Kerala Plus One Business Studies Chapter Wise Previous Questions Chapter 11 International Business – I
Question 1.
This is a document stating the value and quantity of goods entering the country from abroad. It is submitted to the customs office. State the name of this document. (August – 2009)
Answer:
Bill of entry
Question 2.
Imagine that India produces all goods and services it needs. Then, in your opinion, is there any need. for external trade? Substantiate your opinion by stating any three reasons. (August – 2009)
Answer:
For the development of a country, we need external trade. The importance of external/foreign trade are
Benefits of International Business: The benefits of international business to the nations and business firms are:
Benefits to Nations
1. Earning of foreign exchange: It helps a country team foreign exchange which can be used for importing capital goods, technology, petroleum products, and fertilizers, pharmaceutical products, etc.
2. More efficient use of resources: External trade enables a country to utilize the available resources in the best possible manner.
3. Improving growth prospects and employment potentials: External trade helps to accelerate the economic growth and employment opportunities of a country.
4. Increased standard of living: Foreign trade helps in raising the standard of living of a country.
5. International relation: External trade helps to promote harmonious and cordial relationship among the nations.
Benefits to Firms
1. Prospects for higher profits: When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.
2. Increased capacity utilization: It help firms in using their surplus production capacities and improving the profitability of their operations. Large scale production helps to reduce the cost of production.
3. Prospects for growth: It helps firms in improving their growth prospects by creating demands for their products in foreign countries.
4. Enhances competition: External trade enhances competition, which compels the domestic firms to improve the technology of production,
production process and quality of the products.
5. Improved business vision: It improves business vision as it makes firms to grow, more competitive and diversified.
Question 3.
Even though a country produces all goods and services they need, the importance of external trade doesn’t end. Substantiate your answer. (October – 2013)
Answer:
Benefits of International Business: The benefits of international business to the nations and business firms are:
Benefits of International Business: The benefits of international business to the nations and business firms are:
Benefits to Nations
1. Earning of foreign exchange: It helps a country team foreign exchange which can be used for importing capital goods, technology, petroleum products, and fertilizers, pharmaceutical products, etc.
2. More efficient use of resources: External trade enables a country to utilize the available resources in the best possible manner.
3. Improving growth prospects and employment potentials: External trade helps to accelerate the economic growth and employment opportunities of a country.
4. Increased standard of living: Foreign trade helps in raising the standard of living of a country.
5. International relation: External trade helps to promote harmonious and cordial relationship among the nations.
Benefits to Firms
1. Prospects for higher profits: When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.
2. Increased capacity utilization: It help firms in using their surplus production capacities and improving the profitability of their operations. Large scale production helps to reduce the cost of production.
3. Prospects for growth: It helps firms in improving their growth prospects by creating demands for their products in foreign countries.
4. Enhances competition: External trade enhances competition, which compels the domestic firms to improve the technology of production,
production process and quality of the products.
5. Improved business vision: It improves business vision as it makes firms to grow, more competitive, and diversified.
Question 4.
………….. are the means of importing foreign goods from some countries to re-export them to other countries. (March – 2014)
Answer:
Entrepot Trade
Question 5.
In this modern world, the volume of international trade has increased a lot. Explain the importance of external trade in this context. (August – 2014)
Answer:
Importance of external trade:
Benefits of International Business: The benefits of international business to the nations and business firms are:
Benefits to Nations
1. Earning of foreign exchange: It helps a country team foreign exchange which can be used for importing capital goods, technology, petroleum products, and fertilizers, pharmaceutical products, etc.
2. More efficient use of resources: External trade enables a country to utilize the available resources in the best possible manner.
3. Improving growth prospects and employment potentials: External trade helps to accelerate the economic growth and employment opportunities of a country.
4. Increased standard of living: Foreign trade helps in raising the standard of living of a country.
5. International relation: External trade helps to promote harmonious and cordial relationship among the nations.
Benefits to Firms
1. Prospects for higher profits: When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.
2. Increased capacity utilization: It help firms in using their surplus production capacities and improving the profitability of their operations. Large scale production helps to reduce the cost of production.
3. Prospects for growth: It helps firms in improving their growth prospects by creating demands for their products in foreign countries.
4. Enhances competition: External trade enhances competition, which compels the domestic firms to improve the technology of production,
production process and quality of the products.
5. Improved business vision: It improves business vision as it makes firms to grow, more competitive, and diversified.
Question 6.
Dev Enterprises is doing their business all over the world, while Pran Enterprises is doing its business only in India. In this context, write any three differences that exist between international businesses and domestic businesses. (March – 2015)
Answer:
| Domestic Business | International Business. |
| Both the buyers and sellers are from the same country | Buyers and sellers are from different Countries |
| Various stakeholders such as suppliers, employees, middlemen .shareholders and partners are usually citizens of the same country | Various stakeholders such as suppliers, employees, middlemen, shareholders, and partners are from different nations |
| The factors of production Like capital, labor, and raw material can move freely within the country | There are, restrictions on free mobility of factors of production across countries |
| Domestic markets are relatively more homogeneous in nature | International markets lack homogeneity due to differences, in languages, preferences customs, etc across markets. |
| Business systems and practices are relatively more homogeneous within a country | Business systems and practices vary considerably across countries. |
| It has to face the political system and risk of only one country | Different countries have different forms of political systems and risk. |
| Business laws, regulations, and economic policies are uniformly applicable within a country. | Business laws, regulations, and economic policies differ widely among nations. |
| The currency of the domestic country is used. | They use different currencies for business transactions. |
Question 7.
The company which operates in more than one country is called MNC (Multinational Corporation). Write any two features of it. (Say – 2015)
Answer:
Features of MNC
- Huge capital resources
- Foreign collaboration
- Advanced technology
- Product innovation
- Marketing strategies
- International Market
- Centralized control
Question 8.
Mr. Karthik is a domestic spices merchant, who wants to expand his business globally. He decided to enter the international export market. What are the benefits that Karthik’s firm enjoys through this decision? (Say – 2015)
Answer:
Benefits of International Business: The benefits of international business to the nations and business firms are:
Benefits to Nations
1. Earning of foreign exchange: It helps a country team foreign exchange which can be used for importing capital goods, technology, petroleum products, and fertilizers, pharmaceutical products, etc.
2. More efficient use of resources: External trade enables a country to utilize the available resources in the best possible manner.
3. Improving growth prospects and employment potentials: External trade helps to accelerate the economic growth and employment opportunities of a country.
4. Increased standard of living: Foreign trade helps in raising the standard of living of a country.
5. International relation: External trade helps to promote harmonious and cordial relationship among the nations.
Benefits to Firms
1. Prospects for higher profits: When the domestic prices are lower, business firms can earn more profits by selling their products in countries where prices are high.
2. Increased capacity utilization: It help firms in using their surplus production capacities and improving the profitability of their operations. Large scale production helps to reduce the cost of production.
3. Prospects for growth: It helps firms in improving their growth prospects by creating demands for their products in foreign countries.
4. Enhances competition: External trade enhances competition, which compels the domestic firms to improve the technology of production,
production process and quality of the products.
5. Improved business vision: It improves business vision as it makes firms to grow, more competitive, and diversified.
Question 9.
When one country provides service to another country, the trade in such intangibles is known as …………. (March – 2016)
a) invisible trade
b) innovative trade
c) intangible trade
d) None of these
Answer:
a) invisible trade
Question 10.
Expand the following: (March – 2016)
a) MNC
b) MOU
Answer:
MNC – Multi-National Company
MOU – Memorandum Of Undertaking/Memorandum of understanding
Question 11.
Some businesses operate within the boundaries of a country, while some other businesses operate beyond the national frontiers. Differentiate between these two types of businesses. (March – 2016)
Answer:
| Domestic Business | International Business. |
| Both the buyers and sellers are from the same country | Buyers and sellers are from different Countries |
| Various stakeholders such as suppliers, employees, middlemen .shareholders and partners are usually citizens of the same country | Various stakeholders such as suppliers, employees, middlemen, shareholders, and partners are from different nations |
| The factors of production Like capital, labor, and raw material can move freely within the country | There are, restrictions on free mobility of factors of production across countries |
| Domestic markets are relatively more homogeneous in nature | International markets lack homogeneity due to differences, in languages, preferences customs, etc across markets. |
| Business systems and practices are relatively more homogeneous within a country | Business systems and practices vary considerably across countries. |
| It has to face the political system and risk of only one country | Different countries have different forms of political systems and risk. |
| Business laws, regulations, and economic policies are uniformly applicable within a country. | Business laws, regulations, and economic policies differ widely among nations. |
| The currency of the domestic country is used. | They use different currencies for business transactions. |
Question 12.
Explain any two modes of entry into international business. (September – 2016)
Answer:
1. Merchandise exports and imports:
merchandise exports mean sending tangible goods abroad, merchandise imports mean bringing tangible goods from a foreign country to one’s own country. It is also known as trade in goods (visible trade), includes only tangible goods and excludes services.
2. Licensing and franchising: Permitting another party in a foreign country to produce and sell goods under their trademarks, patents, or copyright in lieu of some fee is called licensing. Franchising is similar to licensing, but it is a term used in connection with the provision of services.
Question 13.
Manufacturing and selling goods beyond the boundaries of one’s own country is called ………….. (March – 2017)
a) national business
b) international business
c) domestic business
d) None of these
Answer:
International Business
Question 14.
AM Associates in India and C-Link Associates in Japan, two computer assembling firms, joined together and formed AMC Associates to do the same business. (March – 2017)
a) Name the mode of international business mentioned above.
b) State any two advantages of such business.
Answer:
a) Joint venture
b) 1. Increased resources and capacity: Since two or more firms join together to form a joint venture, there is the availability of increased capital and other resources, able to face market challenges and take advantage of new opportunities.
2. Access to new markets and distribution networks: A foreign company gains access to the vast Indian market by entering into a joint venture with an Indian Company. They can also take advantage of the established distribution channels.