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This chapter explains the concept of business activities that cross national boundaries. It covers the meaning of international business, reasons why firms go international, differences between domestic and international business, modes of entry into international business, export-import procedures, and the role of various documents and institutions. The notes below are prepared strictly from the latest NCERT Business Studies textbook for Class 11 and cover every point in a simple, systematic and exam-friendly manner. You can also download the free PDF of this chapter to revise effectively from anywhere, anytime.
Contents
- 1 Introduction
- 2 Meaning of International Business
- 3 Difference between Domestic Business and International Business
- 4 Reasons/Advantages of International Business
- 5 Scope of International Business
- 6 Modes of Entry into International Business
- 7 Export-Import Procedures
- 8 Important Documents Used in International Trade
- 9 Foreign Trade Promotion Measures and Schemes
- 10 Institutional Support for International Business
- 11 Important Definitions in NCERT Notes Class 11 Business Studies Chapter 11: International Business
- 12 FAQs
Explore Notes of Class 11: Business Studies
Introduction
When the buying and selling of goods and services take place across the national boundaries of two or more countries, it is called international business or international trade. Every country has limited resources; therefore, it has to depend on other countries for goods and services it cannot produce. International business has become essential for every nation to achieve faster economic growth.
Meaning of International Business
International business consists of transactions (buying and selling of goods, services, technology, capital, etc.) that are carried out across national borders to satisfy the objectives of individuals and organisations.
Nature of International Business:
1. Involves at least two countries.
2. Transactions are carried out in different currencies.
3. Subject to different legal systems, taxation policies, and political environments.
4. Higher risk due to longer distances, cultural differences, and political uncertainties.
5. Requires detailed documentation and compliance with import-export regulations.
Difference between Domestic Business and International Business
Here, we have mentioned the difference between domestic business and international business.
| Basis | Domestic Business | International Business |
| Area of operation | Within the geographical boundaries of one country | Across the boundaries of two or more countries |
| Currency | Single currency (home currency) | Multiple currencies |
| Risk | Lower risk | Higher risk (political, exchange rate, etc.) |
| Mobility of factors | Free movement of labour and capital | Restricted movement due to visa, immigration rules |
| Customers | Homogeneous (similar tastes) | Heterogeneous (different tastes, languages, cultures) |
| Legal system | Uniform laws | Different laws, tariffs, quotas |
| Government restrictions | Fewer restrictions | Many restrictions (tariffs, quotas, exchange control) |
Reasons/Advantages of International Business
Look at the advantages of International Business according to various aspects.
A. To Earning Country (Exporting Country)
1. Earns valuable foreign exchange.
2. Better utilisation of resources.
3. Increased employment opportunities.
4. Enhanced standard of living.
5. Improves the balance of payment position.
6. Growth of domestic industries.
B. To the Importing Country
1. Access to goods and services not produced domestically.
2. Availability of superior quality and lower-priced goods.
3. Technological advancement through the import of capital goods.
4. Development of new tastes and fashions.
Scope of International Business
The scope of International Business has been varied due to many reasons. Look at the scope of International business in today’s time.
1. Merchandise exports and imports (visible trade).
2. Service exports and imports (invisible trade) – tourism, transportation, banking, insurance, software, etc.
3. Licensing and franchising.
4. Foreign investments (FDI and FPI).
Modes of Entry into International Business
Entry to International Business is not difficult if you follow the right steps. Here are the modes of entry into international business.
1. Exporting and Importing (Direct & Indirect)
- Direct exporting/importing: Firm handles its own exports/imports.
- Indirect exporting/importing: Done through middlemen (export houses, trading houses).
2. Contract Manufacturing (Outsourcing)
A firm gets its products manufactured or assembled in a foreign country by a local manufacturer under contract.
3. Licensing and Franchising
- Licensing: Permitting a foreign firm to produce and sell goods under the licensor’s trademark, patent, etc., for a fee/royalty.
- Franchising: Similar to licensing but for services (e.g., McDonald’s, Pizza Hut).
4. Joint Ventures
Two or more firms (one local and one foreign) jointly set up a new enterprise, sharing capital, technology, and risks.
5. Wholly Owned Subsidiary
100% ownership by the parent company in a foreign country, either by setting up a new firm (green-field venture) or acquiring an existing firm.
Also Read: NCERT Class 11 Sociology Chapter 3: Understanding Social Institutions Notes (Free PDF)
Export-Import Procedures
Export and Import are a major part of International Business. Here, we have listed the steps to proceed with the export nd import process.
A. Export Procedure
1. Receipt of enquiry and sending quotation.
2. Receipt of order or indent.
3. Obtaining an export licence (IEC number mandatory).
4. Obtaining pre-shipment finance.
5. Production or procurement of goods.
6. Pre-shipment inspection (mandatory for certain goods).
7. Excise clearance.
8. Obtaining certificate of origin (GSP, etc.).
9. Reservation of shipping space and packing.
10. Forwarding goods to the port and obtaining the mate’s receipt.
11. Customs clearance and payment of dock dues → Cart ticket → Shipping bill.
12. Payment of freight and issuance of bill of lading/airway bill.
13. Obtaining a marine insurance policy.
14. Realisation of export proceeds (within 180 days).
B. Import Procedure
1. Obtaining Import-Export Code (IEC).
2. Obtaining registration with the EPC or the commodity board.
3. Placing indent/order.
4. Obtaining a letter of credit from a bank.
5. Arranging finance.
6. Receipt of shipment advice.
7. Retirement of documents and payment.
8. Arrival of goods and customs clearance (Bill of Entry).
9. Payment of customs duty and obtaining clearance.
Important Documents Used in International Trade
International Trade requires a certain process, and each process has its own criteria. Here are the important documents and purposes that are used in International Trade.
| Document | Purpose |
| Pro forma Invoice | Initial quotation sent by the exporter |
| Commercial Invoice | Actual bill for goods shipped |
| Packing List | Details of contents and packing |
| Certificate of Origin | Certifies country of manufacture (for GSP benefit) |
| Certificate of Inspection | Quality check by a recognised agency |
| Mate’s Receipt | Issued by the captain acknowledging receipt of goods on the ship |
| Shipping Bill | Customs document for export clearance |
| Bill of Lading | Document of title to goods; receipt and contract of carriage |
| Airway Bill | Used for air transport |
| Marine Insurance Policy | Insurance cover for goods in transit |
| Consular Invoice | Required by some countries |
| Bill of Entry | Filled by the importer for customs clearance |
Foreign Trade Promotion Measures and Schemes
Learn about the foreign trade promotion measures and schemes to help you with another major step of international business and trade.
1. Duty drawback scheme
2. Export manufacturing under the bond scheme
3. Exemption from payment of sales taxes
4. Advance licence scheme
5. Export Promotion Capital Goods (EPCG) scheme
6. Scheme of recognising Export Houses, Trading Houses, and Star Trading Houses
7. Export Processing Zones (EPZs) / Special Economic Zones (SEZs)
8. 100% Export Oriented Units (EOUs)
Institutional Support for International Business
There are many institutions that support international businesses; some of them are listed below:
1. Department of Commerce
2. Export Promotion Councils (EPCs)
3. Commodity Boards
4. Indian Institute of Foreign Trade (IIFT)
5. Indian Trade Promotion Organisation (ITPO)
6. Export Inspection Council (EIC)
7. Indian Council of Arbitration
8. Federation of Indian Export Organisations (FIEO)
9. Export Credit Guarantee Corporation (ECGC) covers the risks of exporters
10. EXIM Bank provides long-term finance
Important Definitions in NCERT Notes Class 11 Business Studies Chapter 11: International Business
This section lists key terms for clarity and revision:
- International Business: Business transactions across national boundaries.
- Bill of Lading: A Document issued by a shipping company acknowledging receipt of goods for transport and serves as a document of title.
- Mate’s Receipt: Receipt issued by the commanding officer of the ship when goods are loaded.
- Letter of Credit: A Guarantee by the importer’s bank to pay the exporter on presentation of documents.
- IEC Number: Import Export Code issued by DGFT – mandatory for any export/import.
- GSP: Generalised System of Preferences – preferential tariff treatment given by developed countries to developing nations.
Explore Solutions of Class 11: Business Studies
Related Reads
Explore Notes of Other Subjects of NCERT Class 11
FAQs
Domestic business is confined to one country, whereas international business involves cross-border transactions between two or more countries.
The five documents for export transaction are the Pro forma invoice, the commercial invoice, the packing list, the shipping bill, the bill of lading, certificate of origin.
Contract manufacturing involves outsourcing production, while a wholly owned subsidiary involves 100% ownership and full control.
A Letter of Credit (L/C) is the most common method used by Indian exporters for receiving payment.
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