Case-Based Questions International Business - Business Studies (BST) Class

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

Ans: (d)
Explanation: Exporting means selling goods produced in one country to buyers in another country. To extend its market territory beyond national boundaries, Kalakriti Industries must sell its products abroad. Exporting directly opens new markets, helps utilise idle production capacity and increases overall sales revenue by accessing foreign customers.

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

Ans: (a)
Explanation: A trade enquiry is a written request from an importer asking the exporter for details such as price, quantity, packing, delivery period and payment terms. It allows the importer to specify requirements clearly so the exporter can respond with appropriate terms or a quotation.

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

Ans: (b)
Explanation: When domestic demand is saturated and production capacity is underutilised, entering international markets gives the firm new customers and orders. This provides clear prospects for growth by expanding the market base, increasing sales volume and allowing better use of existing capacity.

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

Ans: (d)
Explanation: Higher production capacity allows the firm to produce larger quantities. This often leads to economies of scale, which reduce the average cost per unit. Lower costs help improve the profit margin. Therefore, all the listed benefits follow from increased capacity.

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)

Ans: (b)
Explanation: The enterprise sells goods across national borders as well as within the country. Such cross-border trade in goods and services is known as international business. It involves transactions between firms and buyers in different countries.

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

Ans: (b)
Explanation: An indent is an order placed by a buyer specifying the description of goods, quantity, price and other instructions to the seller or manufacturer. While a proforma invoice is a seller's quotation, an indent represents the buyer's formal order or request for procurement.

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

Ans: (d)
Explanation: An enquiry is used by a prospective buyer to obtain details such as availability, price, quality, packing, delivery schedule and terms of payment. Therefore, a buyer asks about all these points before placing an order.

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

Ans: (a)
Explanation: A proforma invoice is a seller's preliminary bill or quotation sent to the buyer showing the likely price, description of goods, and terms. It helps the buyer to decide and is often used for arranging payment or import clearances before shipment.