Tamilnadu Samacheer Kalvi 11th Commerce Notes Chapter 25 International Business Notes
→ International trade has become inevitable after the second world war since no country remains self sufficient in terms of all natural resources available therein.
→ Countries across the world are endowed with natural resources of various kinds.
→ Today we live in a world where the obstacles to exchange of the goods and technology have been substantially reduced.
→ The contemporary world is called as‘global village’.
→ Today business is growing globally and the need for profit is pushing a large number of business firms into world markets beyond their historical and traditional boundaries.
→ ‘International business denotes all those business activities which take place beyond the geographical limits of the country.
→ Roger-Bennet defines, International business involves commercial activities that cross national frontiers.
→ According to John D. Daniels and Lee H. Radebaugh, International business is all business transactions -private and governmental- that involve two or more countries.
→ A Joint venture is a business agreement wherein parties agree to develop a new entity and assets subscribing to equity shares and thereby exercising control over enterprise and consequently sharing revenues, expenses and the assets.
→ FDI means investment made by a company or individual in one country in the business , interest in another country in the form of either establishing new business operations or acquiring business assets in the other country.
→ Production cost varies significantly among the countries due to difference in socio-economic, geographical, demographical, technical and political environments prevailing therein.
→ Consumers are relatively heterogeneous in nature in terms of culture, behavior, taste, preferences, legal system, customs and practices, etc. prevailing across the countries.
→ The risks involved in international business are more due to distance, difference in socio-economic and political conditions, change in foreign exchanges value, etc
→ On the basis of sale and purchase of goods and services, international trade can be divided into three kinds. They are export trade, import trade and entrepot trade.
→ When the firm of country sells goods and services to a firm of another country it is called export trade.
→ When the business firm of a country purchases of goods from the firm of another country it is called import trade.
→ When the firm of country imports goods for the purpose of exporting the same goods to the firms of some other country with or without making any change in the goods meant for export it is known as entrepot trade.
→ Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land and so on.
→- International business operates on a simple principle what your country can produce more efficiently and trade the surplus production with other countries, to procure what they can produce more efficiently.
→ 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.
→ International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market.
→ International business enables the firms across the country to sell their goods and services on a large scale in the international market.
→ International business makes countries across the world become inter-dependent while they ‘ are independent in their functioning.
→ International trade is more likely to make the country too much dependent on imports from foreign countries.
→ International business may create economic dependence among the countries which may threaten their political independence.
→ Acute competition for exports may lead to rivalry among the nations.
→ International business may result in invasion of country’s culture.