Business Studies · Ch 10 — International Business
Key Terms
Key Terms
- International business — Business activities carried on across national frontiers, including trade, foreign investment and overseas production of goods and services.
- International trade — Export and import of goods and services between countries.
- Merchandise trade — Trade in tangible goods that can be seen and touched (also called trade in goods).
- Invisible trade — Trade in intangible services, so called because services cannot be seen or touched.
- Foreign investment — Investing funds abroad in exchange for a financial return.
- FDI (Foreign Direct Investment) — Direct investment in plant, property and machinery abroad that gives the investor a controlling interest in the foreign company.
- Portfolio investment — Investment in a foreign firm by acquiring shares or giving loans, earning dividends or interest without direct involvement in operations.
- Exporting — Sending goods and services from the home country to a foreign country.
- Importing — Purchasing goods from a foreign country and bringing them into one's own country.
- Contract manufacturing — Getting goods produced by local manufacturers abroad to one's own specifications; also called outsourcing.
- Licensing — A contractual arrangement granting another firm rights to use one's patents, technology or trade secrets for a royalty.
- Franchising — A licensing-like arrangement for services, with stricter rules set by the franchiser.
- Outsourcing — Another name for contract manufacturing — getting production done by an outside/local manufacturer.
- Joint ventures — A firm jointly owned by two or more otherwise independent firms.
- Wholly owned subsidiaries — A foreign firm fully controlled by a parent company through 100 per cent equity investment.
- Proforma invoice — A quotation giving the quality, grade, size, weight, price and terms on which export will take place.
- Order or indent — The buyer's order describing the goods, prices, packing, delivery and payment terms.
- Export licence — Official permission required before a firm can export goods.
- IEC number — Import Export Code number issued by the DGFT, quoted on export/import documents.
- Registration-cum-Membership Certificate (RCMC) — Certificate of membership of an export promotion council needed to avail government benefits.
- Pre-shipment finance — Finance obtained by the exporter to procure, process, pack and transport goods before shipment.
- Pre-shipment inspection — Compulsory quality inspection of certain export goods by a designated agency.
- Export Inspection Agency (EIA) — Agency that inspects export goods and issues the certificate of inspection.
- Excise clearance — Clearance from the excise authorities for duty payable on materials used in manufacturing export goods.
- Certificate of origin — Document certifying the country in which the goods were produced, used to claim tariff concessions.
- Customs clearance — Completion of customs formalities before goods can be exported or taken delivery of after import.
- Letter of credit — A guarantee from a bank to honour payment of export bills up to a certain amount.
- Shipping bill — The main document on which customs grants permission for export.
- Mate's receipt — Receipt issued by the ship's commanding officer once cargo is loaded on board.
- Bill of lading — Shipping company's receipt of goods on board and undertaking to carry them; a transferable document of title.
- Airway bill — Airline's equivalent of a bill of lading for goods carried by air.
- Invoice — A statement of the quantity of goods sent and the amount payable by the importer.
- Bill of exchange — A written order directing the importer to pay a specified amount to a person or the bearer.
- Sight draft — A bill of exchange where documents are released only against payment.
- Usance draft — A bill of exchange where documents are released against acceptance for payment after a specified period.
- Negotiation of bills — Submitting the export documents (including the bill of exchange) to the bank so that the exporter can obtain payment against them.
- Marine insurance policy — An insurance contract under which the insurer, in return for a premium, indemnifies the insured against loss to the goods from the perils of the sea.
- Cart ticket — Also called a cart chit, gate pass or vehicle pass; prepared by the exporter, it records the shipper's name, number of packages, shipping bill number, port of destination and the number of the vehicle carrying the cargo.
- Bank certificate of payment — A certificate stating that the documents relating to a particular export consignment have been negotiated and that payment has been received in accordance with exchange-control regulations.
- Certificate of inspection — A certificate issued by an authorised inspection agency confirming that the consignment has been inspected, meets the prescribed quality-control standards and is export worthy.
- Trade enquiry — A written request from an importing firm to an exporter seeking information about the price and the terms and conditions on which the exporter is willing to supply goods.
- Shipment advice — A document the exporter sends to the importer informing that the shipment has been made; it gives the invoice number, bill of lading/airway bill number and date, name and date of the vessel, port of export, and description and quantity of goods. …