{"id":20531,"date":"2019-10-09T01:00:13","date_gmt":"2019-10-08T19:30:13","guid":{"rendered":"https:\/\/www.cbselabs.com\/?p=20531"},"modified":"2021-09-18T15:16:25","modified_gmt":"2021-09-18T09:46:25","slug":"ncert-solutions-for-class-11-business-studies-international-business-i","status":"publish","type":"post","link":"https:\/\/www.cbselabs.com\/ncert-solutions-for-class-11-business-studies-international-business-i\/","title":{"rendered":"NCERT Solutions For Class 11 Business Studies International Business-I"},"content":{"rendered":"
Free PDF download of NCERT Solutions for Class 11 Business Studies Chapter 11 International Business solved by Expert Teachers as per NCERT (CBSE) Book guidelines. All Chapter wise Questions with Solutions to help you to revise complete Syllabus and Score More marks in your examinations.<\/p>\n
NCERT Solutions <\/a>Class 11 Business Studies<\/a>Business Studies Sample Papers<\/a><\/p>\n I.Multiple Choice Questions<\/span><\/strong> II. Short Answer Type Questions<\/span><\/strong> Question 2. Discuss any three advantages of international business.<\/strong> Question.3. What is the major reason under lying trade between nations?<\/strong> Question 4. Discuss as to why nations trade.<\/strong> Question 5. Enumerate limitations of contract manufacturing.<\/strong> Question 6. Why is it said that licensing is an easier way to expand globally?<\/strong> Question 7. Differentiate between contract manufacturing and setting up wholly owned production subsidiary abroad.<\/strong> Question 8. Distinguish between licensing and franchising.<\/strong> <\/p>\n Question 9. List major items of India\u2019s import.<\/strong> Question 10. What are the major items that are exported from India?<\/strong> Question 11. List the major countries with whom India trades.<\/strong> III. Long Answer Type Questions<\/strong><\/span> <\/p>\n Question 2. \u201cInternational business is more than international trade\u201d. Comment.<\/strong> Question 3. What benefits do firms derive by entering into international business?<\/strong> Question 4. In what ways is exporting a better way of entering into international markets than setting up wholly owned subsidiaries abroad.<\/strong> Question 5. Discuss briefly the factors that govern the choice of mode of entry into international business.<\/strong> Question 6. Discuss the major trends in India\u2019s foreign trade. Also list the major products that India trades with other countries.<\/strong> Question 7. What is invisible trade? Discuss salient aspects of India\u2019s trade in services.<\/strong> I. Very\u00a0Short Answer Type Questions<\/strong><\/span> Question 2. What is the basic reason behind international trade?<\/strong> Question 3. Give one point of difference between licensing and franchising.<\/strong> Question 4. When a middleman is involved in handling export procedure, then it is called by what name?<\/strong> Question 5. Licensee or franchisee pays a fee to licensor or franchisor. What is it called?<\/strong> Question.6. Reebok orders for footballs to local manufacturers of Ludhiana and then sells it all over the world. It is an example of what?<\/strong> Question 7. Name the country whose share is largest in India\u2019s exports and imports.<\/strong> Question 8. What is the share of India\u2019s exports in world exports?<\/strong> Question 9. Which service has got dominating share in foreign trade in services?<\/strong> Question 10. India is_largest economy in the world.<\/strong> II. Short Answer Type Questions<\/strong><\/span> Question 2. Explain different forms of Joint Ventures.<\/strong> Question 3. Explain different forms of contract manufacturing.<\/strong> Question 4. India embarks on the path of globalisation. Comment<\/strong> Question 5. What are the benefits of international trade to firms?<\/strong> Question 6. Write a short note on India\u2019s foreign investments.<\/strong> Question 7. Discuss the merits and demerits of entering into joint ventures.<\/strong>TEXTBOOK QUESTIONS SOLVED<\/strong><\/span><\/h3>\n
\nQuestion 1. In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee<\/strong>
\n (a) Licensing (b) Contract manufacturing<\/strong>
\n (c) Joint venture (d) None of these<\/strong>
\n Question 2. Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as<\/strong>
\n (a) Licensing (b) Franchising<\/strong>
\n (c) Contract manufacturing (d) Joint venture<\/strong>
\n Question 3. When two or more firms come together to create a new business entity that is legally separate and distinct from its parents it is known as<\/strong>
\n (a) Contract manufacturing (b) Franchising<\/strong>
\n (c) Joint ventures (d) Licensing<\/strong>
\n Question 4. Which of the following is not an advantage of exporting?<\/strong>
\n (a) Easier way to enter into international markets<\/strong>
\n (b) Comparatively lower risks<\/strong>
\n (c) Limited presence in foreign markets<\/strong>
\n (d) Less investment requirements<\/strong>
\n Question 5. Which one of the following modes of entry requires higher level of risks?<\/strong>
\n (a) Licensing (b) Franchising<\/strong>
\n (c) Contract manufacturing (d) Joint venture<\/strong>
\n Question 6. Which one of the following modes of entry permits greater degree of control over overseas operations?<\/strong>
\n (a) Licensing\/franchising (b) Wholly owned subsidiary<\/strong>
\n (c) Contract manufacturing (d) Joint venture<\/strong>
\n Question 7. Which one of the following modes of entry brings the firm closer to international markets?<\/strong>
\n (a) Licensing (b) Franchising<\/strong>
\n (c) Contract manufacturing (d) Joint venture<\/strong>
\n Question 8. Which one of the following is not amongst India\u2019s major export items?<\/strong>
\n (a) Textiles and garments (b) Gems and jewellery<\/strong>
\n (c) Oil and petroleum products (d) Basmati rice<\/strong>
\n Question 9. Which one of the following is not amongst India\u2019s major import items?<\/strong>
\n (a) Ayurvedic medicines (b) Oil and petroleum products<\/strong>
\n (c) Pearls and precious stones (d) Machinery<\/strong>
\n Question 10. Which one of the following is not amongst India\u2019s major trading partners?<\/strong>
\n (a) USA (b) UK<\/strong>
\n (c) Germany (d) New Zealand<\/strong>
\n Answer:\u00a0<\/strong>
\n1. (a) 2. (c) 3. (c) 4. (a) 5. (c)
\n6. (b) 7. (c) 8. (d) 9. (6) 10. (d)<\/p>\n
\nQuestion 1. Differentiate between international trade and international business.<\/strong>
\n Answer:\u00a0<\/strong>\u00a0Difference between international trade and international business is similar to difference between trade and business.<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0The following are some of the advantages of foreign trade:<\/p>\n\n
\n Answer.<\/strong> The major reason behind international business is that the countries cannot produce equally well or cheaply all the commodities. This is called theory of comparative cost advantage. It is so because resources are unequally distributed in natural resources. Some countries are abundant in one commodity and scarce in others while opposite is true for some other country. It makes a case for international trade and exchanging abundant commodity with scarce commodity by nations. Different nations are endowed with different factors of production which includes land, labour, capital and entrepreneurship. For example, India is a labour abundant country. Therefore, it is advisable for India to produce such commodities which use labour intensive methods and exchange it for those which use capital intensive methods. USA is a capital abundant country. Therefore, nations need to trade. Due to these reasons one country has a comparative advantage in production of particular goods as compared to other countries. Consequently, each country fins it advantageous to produce those selected goods and services that it can produce more effectively at home and importing those goods in which other nations have a comparative cost advantage.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Nations trade because of following reasons:<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0Major limitations of contract manufacturing are discussed below:<\/p>\n\n
\nstandards or product design. It may cause serious quality problems for international firm. .<\/li>\n
\n Answer:\u00a0<\/strong>\u00a0It is said that licensing is an easier way to expand globally because of its advantages over other modes of international business.<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0The difference between contract manufacturing and wholly-owned subsidiary is discussed below:
\n<\/p>\n
\n Answer:\u00a0<\/strong>
\n<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0India\u2019s major items of imports include crude oil and petroleum products, capital goods, electronic goods, pearls, precious and semi-precious stones, gold, silver and chemicals.<\/p>\n
\n Answer:<\/strong>\u00a0India\u2019s major items of exports include textiles, garments, gems and jewellery, engineering products and chemicals, agriculture and allied products.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0India\u2019s major trading partners are USA, UK, Germany, Japan, Belgium, Hong Kong, UAE, China, Switzerland, Singapore and Malaysia.<\/p>\n
\n Question 1. What is international business? How is it different from domestic business?<\/strong>
\n Answer:\u00a0<\/strong>\u00a0International business refers to business which is carried on in two or more nations. It means carrying on business activities beyond national boundaries. These activities normally include the transaction of economic resources such as goods, capital, services (comprising technology, skilled labour, and transportation, etc.), and international production. It refers to that business activity that takes place beyond the geographical limits of a country. Production may either involve production of physical goods or provision of services like banking, finance, insurance, construction, trading, and so on. Thus, international business includes not only international trade of goods and services but also foreign investment, especially foreign direct investment.
\nDifferences between International Business and Domestic Business are summarised below:
\n<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0It is rightly said that international business is more than international trade. The scope of international business is much wider than international trade. International trade means exports and imports of goods which is an important component of international business but international business includes much more than this. International trade in services like travel and tourism, transportation, communication, banking, warehousing, distribution and advertising is a part of international business. International business also includes foreign direct investments, contract manufacturing, and setting up wholly owned subsidiaries etc. which are not included in international trade. It is clear from the diagram given below:
\n<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0The trade between two or more nations is termed as foreign trade or international trade. It involves exchange of goods and services between the trades of two countries. Foreign trade consists of import trade, export trade and entrepot trade. In the early stages of human civilization, production was confined as per consumption. Human wants were limited. Nowadays, human wants are increasing and as such no man was considered to be self-dependent. Like this no country can live in isolation and claimed the status to be self-sufficient. Because of this reason countries have trade relationships with each other. The primary objective of foreign trade is to increase foreign trade and increase the standard of living of its people. There is an increasing demand for foreign trade because of the following reasons:<\/p>\n\n
\nThe following are some of the advantages of foreign trade:<\/li>\n<\/ol>\n\n
\n Answer:\u00a0<\/strong>\u00a0Exporting is a better way of entering into international markets than setting up wholly owned subsidiaries abroad in following ways:<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0Following factors govern the choice of mode of entry into international business,<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0India is 10th largest economy in the world. It is the second fastest growing economy, next only to China. But India\u2019s performance in international business is not very good. India\u2019s share in world trade in 2003 was just 0.8%. In absolute terms, there has been significant increase in imports as well as exports. Total exports have increased from 606 crores in 1950-51 to Rs. 2, 93,367 crores in 2003-04 while imports have increased from 608 crores in 1950-51 to 3, 59,108 crores in 2003-04. Exports increased 480 times while imports increased 590 times indicating that there is adverse balance of trade. India\u2019s major trading partners are USA, UK, Germany, Japan, Belgium, Hong Kong, UAE, China, Switzerland, Singapore and Malaysia.
\nIndia\u2019s major items of exports include: Textiles, garments, gems and jewellery, engineering products and chemicals, agriculture and allied products.
\nIndia\u2019s major items of imports include: Crude oil and petroleum products, capital goods, electronic goods, pearls, precious and semi precious stones, gold, silver and chemicals.
\nBefore 1991, promotion of import substitution and discouraging of exports was government strategy. Imports consisted of machinery, equipment and intermediates in production, petroleum and petroleum-products. After green revolution, imports of fertilizer too increased.
\nBefore 1991, India\u2019s exports consisted of agricultural products like tea, raw cotton with the diversifying industrial structure, promoted by import substitution, exports of manufactures were growing. During 1986-91, external trade formed only 13.40 % of the GDP. During the 1990-2000, this share is rising continuously.
\nIndia\u2019s foreign trade has grown to exports of $250 billion and imports of $380 billion in 2010-11. The ratio of exports plus imports to GDP has grown from 13.40 % during 1985-90 to almost three times that, being 37.7 % in 2010-11. On adding services it becomes from 22.9 % in the 1990s to 49.0 % in 2010-11.
\nLeading role has been played by \u2018invisibles\u2019 which includes both services, mainly software services, export of which has grown to $59 billion in 2010-11. It has decreased the current account deficit from $130 billion to $44. This deficit was compensated by capital account surplus of $59 billion in that year.
\nBut it is only because of IT services and we are still lacking in manufacturing exports which can generate a large volume of employment. We have not done as well as China and Malaysia have done.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Trade in services is called invisible trade. Since services are invisible, export and import of services has been named as invisible trade. In absolute terms, there has been significant increase in India\u2019s foreign trade in services. Export and import of foreign travel, transportation and insurance has largely increased during last four decades. There has been a change in composition of services exports. Software and other miscellaneous services have emerged as the main categories of India\u2019s export of services. Share of travel and transportation has declined to 29.6% in 2003-04 from 64.3% in 1995-96 while the share of software exports has increased from 10.2% in 1995-96 to 49% in 2003-04.
\n
\nThe composition of India\u2019s external trade has been changing. During 1950s and 60s exports were mainly of primary goods. Over time, the role of engineering goods has been increasing. Overall manufactured goods constitute 66 % of total exports, of which engineering goods are 27%. Textiles and textile products, garments and leather products make around 10 % of India\u2019s exports.
\nIn nutshell, we can say that the role of the external or internationally traded goods sector has been growing steadily in Indian economy. At present imports and exports together account for upto 49 % of India\u2019s GDP which was 18% in 1990s. In India there is greater share of exports of services which are IT software services, called IT- enabled services (ITES). It contributed more than 20% of India\u2019s export earnings. India accounts for about 45% of the world\u2019s BPO services. The major Indian IT companies, TCS, Infosys and Wipro, initiated and perfected the Global Services Delivery (GSD) model. It is because India has a vast pool of software engineers and an even bigger pool of English-knowing staff. With growing competition in the market for such services, Indian companies have moved from BPO to Knowledge Process Outsourcing (KPO), which involves providing services for R and D and to high-end consulting.<\/p>\nMORE QUESTIONS SOLVED<\/span><\/strong><\/h3>\n
\n Question 1. Out of international trade and international business which one is wider in scope?<\/strong>
\n Answer:\u00a0<\/strong>\u00a0International business<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Comparative cost advantage in production of some goods.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Licensing is used for goods and franchising is used for services.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Indirect exporting<\/p>\n
\n Answer: <\/strong>\u00a0Royalty.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Contract manufacturing.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0USA<\/p>\n
\n Answer:\u00a0<\/strong>\u00a00.8%<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Software and Miscellaneous<\/p>\n
\n Answer:\u00a0<\/strong>\u00a010th<\/p>\n
\n Question 1. Define international business.<\/strong>
\n Answer:\u00a0<\/strong>\u00a0According to Roger Beneett, \u201cInternational business involves commercial activities that cross national frontiers.\u201d
\nIn the words of John D Daniels and Lee H Radebough, \u201cInternational business is all about business transactions\u2014private and governmental that involve two or more countries. Private companies undertake such transactions for profits; government may or may not do the same in their transactions.\u201d
\nAccording to Michael R Czinkota, \u201cInternational business consists of transactions that are devised and carried out across national borders to satisfy the objectives of the individuals, companies and organizations. These transactions take on various forms which are often correlated.\u201d<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0A joint venture refers to establishing a firm which is jointly owned by two or more independent firms. It can be entered into three ways:<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0Contract manufacturing can take three forms:<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0Since 1991, with the announcement of New Economic Policy, 1991 India also embarks on the path of globalisation. India was facing a severe financial crisis. It approached International Monetary Fund and World Bank for help. IMF agreed to led money to India on the condition that India will introduce structural changes in its economy. As a result, India announced the policy of LPG i.e. Liberalisation, Privatisation and Globalisation. Then on 1 January, 1995 WTO was formed. India became founder member of WTO and thereby was under a compulsion to follow rules and regulations of WTO. Therefore, it had to open up its economy for rest of the world and they also allowed India to enter their markets. Though the process of reforms has somewhat slowed down, India is very much on the path of globalisation.<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0Given below sue benefits of international business for firms:<\/p>\n\n
\n Answer:\u00a0<\/strong>\u00a0There has been a phenomenal increase in foreign capital inflow and outflow. Inward foreign investments have increased from 201 crores in 1990-91 to 151406 crores in 2003-04. India\u2019s investment in foreign countries has increased from 19 crores in 1990\u00ac91 to 83616 crores in 2003-04.
\nInward foreign investments have grown more than 750 times while India\u2019s investment abroad have increased 4927 times.
\nTable showing inflow and outflow of foreign capital in and from India:
\n<\/p>\n
\n Answer:\u00a0<\/strong>\u00a0