INTERNATIONAL

BUSINESS
CHAPTER.11 CLASS XI
 1. MEANING:

• International business refers to buying and selling of goods and services beyond geographical
limits of a country.
• It is also called TRADE BETWEEN TWO COUNTRIES.
• International trade is of three types:

1. EXPORT: It refers to selling of goods and services to foreign countries.

2. IMPORT: It refers to buying goods or services from foreign countries.
3.ENTERPORT: It refers to import of goods not for consumption in home country but
for exporting them to another country.
2. NATURE OF EXTERNAL TRADE:

1. INVOLVEMENT OF TWO COUNTRIES:

In international business, minimum two countries are involved. Buying and selling across the
borders of the country can also be termed as external trade.
2. PAYMENT in FOREIGN CURRENCY:
Each country has its own currency. Payment for imported goods is made in foreign currency
and payment for export is also received in foreign currency only.
3. PROBLEMS OF INT .BUSINESS:

1. LEGAL PROCEDURES:
Import and export of goods involves a lenghtly and complicated procedures.
2. RESTRICTIONS:
The international business is not free as internal trade. In case of several items export or
import license has to be obtained. Many restrictions are imposed by govt. on some items.
3. HIGH RISK:
The risk involved in international business is much higher than in internal trade.
a. risk of damage of goods in transit.
b. risk of currency fluctuation. And etc.
4. DIFFERNET LANGUAGES:
Different languages are spoken and written in different countries . Traders must appoint
someone who can read and understand the foreign languages to read the price, terms n cond.
5. ARRANGEMENT OF FOREIGN CURRENCY:
For making payment of import , importer has to arrange foreign currency which involves
lengthy procedure.
 DIFF B/W INTERNAL ND EXTERNAL TRADE:
s.n BASIS OF INTERNAL TRADE EXTERNAL TRADE
o DIFFERENCE
1. MEANING:  It refers to buying nd selling of  It refers to buying nd selling of goods
goods within geographical limits of beyond the geographical limits of a
country. country.
2. COUNTRIES  Only one country is involved.  Minimum two countries are involved.
INVOLVED:
3. RISK:  Less degree of risk is involved.  High degree of risk is involved.
4. MODE OF PAYMENT:  Payments are made nd received in  Payments are made nd received in
home currency only. foreign currency only.
5. MODE OF  It uses road , railway mode of  It uses sea , air transportation.
TRANSPORT: transportation.
6. COST INVOLVED:  Operating cost of internal trade is  Operating cost of external trade is
lower. higher due to involvement of long
distance.
4. REASONS FOR INT. BUSINESS:
1. The countries can not produce equally well or cheaply all that they need.,
2. There is unequal distribution of natural resources among different countries.
3. Availability of different factors of production such as land, labour, capital and
raw materials differ among different countries.
4. Difference in labour , productivity and production cost due to socio-
economic , geographical and political reasons.
5. There is not even a single country , which is in a better position to produce
better quality products at a lower cost.
5. INT. BUSINESS V/S DOMESTIC BUS.
1. NATIONALITY OF BUYERS AND SELLORS:
2. NATIONALITIES OF OTHER STAKEHOLDERS:
3. MOBILITY OF FACTORS OF PRODUCTION:
4. CUSTOMER HETEROGENEITY ACROSS MARKETS :
5. DIFFERENCE IN BUSINESS SYSTEMS ND PRACTISES:
6. POLITICAL SYSTEM ND RISK:
7. BUSINESS REGULATIONS ND POLICIES:
8. CURRENCY USED IN BUSINESS TRANSACTIONS:
6. NEED FOR INT. BUSINESS:
1. BENEFITS TO NATIONS:
 EARNING OF FOREIGN EXCHANGE
 MORE EFFICIENT USE OF RESOURCES
 IMPROVING GROWTH PROSPECTS ND EMPLOYMENT POTENTIAL
 INCREASES STANDARD OF LIVING
2. BENEFITS TO FIRMS:
 PROSPECTS FOR HIGHER PROFIT
 INCREASED CAPACITY UTILISATION
 PROSPECTS FOR GROWTH
 IMPROVED BUSINESS VISION
7. SCOPE OF INT. BUSINESS:

1. MERCHANDISE EXPORTS ND IMPORTS

2. SERVUCE EXPORTS ND IMPORTS
3. LICENSING ND FRANCHISING
4. FOREIGN INVESTMENTS