chapter 10 Flashcards
meaning of international businesses
international business refers to buying and selling of goods or services beyond the geographical limits.
three types of international trade
- export
2.import - entrepot
nature of external trade
involvement of two countries
payment in foreign currency
problems of international trade
- legal procedures
- restriction
- high risk
- different languages
- arrangement of foreign currency
reasons for international trade
- the countries cannot produce equally well or cheaply all that they need.
- there is unequal distribution of natural recourses among different countries
- availability of different factor of production differ among different country
- there is not even a single country, which is in a better position to produce better quality product at a low cost
- difference in labour, productivity and production cost due to socio-economic, geographical and political reasons.
key areas of difference in international and domestic business
- Nationality of buyers and sellers
- nationality of other stakeholders
- mobility of factors of production
- customer heterogeneity across market
- difference in business systems and practices
- political system and risks
- business regulation and policies
- currency used in business transactions
benefits of international business to nation
- earring of foreign currency
- more efficient use of resources
- improving growth prospects and employment potential
- increased standard of living
benefits of international business to firm
- prospects for higher profit
- increased capital utilisation
- prospects for growth
- way out from intense competition in the domestic market
- improved business vision
export trade
Export trade refers to selling goods and services provided in the home country to foreign country or across the border.
objectives of export trade
- to sell surplus goods
- to make better utilisation of resources
- to earn foreign exchange
- to increase national income
- to generate employment
- to increase government revenue
- to create international place and cooperation
export procedure
- receipt of enquire and sending quotations
2.receipt of order - assessing importer’s creditworthiness
- obtaining export licence
- obtaining pre shipment finance
- production and procurement of goods
- pre shipment inspection
- GST clearance
- obtaining certificate of origin
- reservation of shipping space
- packing and forwarding
- insurance of goods
- custom clearance
- obtaining mate’s receipt
- payment of freight and insurance of bill landing
- preparation of invoice
- securing payments
prerequisite of obtaining export licence
- IEC number (Import export code)
- RCMC (Registration cum membership certificate )
- ECGC (Export credit guarantee corporation)
what is IEC?
the number used in filling formalities of export procedure
documents needed for IEC
- details about personal record of exporter
- bank receipts of fees to apply for IEC number
- certificate from bankers
- declaration by exporters that they will not be exporting the goods listed in caution list
who issues RCMC?
1.export promotion council
2. federation of Indian export orgnisation
3. export development authority
methods of pre shipment inspection
- consignment wise inspection
- in process quality control
- self certification
what is consignment wise inspection ?
In this method, the exporter calls the inspector from export council after goods are ready for dispatch.
what is in process quality control ?
Under this method the inspector inspects the quality during the production process.
what is self certification ?
Reputed firms and large scale exporters themselves see to it that international quality standards are maintained to improve and earn a goodwilll in the international market.
import trade
import trade refers to buying goods and services from another country
objectives of import
- to speed up industrialisation
- to meet consumer demand
- to improve standard of living
4.to overcome natural calamities - to ensure national defence
import procedure
- trade enquiry
- procurement of import license
- obtaining foreign exchange
- placing order or indent
- obtaining letter of credit
- arranging for finance
- receipt of shipment advance
- retirement of import documents
- arrival of goods
10.customs clearance
principal export documents
- commercial invoice
- packing list
- bill of landing
- airway bill
- certificate of ispection
- bill of exchange
commercial invoice
this documents contains the details of goods supplied buy the exporter
bill of exchange
this document relating to the payment of goods supplied
certificate of origin
this certifies that the goods to be exported are originally from the home country only or exporter’s country only.
bill of landing
it is issued by the shipping company when the exporter surrender’s mate’s receipt.
certificate of inspection
this certifies that the export consignment has been inspected as per the specification of quality control or inspection act.
