Samacheer Kalvi 11th Commerce Solutions Chapter 25 International Business

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Samacheer Kalvi 11th Commerce Solutions Chapter 25 International Business

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Samacheer Kalvi 11th Commerce International Business Textbook Exercise Questions and Answers

I. Choose the Correct Answer

Question 1.
Movement of goods, services, intellectual property, human assets, technology and so on among the countries ………………
(a) International Trade
(b) International business
(c) Entrepot Trade
(d) Internal trade
Answer:
(a) International Trade

Question 2.
Goods are imported for purpose of re – export to another country is termed as ………………
(a) Import Trade
(b) Export Trade
(c) Entrepot Trade
(d) International trade
Answer:
(c) Entrepot Trade

Question 3.
Movement of goods, services among the countries ………………
(a) International Trade
(b) International business
(c) Entrepot Trade
(d) Internal trade
Answer:
(b) International business

Question 4.
Selling of goods from home country to foreign country is called ………………
(a) Home Trade
(b) Entrepot Trade
(c) Foreign Trade
(d) Joint Venture
Answer:
(c) Foreign Trade

II. Very Short Answer Questions

Question 1.
What do you mean by international business?
Answer:
International business denotes all those business activities which take place beyond the geographical limits of the country.

Question 2.
What is meant by Export Trade?
Answer:
When the firm of country sells goods and services to a firm of another country it is called export trade. Export trade indicates selling of goods and services from the home country to a foreign country.

Question 3.
What is meant by Import Trade?
Answer:
When the business firm of a country purchases goods from the firm of another country it is called import trade. Importing means purchase of foreign products and bringing them into one’s home country.

Question 4.
What is meant by Entrepot Trade?
Answer:
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.

Question 5.
Give any two reasons for International Business.
Answer:

  1. Unequal Distribution of Natural Resources.
  2. Uneven Availability of Factors of Production.

III. Short Answer Questions

Question 1.
Describe importance of the external trade to an economy.
Answer:
The economic environment of countries involved in international business differs significantly in terms of legal framework, institutional set – up, monetary fiscal and commercial policy, resources availability, production techniques, etc.

Question 2.
What is the necessity for entrepot trade?
Answer:
Entrepot is necessary because of the following reasons:

  1. The country may not have any accessible trade routes connecting the importing country.
  2. The goods imported may require further processing or finishing before exporting, and these facilities may be lacking in the exporting or importing country.
  3. There may not have any bilateral trade agreement between both the countries.

Question 3.
What are the limitations of international business?
Answer:

  1. Economic Dependence : International trade is more likely to make the country too much dependent on imports from foreign countries.
  2. Inhibition of Growth of Home Industries : International business may discourage the growth of indigenous industry.
  3. Import of Harmful Goods : International business may lead to import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well – being of people.

IV. Long Answer Questions

Question 1.
List out the advantages of international trade.
Answer:
1. Geographical Specialization : Countries across the world differ significantly in terms of natural resources, capital equipment, manpower, technology and land and so on.

2. Optimum use of Natural Resources : International business operates on a simple principle that a country which can produce more efficiently and trade the surplus production with other countries has to procure what it cannot produce more efficiently.

3. Economic Development : International business helps the developing countries greatly in achieving rapid economic development by importing machinery, equipment, technology, talent, and so on.

4. Generation of Employment : International business generates employment opportunities by assisting the expansion and growth of agricultural and industrial activities.

5. Higher Standard of Living : 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.

6. Price Equilisation : International business helps to stabilize the prices of various commodities which are fluctuating on a daily basis in the world market.

7. Prospects for Higher Profit : International business helps the firms which produce goods in excess to sell them at relatively higher price to various countries in the international market.

8. Capacity Utilisation : International business enables the firms across the country to sell their goods and services on a large scale in the international market.

9. International Peace : International business makes countries across the world become inter-dependent while these countries are independent in their functioning.

Question 2.
Enumerate the disadvantages of international trade.
Answer:
1. Economic Dependence : International trade is more likely to make the country too much dependent on imports from foreign countries. The former may not take any efforts to produce goods and services indigenously to substitute imported goods and thus becoming self sufficient.

2. Inhibition of Growth of Home Industries : International business may discourage the growth of indigenous industry. Unrestricted imports and severe competition from foreign companies may ruin the home industries altogether.

3. Import of Harmful Goods : International business may lead to import of luxurious goods, spurious goods, dangerous goods, etc. It may harm the well – being of people.

4. Shortage of Essential Goods in Home Country : The export of essential commodities out of the greed of earning more foreign exchange may result in absolute shortage of these goods at home country and people may have to buy these commodities at exorbitant price in the local market.

5. Misuse of Natural Resources : Excessive export of scarce natural resources to various countries across the world may lead to faster depletion of the resources in the exporting countries.

6. Political Exploitation : International business may create economic dependence among the countries which may threaten their political independence.

7. Rivalry among the Nations : Acute competition for exports may lead to rivalry among the nations. This may lead to conflict of interest among the countries and end up in wars among them.

8. Invasion of Culture : International business may result in invasion of country’s culture. Younger generation is more likely to imitate foreign culture and buy goods and services beyond their means to gain acceptance in the affluent section of society. This will ruin the conventional lifestyle of the society.

Question 3.
Distinguish between internal and international trade.
Answer:
Samacheer Kalvi 11th Commerce Solutions Chapter 25 International Business

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