Case-Based Questions: International Business | Business Studies (BST) Class 11 - Commerce PDF Download

Carefully read the following case studies, which present real-world business scenarios, and answer the question(s) that follow each case to test your understanding and application of business studies concepts.
Case 1: Kalakriti Industries
Kalakriti Industries is a company manufacturing stationery items. The company has set its objective of increasing revenue from ₹ 50 crores to 100 crores within 2 years. Unfortunately with the saturating domestic demand, underutilization of production capacity, etc. their objectives could not be achieved even after 3 years. In a long discussion in the meeting with all the managers, the company discussed the scope of international business and reached the decision to extend its market territory beyond the nation’s boundaries by selling goods to foreign countries. For this, the company decided to import exclusive stationery items from Japan. After identifying a suitable exporter, Kalakriti Industries sent a written request to the exporter to provide information regarding price, terms and conditions, etc. on which basis the exporter will be able to supply goods.

Q1: '... to extend its market territory beyond the nation’s boundaries.’ Identify the means through which the company can do so in light of the given case.
(a) Improving promotion strategy
(b) Improving productivity
(c) Opening more retail outlets in the country
(d) Exporting the goods

Correct Answer: Option (d)
Exports are goods and services that are produced in one country and sold to buyers in another. Exports, along with imports, make up international trade.

Q2: ________ is a written request to the exporter to provide information regarding price, terms and conditions, etc. on which the exporter will be able to supply goods.
(a) Trade Enquiry
(b) Proforma Invoice
(c) Quotation
(d) None of the above

Correct Answer: Option (a)
Trade enquiry is essential in Import Trade as it enables the importer to mention all the details regarding the quantity of items needed. It is a written request regarding the price and the terms on which the exporter will be able to supply goods.

Q3: ’Unfortunately with the saturating domestic demand ..................’. In the reference of the given statement which of the benefits of international trade suits this case?
(a) Way out to intense competition in the domestic market
(b) Prospects for growth
(c) Prospects for higher profits
(d) Improved business vision

Correct Answer: Option (c)
The definition of a prospect is an expected outcome or a likely customer. An example of prospect is a new client with whom a company is counting on signing a contract. The direction in which an object, such as a building, faces; an outlook. Something presented to the eye; a scene.

Q4: How will an increase in the production capacity of Kalakriti Industries benefit it?
(a) Economies of scale
(b) Reduction in production cost
(c) Improve profit margin
(d) All of the above

Correct Answer: Option (d)
Industrialization provides increased employment opportunities in small- and large-scale industries. In an industrial economy, industry absorbs underemployed and unemployed workers from the agricultural sector, thereby increasing the income of the community.

Case 2: Paras Manek Ltd.
Paras Manek is a successful businessman who is engaged in manufacturing auto spare parts. The products manufactured by his business enterprise Paras Manek Ltd. are sold not only in India, but also exported to various countries such as Singapore, Switzerland, China, North Korea, etc. Trudy Ltd., a Russian company wants to import auto spare parts from Paras Manek Ltd. Paras Manek Ltd. has received an enquiry regarding the goods and trade. Paras Manek Ltd. has replied to it in the form of a quotation. Finding it favourable, Trudy Ltd. has placed an order containing description of goods, price and other instructions, etc. But before exporting the goods it has to fulfill certain legal formalities like procuring export license and preparing the documents related to goods, shipment, and payment.

Q1: “... but also exported to various countries such as Singapore, Switzerland, China, North Korea, etc.” Identify the type of business discussed above.
(a) Domestic Business
(b) International Business
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Correct Answer: Option (b)
International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross-border transactions of goods and services between two or more countries. International business is also known as globalization.

Q2: Which of the following documents contains a description of goods, price and other instructions.
(a) Proforma Invoice
(b) Indent
(c) Letter of Credit
(d) Enquiry

Correct Answer: Option (b)
Indent Order means an order placed with the Company by the Buyer whereby the Company, in order to satisfy that order, is required to specifically purchase goods or services from a third party because such goods or services are not usually stocked or provided by the Company.

Q3: In case of export, a buyer sends an enquiry to exporter to seek information about:
(a) Availability of goods
(b) Price of goods
(c) Terms and conditions of trade
(d) All of the above

Correct Answer: Option (d)
An inquiry is a request from the prospective buyer to keep him informed of the terms and conditions of sale. Any export inquiry has to be attended with promptness and meticulous care. It is desirable to send samples as they speak better about quality, which is the main criterion for selection of exporter.

Q4: “Paras Manek Ltd. has replied to it in the form of a quotation.” Identify the document stated here.
(a) Proforma Invoice
(b) Indent
(c) Letter of Credit
(d) Enquiry

Correct Answer: Option (a)
Proforma invoices are sent to buyers ahead of a shipment or delivery of goods or services. Most pro forma invoices provide the buyer with a precise sale price. A pro forma invoice requires only enough information to allow customs to determine the duties needed from a general examination of the included goods.