11th class business studies

1. 1Pradhyumn Somani
Pradhyumn Somani

2. Class-XI Commerce
Presented By :-
Pradhyumn Somani
2
Chapter - 11
Pradhyumn Somani
Pradhyumn Somani

3. Contents
 Meaning & 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 Organization
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4. Meaning
&
Type of
International Trade
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5. 5
Import Export
Entrepot
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6. 6
Australia
America
India
Africa
Import & ExportEntrepot
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7. 1) Involvement of Two Countries
2) Payment in Foreign Currency
3) Legal Procedure
4) Restrictions
5) High Risk
6) Different Languages
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8. 8Pradhyumn Somani
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9. 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 .
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10. 10
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 Idea
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11. 11
1. Nationality of buyer and seller .
2. Nationality of other stake holders .
3. Mobility of factors of production .
4. Customer heterogeneity across the market .
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12. 5. Differences in business practices .
6. Political system & risk
7. Business regulation & policies .
8. Currency used in transaction . 12Pradhyumn Somani
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13. 13
1) Merchandise exports &
Imports .
2) Service export & import .
3) Licensing & Franchising .
4) Foreign investment .
I. Direct investment .
II. Portfolio investment .
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14. 14
Benefits to Nations
1) Earning of Foreign Exchange .
2) Efficient Use of Resources .
3) Improving Growth Prospects &
Employment Potential .
4) Increases Standard of Living .
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15. 15
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 .
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16. 16
1) Licensing .
2) Franchising .
3) Joint Venture .
4) Exporting & Importing
I
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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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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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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
1) Expansion 2) Direct Feedback
3) Enhancing the Goodwill
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20. 20
Merits
1) Established Brand
2) Quality Product
3) Advertisement
4) Financing
5) Training
6) Technological upgradation
7) Uniform Control System
8) Better Start
Demerits
1) High Royalty Payment
2) No Independence
3) Limited Varity
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21. 21
1) 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
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22. 22
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
1) Problem of Sharing Capital
2) Legal Restriction
3) Conflicts
4) Mergers & Monopolies
5) Lack of Coordination
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23. 23
1) 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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Merits
1) Easiest way to get entry in
foreign country .
2) Comparatively less investment .
3) Risk involved is very less or
comparatively nil .
Demerits
1) Physically movement of goods
involves huge cost .
2) Import restrictions &trade
barriers .
3) Far locality of exporter creates
lack of customer support
services .
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25. 25
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)
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26. 5) Obtaining Pre-Shipment Finance
6) Production and Procurement of goods
7) Pre-shipment Inspection
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Quality Control & Inspection Act
1) Consignment wise Inspection
2) In Process Quality Control
3) Self - Certification
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28. 8) Excise Clearance
9) Obtaining Certificate of Origin
10) Reservation of Shipping Space
11) Packing and Forwarding
12) Insurance of Goods
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29. 29
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
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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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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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33. 33
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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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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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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36. 1) Free on Board (FOB)
2) Cost and Freight (CFR)
3) Cost Insurance and Freight (CIF)
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37. 37
{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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{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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39. Pradhyumn Somani