaged nations.

• After achieving success, it shifted its focus to the development of undeveloped countries.

• It realised that by investing more in these countries, particularly in social sectors such as health and education, it might help them achieve the requisite social and economic transformation.

• The International Development Association (IDA), an affiliate of the World Bank was established with the goal of providing loans on favourable terms and circumstances to countries with per capita incomes below a crucial level. 

• IDA thus offers poor countries with interest-free long-term loans. 

• The World Bank is a group of five multinational organisations responsible for providing financial assistance to countries around the world.

International Monetary Fund

The IMF was established with the primary goal of developing an orderly international monetary system, which includes facilitating international payments and adjusting exchange rates between national currencies.

Objectives

• Facilitate the expansion of balanced international commerce and contribute to the promotion, maintenance of a high level of employment through the establishment of a permanent institution.

• Assist in the construction of a multilateral system of payments for current transactions between members to enhance exchange stability and preserve orderly exchange arrangements among member nations.

Functions

• Acting as a short-term credit institution.

• Providing machinery for the orderly adjustment of exchange rates Acting as a short-term credit institution.

• Provision of necessary facilities to ensure that the exchange rates are adjusted timely and orderly

• Acting as a repository for all member countries' currencies.

• Acting as a foreign currency and current transaction lending institution Determining the value of a country's currency and altering it.

• Providing machinery for international consultations.

World Trade Organisations and Major Agreements

• The decision to establish a permanent agency to oversee the promotion of free and fair trade among states was one of the major triumphs of the GATT negotiations.

• On January 1, 1995, the organisation GATT was replaced by the World Trade Organization. 

• Its headquarters are in Geneva, Switzerland.

• It is also a member-driven rule-based organisation, in that all decisions are made by member states based on a general consensus. 

• India is the founding member of the World Trade Organisation.

Objectives

• To ensure that tariffs and other trade barriers imposed by different countries are reduced.

• To engage in activities that improve living standards, create jobs,

• Increase income and effective demand, and facilitate increased production and trade; 

• To facilitate the most efficient use of the world's resources for sustainable development.

• To promote a more integrated, viable, and long lasting trade system.

Functions

• Establishing a commonly accepted code of behaviour with the goal of reducing trade obstacles, such as tariffs, and eradicating discrimination in international trade relations by encouraging its member countries to come forward to the WTO to resolve their problems.

• Acting as a dispute resolution body.

• Ensuring that all of the Act's rules and regulations are obeyed.

• Holding consultations to improve understanding and cooperation in global economic policymaking.

Benefits

• Aids in the promotion of international peace and the facilitation of international trade.

• All member-nation conflicts are resolved by mutual talks. 

• International trade and ties are made much easier and more predictable by rules.

• Free trade raises people's living standards by raising their income levels.

• Free trade allows for a wide range of high-quality products to be obtained. 

• Because of free trade, economic growth has accelerated.

• The system promotes effective government.

• The World Trade Organization (WTO) aids in the development of poorer countries.

International Business: Class 11 Business Studies Chapter 11 Revision Notes Summary

A prime chapter of Business Studies taught in Class 11 Commerce, International Business concentrates on how a business can cross geographical borders and take its propositions to a new market. Conducting business on an international platform is not an easy task. There are certain rules and protocols that a business has to follow. It adds smoothness and security to business operations. Students will learn such concepts in this chapter and will use them to answer questions relevant to the topics. Let us check what you will get in the revision notes of Chapter 11 Class 11 Business Studies International Business.

The notes start with the explanation and definition of international business and then proceed to the different aspects of it. You will find an apt description of the concept of business. In this section, you will learn about the different forms of business operations conducted in an international business. The notes of Chapter International Business Class 11 cover every aspect of this chapter such as merchandise import and export, raw material, invisible trade, franchising, etc. You will learn how a business can enter an international market easily. This section will also describe how an international business should be conducted maintaining the decorum of that particular market in a foreign country.

Here, you will learn how foreign investments are made to enter an international market and become a prominent player. The businessman will have to comply with certain protocols and legal aspects mandated by the government of the country. Find out what direct and indirect investment is. Students will also learn what portfolio investment is. It will also teach how a company can proceed and find out the ways to invest in an international business. To make it clearer, refer to the notes of Chapter International Business Class 11 and find these concepts explained using simple language.

On proceeding further, you will come to know the benefits of international business and how they can be used. The benefits are aptly segregated into two different sections. One section will describe how a firm will be benefitted from an international venture. The second section will describe how both the nations will be benefitted from such a venture. You will also learn how a domestic business differs from an international business.

Further in Chapter 11 Business Studies Class 11, you will study the simplest explanation of modes of entering an international venture. Every point will have its merits and demerits. Make sure you have studied them all properly so that you can answer questions correctly in the exam. The legal aspects of these modes of entry should be properly grasped and the associated technical terms should be understood. Refer to the revision notes prepared by the experts to grab hold of the concepts and learn the chapter efficiently.