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International Business
Chapter-o1

Q: 1. What is international business? (06, 08,12,15)

International business refers to business transaction between parties
from more than one country.
“International business refers to the business transaction more than one
country”—Kindle Berger.
According to D.Danils-“International business is all commercial
transaction both private and government between two or more
countries.”
So, from the above discussion we can say that the buying and selling of
goods or services across the national boundaries of a country is known
as international business.
Q:2: Explain the features or nature of International Business. 2017

The nature and characteristics or features of international business are:-

1. Large scale operations: In international business, all the

operations are conducted on a very huge scale. Production and
marketing activities are conducted on a large scale. It first sells its
goods in the local market. Then the surplus goods are exported.
2. Integration of economies: International business integrates
(combines) the economies of many countries. This is because it
uses finance from one country, labor from another country, and
infrastructure from another country. It designs the product in one
country, produces its parts in many different countries and
assembles the product in another country. It sells the product in
many countries, i.e. in the international market.
3. Dominated by developed countries and MNCs: International
business is dominated by developed countries and their
multinational corporations (MNCs). At present, MNCs from USA,
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Europe and Japan dominate (fully control) foreign trade. This is

because they have large financial and other resources. They also
have the best technology and research and development (R & D).
They have highly skilled employees and managers because they
give very high salaries and other benefits. Therefore, they produce
good quality goods and services at low prices. This helps them to
capture and dominate the world market.
4. Benefits to participating countries: International business gives
benefits to all participating countries. However, the developed
(rich) countries get the maximum benefits. The developing (poor)
countries also get benefits. They get foreign capital and
technology. They get rapid industrial development. They get more
employment opportunities. All this results in economic
development of the developing countries. Therefore, developing
countries open up their economies through liberal economic
policies.
5. Keen competition: International business has to face keen (too
much) competition in the world market. The competition is
between unequal partners i.e. developed and developing countries.
In this keen competition, developed countries and their MNCs are
in a favorable position because they produce superior quality
goods and services at very low prices. Developed countries also
have many contacts in the world market. So, developing countries
find it very difficult to face competition from developed countries.
6. Special role of science and technology: International business
gives a lot of importance to science and technology. Science and
Technology (S & T) help the business to have large-scale
production. Developed countries use high technologies. Therefore,
they dominate global business. International business helps them to
transfer such top high-end technologies to the developing
countries.
7. International restrictions: International business faces many
restrictions on the inflow and outflow of capital, technology and
goods. Many governments do not allow international businesses to
enter their countries. They have many trade blocks, tariff barriers,
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foreign exchange restrictions, etc. All this is harmful to

international business.
8. Sensitive nature: The international business is very sensitive in
nature. Any changes in the economic policies, technology, political
environment, etc. have a huge impact on it. Therefore,
international business must conduct marketing research to find out
and study these changes. They must adjust their business activities
and adapt accordingly to survive changes.

Q: 3. Discuss the various forms of international business.(10,11,13)

Or state the means of promoting international business.( 2014).
Or various entry strategies of international business. 2013
There are various forms of international business. The common forms of
international business are given below:
1. Export and import: Exporting is the selling of products made in
own country resale in other country. Importing is the buying of
products made in other country which use in another country.
2. Licensing: Licensing is a contractual agreement in which a firm in
one country license the use of its intellectual property (patent, copy
right) to a firm in a second country in return for a royalty payment.
3. Franchising : Franchising is specialized form of licensing occurs
when a firm in one country (franchiser) authorizes a firm in a
second country (franchisee) to utilize its operating system as well
as its brand name, trade mark and locus in return for a royalty
payment.
4. Management contract: Management contract is an arrangement
wherein a firm in one country agrees to operate facilities or
provide other management services to firm in another country for
and agreed upon fee.

5. Multinational company: Multinational Company is a firm that

engaged in foreign direct investment owns and central value
adding actives in more than one country.

So the above are the various forms of international business.

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Question:4: What is the importance/significance of

International Business?(08,12,15)
Or Why do nations engage in international trade. 2014.
Ans: International business is most important in the present age of
business. The main importance of international business is given bellow:
1. Proper utilization of resources: For using the all kinds of
resources country needs different kind’s resources like man,
machine, material and money. International business helps to
collect all kinds’ resources and properly use of these resources.
2. Increase living standard: International business create the
opportunity to use the most quality product in low cost that
increase the standard of living.
3. Develop new business and Industry: International business
give the opportunity to the business to capture the huge amount
of consumers to sell their product. It is opportunity of the
business to set up new business and industry.
4. Proper utilization of technology: Some countries are more
develop in technology. But there is not enough market to utilize
this technology. International business gives the opportunity to
utilize the technology properly.
5. Importation of machineries and raw materials: Poor country
has not enough capacity to make the machineries and raw
material. So poor country must have to import the raw material
and machineries to meet own country needs. International
business helps to do that.

6. Make life comfortable and easy: By using the foreign product

people can make their life more comfortable and easy.
7. To fulfill the requirements of necessary goods in the
country: Every country is not self dependent to meet up the
demand. So the country has to import necessary products from
the other country.
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8. For earning foreign exchange: By exporting the excess

products the country has to earn foreign exchange.
9. Attracting foreign aid: Which country give the other country
to business in their country that is beneficial to attract the
foreign aid.
10. Create friendly relationship to country: International
business helps to create friendly relationship with other country.
Those countries who engage themselves in international
business their relationship will be close.

So these are the importance of international business.

Q: 5:What is the advantages of International Business?

Ans: International business serves up various important
advantages. The advantage of international business is stated bellow:

1. Export of excess goods: International business create

opportunity to export excess domestic products.
2. Expansion of industry: International business widens the
horizon of trade in different regional countries that helps to
expand the industry.
3. Benefits of market diversification: Industry can get the
benefits of huge market diversification in the world by using
the opportunity of international huge consumer. Company can
divide the market in various segments for wide market to sell
their product.
4. Benefits of specialization: Some country enjoys producing
specialized product for their special natural and technical
resources. International business gives the opportunity to those
countries to marketwise specialized product in the whole world.
5. Benefit of enhancing product quality: By using the huge
international consumer the company can produce the huge
production in low cost in the best quality product.
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6. Remove Sudden scarcity of goods: In different situation,

International business can fulfill the scarcity of goods in
different region.
7. Improving standard of life: International business helps to use
the different kind of qualityful and luxurious products that
improve standard of life.
8. Improving International friendship: Every country strong his
relationship to another country when they can make huge
international trade. So more international trade stronger the
international relationship.
9. Increasing International opportunities: Company can get the
international market for international business.
10. Provides products for poor countries: International
business gives the opportunity to provide the necessary products
to the poor countries.

So above are the important advantages of international business.

Q: 6: What is the problem of International business/Trade in

Bangladesh?
Ans: In our country International business can not possible easily.
In case of Bangladesh International trade faced various problems. The
problems of International business are pointed bellow:

1. Insufficient exportable surplus: Bangladesh has not enough

exportable excess products to export. It is the main problem.
2. Inexperience is export trade: Bangladesh has enough skill in
export trade.
3. Lack of knowledge about foreign market: Bangladesh has not
enough knowledge about foreign market. So he face problem in
conducting the international business.
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4. Low quality of exportable goods: Bangladesh produce

comparatively low quality product to compete in the
international market.

5. Absence of proper packaging: Yet in Bangladesh cannot set

up the quality packaging industry. So their packing can’t protect
quality of their product.
6. Problems of advertising: Bangladeshi industry can’t advertize
their product for lacks of capital.
7. Corruption & bureaucracy: To run the international business
the company has to collect the different kinds of documents. But
in the process corruption and bureaucracy is occurred.
8. Uncertainty in prices of exportable products: Since the raw
material is exported from foreign market and its price is fluctuate. So the
finished exportable items’ prices must be fluctuating.
9. Problem of communication & transportation: In Bangladesh
the communication and transportation facilities are not developed
yet.
10. Unfavorable of foreign buyers: For different kinds of
problems the buyer is not willing to buy for Bangladeshi Product.

Question:7: State the reasons behind the rapid growth of

International trade?
Ans: The reasons behind the rapid growth of International trade
are as follows:
1. Expansion of technology: Today the technology is rapidly
developed. For the technological development international
business can occurred rapidly.
2. Liberalization of cross-border movement: Every country is
tightening their boarder but liberal their principles to make more
international business. So the international business grows up
rapidly.
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3. Development of supporting services: Now days the supporting

service is developed in international business like bank,
insurance and other financial institutions to operate the
international business smoothly.
4. Consumer pressure/demand: International business is rapidly
increased for the demand of different regional consumers for
different products which is not produced in that country.
5. Increase in communication process: The communication
process is rapidly developed and so the hindrance is removed to
operate the business smoothly.
6. Increase in global competition: Different country wants to
capture the different countries consumer and compete with
different company. This competition creates the international
market rapid growth.
7. Transportation facility: Transportation facility is increased
among different countries which influence the international
business to rapid growth.

So above are various reasons of rapid growth of international business.

Question:8: State the basic sources of International business.

or 2007.
Ans: The basic source of International trade is as follows:

1. Difference in climate: Difference in climate encourages the

country to produce local product which have lot of demand in
different countries.
2. Availability of capital and capital goods: Some countries
enjoy the huge capital and capital goods and some countries
lacks of capital and capital goods. So the poor country has
import capital and capital goods from rich country.
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3. Availability of natural resources: Natural resources oriented

country can produce the high quality product in low price and
can sell the product in different countries in low price also.
4. Difference in product price and quality: Different country
can produce different quality product and the consumer can
enjoy buying different quality product from different countries.
So it is used as source of international business
5. Developed technology and technological knowledge: Many
countries can enjoy different technological knowledge.
6. Dynamism of factors of production: Different countries
produce different kinds of product by using different factors of
production. Some country enjoys best production by using their
factors of production that accelerate the international business.
7. Business combination: Combined business accelerates the
international business easily.
Question:9: Do you think that International business is
significant for Bangladesh – Explain? 2006.
Ans: yes, I think that International Business is sigficant for Bangladesh.
Why, is given below: The significant for Bangladesh of International
business are as follows:
1. Properly use of wealth: International business can give the
opportunity Bangladesh to use resources like Human Resources
and other resources. So it is important for Bangladesh.
2. Export of excesses products: Bangladesh can export the excess
product by using the international business like garments and
shrimp etc.
3. Import capital products: Bangladesh is low capital and low
technical oriented country. So the Bangladesh can import the
capital goods by using the international business.
4. Fulfill the demand: Bangladesh need the product which is not
produced in Bangladesh. So to fulfill that demand it needs to
business under international trade.
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5. Technological knowledge: To run the advanced technology in

the country Bangladesh needs the technological knowledge. In
this perspective Bangladesh needs to use International business.
6. Advantages of consumer: Bangladeshi consumer can enjoy the
high quality product in low price for international business.
7. Expansion International currency: Bangladesh can expand
his foreign currency by using international business.
8. Earning foreign currency: Bangladesh can earn more foreign
currency when he involved more in export trade.
9. Increase skill: When more international business is occurred
then the skill of international business is also increased.
10. Increase government revenue: When more international
business is occurred then the government will collect more
revenue.

So for the above reason the international business is

significant for Bangladesh.

Question:10: What are the disadvantages or limitation of

International Business?
Ans: There are some disadvantages of International Business are
as follows:
1. Competition with development countries: For international
business the underdeveloped countries compete with the
developed countries company. It creates major problem for poor
countries.
2. Colonialization: By using international business the rich
country make commercial colony in many countries to sell their
product.
3. Productivity of undesirable fashion goods: For international
business many poor countries can take the opportunity to use
the luxurious goods. This tendency encourages the country to
produce those luxurious goods but this sector is less essential
than another sector.
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4. Dumping policy: By using international business the rich

country can sell their low quality product in the poor country
comparatively in low price to minimize their full loss.
5. Adverse effects on home industry: International business
widens the horizon of getting more products in home country.
So the people are not interested in low quality home product. So
the home industry faced problem of extinction.
6. Language problem: Another problem of international business
is language difference in many countries. To communicate the
country the language is a vital element.
7. Legal Problem: Different country posse’s different kinds of
commercial law. If disputes arise the resolution process is long
term process.

So the above are the main problem of international business.

Q: 11: Distinguish between the domestic business and international

business.

Domestic business International business

1. The business which is conducted 1. The business which is conducted
within the country is called among different countries is
domestic products. called international business.

2. Comparatively small in capital. 2. Comparatively large in capital.

3 .Scope of domestic business is 3 .Scope of international business is
small. wide.
4. Domestic business has to maintain 4. International business has to
domestic rules and regulation. maintain different countries rules
and regulations.
5. Domestic business management 5. The management of
is comparatively simple. international business is
complex.
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12: Briefly describe the common characteristics of MN c (Multi

–National Company).(2013,2015).
The term MNc means “multinational companies”. In a broad
sense, Multinational Corporation refers to a corporate giant
business firm having extended its productive activity in many
nations besides its home country.
According to David E. Liliental, “Corporations which have their
home in one country but operate and live under the laws and
customs of other countries as well.”
The major characteristics of multinational companies are given
below:
1. .Giant Size: The assets and sale of multinational corporations
are quite large. These companies operate on large scale as
they trade in more than one company .Their operations are so
huge that sometimes their sales turnover exceeds GDP of
developing countries.
2. International Operation: A multinational corporations
operates in more than one country. It has branches, factories,
offices in several countries. It operates through a network of
branches and subsidiaries in host counties. They sell their
products in different countries.
3. Professional Management: A multinational corporation
employs professional experts and specialized people. MNc’s
try to keep their employees updated by imparting them
training from time to time. It employs professionals to handle
the advance in technology effectively.
4. Centralized control: The branches of Multinational
companies spread in different counties are controlled and
managed from the headquarters situated in the home country.
Headquarters in the home country is the main branch. All
branches operate within the policy framework formed by
headquarters.
5. Oligopolistic Power: Oligopolistic means power in the
hands of few companies occupy dominating position in the
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market. They join hands with big business houses give rise to
monopoly. They also take over other firms to acquire huge
power and improve market share.
6. Sophisticated Technology: Multinational companies make
use of latest and advanced technology to supply world class
products.
So those are characteristics of multinational companies.

Q:13: What is globalization? What factors have led to

increased globalization? (2013, 17)
Globalization is the tendency of business, technologies, or
philosophies to spread throughout the world, or the process
of making this happen.
Globalization implies the opening of local and nationalistic
perspective to a broader outlook of an interconnected and
interdependent world with free transfer of capital, goods and
services across national frontiers.
Factors have led to increased globalization: Globalization
is a difficult concept to measure. There are some interrelated
factors that led to increased globalization.
1. Increase and expansion of Technology: Vast
improvements in transportation and communications
technology including the development of the Internet-
have significantly increased the effectiveness and
efficiency of international business operations.
2. Liberalization of Cross Border Trade and Resource
Movements: Over time most governments have lowered
restrictions on trade and foreign investment in response to
the expressed desires of their citizens and producers.
3. Development of Services that support international
business: Services provided by government, banks,
transportation companies, and other business greatly
facilitate the conduct and reduce the risks of doing
business internationally.
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4. Growing consumer Pressures: Because of innovations

in transportation and communications technology,
consumers are well-informed about and often able to
access foreign products.
5. Increased Global Competition: The pressures of
increased foreign competition often persuade firms to
expand internationally in order to gain access to foreign
opportunities and to improve their overall operational
flexibility and competitiveness.
Q:14: How culture dynamically influences the
international business operation? Describe it with detail
explanation of the components of culture. (2010, 2013).
Culture is the beliefs, values, customs, ideas, arts etc. of
nation. The effect of culture when negotiating in an
international business context is very relevant. When two
countries participate in business, here culture influence in
product or service pattern and negotiating style.
Components of culture:
1. Religion: Religion is the beliefs of a society, some
traditions.
2. Art: Art is architecture, style.
3. Politics: Government and laws of a culture (rules and
leadership)
4. Language: Communication system of a culture (speech,
writing, symbols).
5. Economy: How people get the things the need (trade,
agriculture, industry, money, hunting).
6. Customs: Traditions of a culture (holidays, clothing,
celebration)
7. Society: Types of people in a culture (race, nationality,
religious identity).
8. Geography: The land, location, and natural resources of a
culture (physical features, climate, raw materials).
9. Beliefs: Specific statement that people hold to be true.
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10. Values: Culturally defined standard defined standard that

determine goodness, beauty and serve as broad guideline for living.
So these are the important elements of culture.
Q: 15 : Do you think that cultural difference are the hindrance of
international business? Explain briefly. 2017
Yes I think that cultural difference are the hindrance of international
business. But now what is culture? Culture is the beliefs, values,
customs, ideas, arts etc. of nation. The effect of culture when negotiating
in an international business context is very relevant. When two countries
participate in business, here culture influence in product or service
pattern and negotiating style.
Components of culture:
1. Religion: Religion is the beliefs of a society, some
traditions. Saudi Arabia’s dishes and dresses are different
from UK. So the business of dishes and cloth of UK is the
hindrance in Saudi Arabia because of religion.
2. Art: Art is architecture, style. So the expression or
application of human creative skill and imagination, typically
in a visual form such as painting or sculpture, producing
works to be appreciated primarily for their beauty or
emotional power. So the business planning of Bangladeshi is
not applicable to business planning of Brazil because of art.
3. Politics: Government and laws of a culture (rules and
leadership) is called politics. Different government permit
different business options as result of political rules.
4. Language: Communication system of a culture (speech,
writing, symbols).
5. Economy: How people get the things the need (trade,
agriculture, industry, money, hunting). Economical status
changes the expectation which influence the business style
that create hamper in some region.
6. Customs: Traditions of a culture (holidays, clothing,
celebration). The tradition of Germany is different from the
tradition of India. So the business of Germany is not
applicable to business of India.
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7. Society: Types of people in a culture (race, nationality,

religious identity). Society formation of India is different
from society formation of Canada. So the business planning
of Canada is the hindrance of Indian business.
8. Geography: The land, location, and natural resources of a
culture (physical features, climate, raw materials). Climate of
Russia is cold. So the business planning of Russia is
hindrance of business of Yemen.
9. Beliefs: Specific statement that people hold to be true.
Beliefs strongly influence the consumption pattern. So the
business planning of Saudi Arabia is the hindrance of
business of Japan.
10. Values: Culturally defined standard that determine
goodness, beauty and serve as broad guideline for living. So the beliefs
of one country is the hindrance of another country’s belief.
So these are the important elements of culture.

Q: 16: What is franchising? How it can help in international

business. (2014)
Franchising is a long-term cooperative relationship between two entities
Va franchisor and one or more franchisees- that is based on an
agreement in which the franchisor provides a licensed privilege to the
franchisee to do business. The franchiser grants the franchisee the right
to use a developed concept, including trademarks and brand names,
production, service and marketing methods and the entire business
operation model, for a fee.
Benefits to Franchising in International Business:
1. Franchising is helpful for the non developed country’s
businessmen.
2. Franchising is helpful for the franchisor and franchisee.
3. Franchising creates the relationship among host country and home
country.
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Q: 17: What is difference between franchising and licensing? 2016

A franchise is a license issued to someone to operate a business using a common
brand name, a common operating support system and involving the payment of
initial and/or ongoing fees.

A franchise is a license, though you usually don't find someone so focused on

language minutia that they make a big deal out of the distinction in the sense of
business opportunities. The term "get a life" springs to mind as I read your account
of them correcting you on this small matter.

If the company you were talking to has those three components as part of their
offering, then they are in fact offering a franchise, whether or not they choose to
call it a license.

There are also many types of licenses that are not franchises. For example, when
you buy a copy of Microsoft Office you are not actually purchasing Office--you
are entering into a license agreement that allows you to use the product under the
specified terms and conditions they have outlined in the license agreement (all that
fine print that no one reads).

There are business opportunities that are not franchises, though I don't know of any
bishops that label their opportunity as a license. Business opportunities are like
franchises except that they are missing one of the three necessary ingredients
mentioned above--typically a common brand.

If the person you were dealing with meant to say that they were a business
opportunity rather than a franchise, they need to go back to hair splitting school to
learn some new terminology.

Q: 18: How does intra and inter industry trade differ? 2016.
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Inter-industry trade is a trade of products that belong to different

industries. Countries usually engage in inter-industry trade according
to their competitive advantages. In these inter-industry trade different
kinds of industry produced product is traded among different
countries.
Intra-industry trade, on the other hand, is a trade of products that
belong to the same industry.Intra-industry trade refers to the
exchange of similar products belonging to the same industry. The term
is usually applied to international trade, where the same types of goods
or services are both imported and exported.
A competition which is created between companies operating in
different industries. For example, an aerospace company trying for a
government manufacturing contract against an automotive company.

Intra-firm trade consist of trade between parent companies of a

compiling country with their affiliates abroad and trade of affiliates
under foreign control in this compiling country with their foreign parent
group.

Q: 19: What is business cycle? Recession and depression impact on

international trade –explain. (2013).

Generally business cycle is a cycle or series of cycles of economic

expansion and contraction.
The business cycle describes the rise and fall in production output of
goods and services in an economy.
Or the business cycle is the natural rise and fall of economic growth that
occurs over time. The cycle is a useful tool for analyzing the
economy. It can also help you make better financial decisions. 
But the international business cycle is the ebb and flow of world
economic growth is known as the international business cycle, which
refers to the changes in the level of economic activity in the global
economy over time.
In economics, a recession is a business cycle contraction when there is a
general decline in economic activity.
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During a recession, investor confidence is low. Hence, there is a

reduction in investment.

During a recession, people lose jobs and reduce consumption.

Consumption of firms also decreases due to lower economic activity in
the economy. As a result, there is reduced demand on an aggregate level.
This reduces trade of goods and commodities (at least the elastic goods).
People are less likely go indulge in luxurious products and services like
cars, tourism etc.

In economics, a depression is a sustained, long-term downturn in

economic activity in one or more economies. It is a more severe
economic downturn than a recession, which is a slowdown in economic
activity over the course of a normal business cycle. It affects the total
economic growth. The production is adversely slowdown and also the
income also. The consumption also adversely reduced and also savings.

So those are the major economic impact of recession and depression on

international trade.

Q:20: What are the political arguments for intervention by

government in international trade. 2013
There are some political arguments for government intervention in international
trade includes:
1. Protecting jobs: Protecting jobs and industries is the most common political
reason for trade restrictions. Usually this results from political pressures by unions
or industries that are "threatened" by more efficient foreign producers, and have
more political clout than the consumers that will eventually pay the costs
2. Protecting industries deemed important for national security : Industries
such as aerospace or electronics are often protected because they are deemed
important for national security.

3. Retaliating to unfair foreign competition: When governments take, or

threaten to take, specific actions, other countries may remove trade barriers  If
threatened governments don’t back down, tensions can escalate and new trade
barriers may be enacted
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4. Protecting consumers from “dangerous” products: Governments may

intervene in markets to protect consumers.
5. Furthering the goals of foreign policy: Foreign policy objectives can be
supported through trade policy . Preferential trade terms can be granted to
countries that a government wants to build strong relations with  Trade policy can
also be used to punish rogue states that do not abide by international laws or norms
6. Protecting the human rights of individuals in exporting countries: The
government here protects the rights of every man in exporting countries.

Q: 21: Briefly explain the trend and composition of export and

import of Bangladesh. 2012