TN State Board 11th Commerce Important Questions Chapter 25 International Business

Question 1.
What do you mean by international business?
Answer:

  1. International business denotes all those business activities which take place beyond the geographical limits of the country.
  2. It involves not only the international movements of goods and services, but also of capital personnel, technology and intellectual property like patents, trademarks, know-how and copy rights.

Question 2.
What is meant by Export Trade?
Answer:

  1. When the firm of country sells goods and services to a firm of another country it is called export trade.
  2. Export trade indicates selling of goods and services from the home country to a foreign country, eg: the sale of handicraft, leather products, electronic goods, herbal products, etc., by Indian company to other countries is known as export trade.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 3.
What is meant by Import Trade?
Answer:

  1. When the business firm of a country purchases goods -from the firm of another country it is called import trade.
  2. Importing means purchase of foreign products and bringing them into one’s home country,
    eg: When Indian enterprise purchases petroleum products, electrical goods, machinery, and medical equipments etc., from other countries, it is termed as Import Trade.

Question 4.
What is meant by Entrepot Trade?
Answer:
When the firm of country imports goods for . the purpose of exporting the same goods io the firms of some other country with or without making any change in the goods meant for export it is known as entrepot trade.

Question 5.
Give any two reasons for International Business.
Answer:

  • Unequal distribution of natural resources.
  • Uneven availability of factors ofproduction.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 6.
Describe importance of the external trade to an economy.
Answer:

  1. Due to advancement of technology the national economics are increasingly becoming borderless and getting progressively integrated into the world economy. The contemporary world is called as “global village”.
  2. Business in today’s context is not restricted to the mere boundaries of the country but alsso expands to boundaries of the several other countries.
  3. Due to tremendous development in the information and communication technology (ICT) and rapid advancement in transportational system more and more firms engage in international business which presents them with numerous opportunities for their faster economic growth and increased gains.

Question 7.
What is the necessity for entrepot trade?
Answer:
A country cannot import goods directly from the others because of the following reasons.

  1. The country may not have any accessible trade routes connecting the importing country.
  2. The goods imported may require further processing or finishing before exporting, and these facilities may be lacking in the exporting or importing country.
  3. There may not have any bilateral trade agreement between both the country.
  4. Importer and exporter may not share good economic relation with each other.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 8.
What are the limitations of .international business?
Answer:
(i) Economic Dependence:
International trade is more likely to make the country too much dependent on imports from foreign countries. The former may not take any efforts to produce goods and services indigenously’to substitute imported goods and thus becoming self sufficient. As a result the importing country may become economically slave to exporting country and end up becoming colony of the exporting country.

(ii) Inhibition of Growth of Home Industries:
International business may discourage the growth of indigenous industry.

(iii) Import of Harmful Goods:
International business may lead to import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well-being of people.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 9.
List out the advantages of international trade.
Answer:
(i) Geogaraphical Specialization:
Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land and so on.

(ii) Optiniurn use of Natural Resowces:
International business operates on a simple principle that a country which can produce more efficiently and trade the surplus production with other countries has to procure what it cannot produce more efficiently.

(iii) Economic Development:
International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent, and so on.

(iv) General ion of Employment:
International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities. It provides direct employment to those people who are hired by export and import firms and generates indirect employment to number of intermediary firms like, clearing and forwarding agent, indent houses transport organizations, outsourcing agencies, etc.

(v) Higher Standard of Living:
On account of international business, the citizens of the country can buy more varieties of goods and services which cannot be produced cost effectively within the home country.

(vi) Price Equilisation:
International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market. Whenever the price of a commodity rises sharply in a particular country, the same commodity is imported from some other foreign countries to prevent the sharp rise in prices in the home country.

(vii) Prospects for Higher Profit:
International business helps the firms which produce goods in excess to sell them at relatively higher price to various countries in the international market. This enables them to earn higher profit.

(viii) Capacity Utilisation:
International business enables the firms across the country to sell their goods and services on a large scale in the international market.

(ix) International Peace:
International business makes countries across the world become inter-dependent while these countries are independent in their functioning.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 10.
Enumerate the disadvantages of international trade.
Answer:
(i) Economic Dependence:
International trade is more likely to make the country too much dependent on imports from foreign countries. The former may not take any efforts to produce goods and services indigenously to substitute imported goods and thus becoming self sufficient.

(ii) Inhibition of Growth of Home Industries:
International business may discourage the growth of indigenous industry. Unrestricted imports and severe competition from foreign companies may ruin the home industries altogether.

(iii) Import of Harmful Goods:
International business may lead to import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well-being of people.

(iv) Shortage of Essential Goods in Home Country:
Moreover the export of essential commodities out of the greed of earning more foreign exchange may result in absolute shortage of these goods at home country and people may have to buy these commodities at exorbitant price in the local market.

(v) Misuse of Natural Resources:
Excessive export of scarce natural resources to various countries across the world may lead to faster depletion of the resources in the exporting countries.

(vi) Political Exploitation:
International business may create economic dependence among the countries which may threaten their political independence.

Question 11.
Distinguish between Internal and International trade.
Answer:

TN Board 11th Commerce Important Questions Chapter 25 International Business 1

(iii) Legal Obligations:
Foreign trade is to be conducted strictly in accordance with the export and import policy of the country concerned. The consent of the government is to be mandatorily obtained with reference to export and import of certain goods and services. Thus government intervention is direct in respect of international transactions.

(iv) Exposure to Risk:
International business imposes huge risks on the parties thereto due to long distances, fluctuation of value of currency, obsolescence, sanctioned, war, etc.;

(v) Heavy Documentation Work:
International business necessitates fulfillment of a lot of formalities. Parties to international business have to execute a number of documents in the matters of conducting International business.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Question 12.
Scope of international business.
Answer:
Involvement of countries. International business can take place only when transactions occur across different countries

Question 13.
Wide range of international business.
Answer:
Geographical specialisation optimum use of Natural resources, Economic development.

Question 14.
Take interest in export or import trade Try to become exporter.
Answer:
In export – take interest in exporting all types of dress materials. Like Sarees, Chudithars.
First I select Importer: To follow export trade procedure.

  1. Receiving enquiries.
  2. Receipt of order or indent.
  3. Obtaining letter of credit.
  4. Obtaining export license.
  5. Obtaining shipping order.
  6. Packing, marking and forwarding.
  7. Preparation of Invoice.
  8. Obtaining customs clearance.
  9. Paying dock dues.
  10. Verification of goods to be shipped.
  11. Bill of lading.
  12. Certificate of origin.
  13. Receiving payments.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Choose the Correct Answer:

Question 1.
Movement of goods, services, intellectual property, human assets, technology and so on among the countries:
(a) international Trade
(b) international business
(c) entrepot Trade
(d) internal trade
Answer:
(a) international Trade

Question 2.
Goods are imported for purpose of re-export to another country is termed as:
(a) import trade
(b) export trade
(c) entrepot trade
(d) international trade
Answer:
(c) entrepot trade

Question 3.
Movement of goods, services among the countries:
(a) international trade
(b) international business
(c) entrepot trade
(d) internal trade
Answer:
(b) international business

Question 4.
Selling of goods from home country to foreign country is called:
(a) home trade
(b) entrepot trade
(c) foreign trade
(d) joint venture
Answer:
(c) foreign trade

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 25 International Business

Samacheer Kalvi 11th Commerce Notes Chapter 25 International Business

→ This chapter presents the basic aspects of international business. It enlightens the students on the difference between internal trade and international business. Types of international business. The advantages and dis advantages of international business. The various pieces of literature bear enormous evidence about India’s foreign trade with other countries.

→ Evidences about our international trade are found in the ancient literature of our country particularly in our Sangam literature. There were regular Trade routes across the seas to the distant Jawa and Sumatra Islands in the east and up to the Arabian Peninsula in the west.

→ But the volume of such trade was insignificant and continued to remain so small all through the middle ages and right Up to the advent of the British rule in India. It is only after the establishment of the British rule in India that India’s foreign trade took a definite shape.

→ International trade has become a part and parcel of the normal economic life of any country. International business denotes all those business activities which take place beyond the geographical limits of the country.

TN Board 11th Commerce Important Questions

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