Business Studies Video Notes
International
Business
Class 11ᵗʰ
Class 11ᵗʰ
Meaning of International Business
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the video (Click Here)
International business refers to buying and selling of goods
or services beyond the geographical limits of a country. It
is also called trade between two countries.
Export Import Entrepot (Re-export)
It refers to selling It refers to buying It refers to import of goods
goods or services to not for consumption in home
goods or services from
country but for exporting
foreign countries. foreign countries. them to another country.
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Nature Of External Trade the video (Click Here)
Involvement of Payment in Study With
Two Countries Foreign Currency Full
Concentration
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Reason for International Business the video (Click Here)
The countries cannot produce equally well or cheaply all that they need.
There is unequal distribution of natural resources among different countries.
Availability of different factors of production such as land, labour, capital and
raw material differ among different nations.
Difference in labour, productivity and production cost due to socio-economic,
geographical and political reasons.
There is not even a single country, which is in a better position to produce better
quality products at lower cost.
As a result, each country finds it advantageous to produce those selected goods
or services that it can produce more effectively and efficiently.
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Benefits Of International Business the video (Click Here)
Earning of Foreign Exchange: International business helps a country to earn
foreign exchange which can be used to import capital goods, technology,
petroleum products, fertilizers, etc.
More Efficient Use of Resources: Every country has some or the other natural
resources. For example, a country may possess mineral resources, labour
resources, technological capabilities, water resources, etc. Every country tries to
use these resources in the best possible manner and gradually they become more
efficient and specialised in using these resources than other countries.
Improving Growth Prospects and Employment Potential: External trade boosts up
the economic growth of a country as the firms of developing countries increase
their production capacity to supply goods in foreign countries.
Increases Standard of Living: In the absence of international trade, it would not
have been possible for the world community to use the goods and services
produced in other countries, The people living in developing and underdeveloped
countries can use these products and increase their standard of living.
Prospects for Higher Profit: When the prices in domestic market are low then
firms can sell at price in international market in the countries where prices are
high.
Increased Capacity Utilisation: With increase in production capacity these firms
can get benefits of large production or economies of scale and reduce the cost of
production.
Prospects for Growth: When the demand for the products starts becoming
saturated in domestic countries then such firms can enhance their business by
approaching international market.
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Mode Of Entering Into International Business the video (Click Here)
Exporting and Importing
Exporting refers to sending of goods and services from the home country to
a country and importing means buying goods and services from a foreign
country.
Objectives
To sell Surplus Goods
To make Better Utilisation of Resources That One Student
To earn Foreign Exchange Topper in Business
To Increase National Income Studies Woh Meh
To Generate Employment hee Hu Guys
To Increase Government Revenue
To Create International Place and Cooperation
Export Procedure
Receipt of Enquiry and Sending Quotations: The exporter sends a reply
to this enquiry in the form of a quotation termed as “Proforma Invoice”.
Receipt of Order or Indent: In case the prospective buyer is satisfied
with the information given in the proforma invoice, then he places an
order for the goods to be despatched.
Assessing Importer's Creditworthiness and Securing Guarantee for Payment:
The exporter enquires about the creditworthiness of the importer to get
payment security. To minimise the risk of default payment most of the
exporters prefer to demand a "Letter of Credit".
Obtaining Export Licence:
Obtaining IEC Number (Import Export Code): Before starting the export
procedure, the exporter has to get an IEC number. To get this number the
exporter has to apply to the Regional Import- Export Licensing Authority in
the prescribed form.
Obtaining RCMC (Registration Cum Membership Certificate): After getting
IEC number, the exporter applies for RCMC. The RCMC is issued by
Export Promotion Council
Federation of Indian Export Organisations
Export Development Authority etc.
Registration with ECGC (Export Credit Guarantee Corporation): It is Carefully
necessary in order to protect overseas payments from political and Read Krna
commercial risks.
Obtaining Pre-shipment Finance: Pre-shipment finance is a finance which the
exporter needs to procure raw materials, other components, processing and
packaging of goods.
Production or procurement of Goods: After sending the confirmation to the
importer, the exporter starts manufacturing the product according to the
specification.
Pre-shipment Inspection: Quality plays a very important role in external trade.
Exporters have to follow international quality standards. If the Council is
satisfied then they issue an inspection certificate. Without inspection
certificate export is not permitted. There are three methods of pre-shipment
inspection.
Consignment-wise Inspection
In-process Quality Control
Self-certification
GST Clearance: To get exemption, the exporters apply to the GST Council along
with a copy of RCMC, invoice, etc. If the exporter has already paid GST and
then applies for the refund.
Obtaining Certificate of Origin: Some importing countries provide tariff
concession to goods coming from a particular country. To avail of such benefits
the importer may ask the exporter to send a "certificate of origin".
Reservation of Shipping Space: The exporting firms apply to a shipping company
for booking a shipping space. On accepting this application the shipping company
issues a Shipping Order.
Packing and Forwarding: The goods are then properly packed and marked with
necessary details such as name and address of the importer, gross and net
weight, port of shipment and destination, etc.
Insurance of Goods: The exporter then gets the goods insured with an insurance
company to protect against the risks of loss or damage of goods due to sea
perils.
Customs Clearance: To obtain the customs clearance the exporter prepares the
Shipping Bill. A shipping bill contains the details about the goods such as the port
where the goods are to be discharged, the country of final destination,
exporter's name and address, etc.
Obtaining Mate's Receipt: After receiving customs clearance, the goods are then
loaded on ship for which the captain of the ship issues a mate's receipt.
Payment of Freight and Insurance of Bill of Lading: After loading the goods on
ship, the exporter goes to the office of the shipping company. There he
surrenders the mate's receipt and in return the shipping company office issues
him a Bill of Lading, which is prepared in triplicate
Preparation of Invoice: After sending the goods, an invoice of despatched goods
is prepared.
Securing Payment: After the shipment of goods, the exporter informs the
importer and then the exporter must send some important documents to the
importer to claim the title of goods.
Import Trade- Meaning and Objectives
Import trade refers to buying goods and services from another country. Generally
countries prefer to import goods that domestic country is not able to produce as
efficiently as foreign country is able to.
Objectives of Import
To speed up Industrialisation
To meet consumer demand
To improve Standard of Living
To overcome Natural Calamities
To ensure National Defence
Import Procedure
Trade Enquiry: The import procedure begins when the importer conducts inquiry
and collects information about the countries and exporter who can supply the
required goods.
Procurement of Import Licence: There are certain goods which can be imported
freely but for some there is a necessity to obtain import licence. For this, the
importer can get information from EXIM (Export Import Policy).
Obtaining Foreign Exchange: In India, all foreign exchange transactions are
regulated by exchange control department of Reserve Bank of India.
Placing Order or Indent: After obtaining the licence and sanction of foreign
exchange, the importer places an import order or indent to supply the specific
products.
Obtaining Letter of Credit: Letter of credit is issued by the importer's
bank in favour of the exporter.
Arranging for Finance: The importer should make in advance the
arrangement for payment.
Receipt of Shipment Advice: After loading the goods on the vessel, the
exporter despatches the shipment advice to the importer.
Retirement of Import Documents: After shipment of goods, the exporter
submits various important documents to his banker. Generally these
documents are letter of credit, bill of lading, packing list, certificate of
origin, marine insurance, bill of exchange, etc.
Arrival of Goods: Goods are shipped by the exporter as per the
specifications of the importer.
Customs Clearance: The customs officer examines the Bill of Entry
carefully and assesses the customs duty to be paid by the importer and
after assessing the duty amount, the Bill of Entry is given to the appraiser
officer.
Export-Import Documents
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the video (Click Here)
Principal Export Documents
Commercial Invoice
This document contains the details of goods supplied by the exporter. The common
contents of this document are names of buyers and sellers, quantity and price of
product, date of sailing, marks made on packings, etc.
Packing List
This list contains the date of packing, order number, corresponding invoice number,
bill of lading number, details of shipping, date of sailing, details of goods in each
pack, etc.
Bill of Lading
It is a very important transport document. It is issued by the shipping company
when the exporter surrenders Mate's Receipt. The Bill of Lading is considered an
important document due to the following reasons:
A Receipt of Goods
A Document of Title to Goods
A contract of Affreightment
Airway Bill
This document is the same as Bill of Lading with only one difference that it is
issued by and not by shipping company.
Certificate of Inspection
This certificate is issued by the export inspection agency. This certifies that the
export consignment has been inspected as per the specification of Quality Control
and Inspection Act.
Certificate of Origin
This certificate is issued by the chamber of commerce or by Export Promotion
Council or by a government department.
Bill of Exchange
According to Negotiable Instruments Act, "A Bill of Exchange is an instrument in
writing containing an unconditional designed by the maker, directing a certain
person to pay's certain amount of money only to or bearder of a person or to the
bearer of the instrument."
Auxiliary Export Documents
Proforma Invoice
Intimation of Inspection
Shipping Instructions
Insurance Declaration
Shipping Order
Mate’s Receipt
Application for Certificate of Origin
Letter to Banks for Collection of Documents
Bill of Entry
This document is prepared by the importer when he gets information about
the arrival of goods at port. This document contains the details of goods such
as number, quantity, price, weight, etc. so that the customs duty can be
calculated. There are three types of Bill of Entry:
Bill of Entry for Home Consumption
Bill of Entry for Warehousing
Ex-Bond Bill of Entry
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WORLD TRADE ORGANISATION the video (Click Here)
Nature of World Trade Organisation
WTO deals with the trade between nations at global level.
It contains contracts signed by governments to bind the governments to keep
their trade policies within agreed limits.
It operates with a purpose of liberalising trade and free flow of goods and
services.
WTO settles disputes through some neutral procedure.
Its main function is to ensure that trade flows as smoothly and freely as
possible.
Major objectives of WTO are:
Promotes international peace.
Settles disputes among member nations.
Makes international trade very smooth by framing common rules and regulations.
Helps in economic growth of developing countries by giving them preferential
treatment.
Free trade helps in providing quality products and improving standard of living of
people.
