B.Com 6th Sem Question Papers & Solved Answers – Gauhati University 2025
Board Question Paper of International Business for B.Com 6th Semester 2024 — Solved
Solving the B.Com 6th Semester question paper for International Business as per the CBCS syllabus with detailed solutions and answers is provided below. Download the 2024 PDF of the International Business paper to understand the pattern of questions asked in the board exam.
(International Business)
Time: Three Hours
SAARC is based on the principles of sovereign equality and mutual benefit. It promotes regional cooperation and aims to improve the quality of life in South Asia through peace, freedom, and economic growth, without interfering in each other's internal affairs.
Nations trade internationally to obtain goods and services they cannot produce efficiently themselves. It helps them access better technology, increase employment, earn foreign exchange, and use resources effectively through specialization and comparative advantage.
A tariff is a tax or duty imposed by a country on imported goods. It raises the price of foreign products, protecting domestic industries and generating revenue for the government.
SEZs aim to attract foreign investment, promote exports, and create jobs by offering tax benefits and advanced infrastructure. They boost industrial growth and support economic development in a country.
(i) To promote free, fair, and predictable trade among nations.
(ii) To resolve trade disputes among member countries through proper procedures and agreements.
(Answer in about 150 words each)
Green field investment is a type of foreign direct investment (FDI) where a company starts a new venture in a foreign country by building new facilities from the ground up. This includes the construction of new factories, offices, and distribution hubs, instead of acquiring existing assets. It gives the investing company full control over operations, hiring, equipment, and business practices.
This method requires large capital investment and more time but provides long-term benefits like full profit retention and better brand presence. For the host country, green field investment creates employment opportunities, improves infrastructure, and brings in advanced technology. It also promotes skill development among local workers. Major global firms often choose this mode when entering developing markets to maintain complete ownership and implement their business standards.
SAARC (South Asian Association for Regional Cooperation) was established to promote peace, progress, and economic development in the South Asian region. The key objectives of SAARC are:
(i) To improve the quality of life of the people in South Asia through mutual cooperation.
(ii) To promote regional collaboration in economic, social, cultural, technical, and scientific fields.
(iii) To strengthen collective self-reliance among South Asian countries.
(iv) To contribute to mutual trust, understanding, and appreciation of one another's problems.
(v) To ensure active collaboration and mutual assistance in the areas of common interest.
(vi) To cooperate with international and regional organizations with similar aims.
SAARC aims to promote peace and stability in the region by reducing conflicts and promoting joint development programs. It also tries to remove trade barriers and encourages free flow of goods and services among member countries.
Globalization has brought many positive changes to the world economy, especially in developing countries. One major benefit is the increase in international trade, which allows countries to access larger markets and sell more goods and services globally.
It encourages foreign direct investment (FDI), which helps in the development of infrastructure, creates employment, and brings in modern technologies. It has also made it easier for businesses to expand their operations across borders, leading to better competition and improved product quality.
Consumers benefit from globalization through greater product variety, better prices, and improved quality. Culturally, globalization has promoted exchange of ideas, values, and innovations among nations. In education and technology, it has led to international collaboration and advancement.
Overall, globalization promotes economic growth, increases standard of living, and supports international cooperation.
Balance of Trade (BOT):
(i) It is the difference between a country's exports and imports of goods only.
(ii) It is a part of the current account in the balance of payments.
(iii) If exports exceed imports, it's a trade surplus; if imports exceed exports, it's a trade deficit.
Balance of Payments (BOP):
(i) It is a comprehensive record of all economic transactions (goods, services, capital) between a country and the rest of the world.
(ii) It includes the current account (trade in goods and services), capital account, and financial account.
(iii) It gives a broader picture of a country's financial position.
In simple words, BOT is a narrower term limited to goods trade, while BOP is broader and includes all monetary transactions. BOP must always balance in theory, while BOT may not.
Trade finance refers to the financial support or instruments used by importers and exporters to facilitate international trade. The main sources of trade finance are:
(i) Banks: They provide export credit, import loans, and letter of credit (LC), which assures payment to the exporter.
(ii) Export Credit Agencies (ECAs): These are government agencies that offer guarantees, loans, and insurance to exporters.
(iii) Factoring Companies: They buy the exporter's receivables and give immediate payment.
(iv) Forfaiting: Involves selling long-term receivables to a forfaiter for upfront cash.
(v) Trade Credit: Suppliers give credit to buyers, allowing payment at a future date.
(vi) Multilateral Institutions: Organizations like World Bank or IMF may assist trade finance, especially in developing nations.
Trade finance ensures liquidity, reduces risk, and builds trust between international buyers and sellers, helping businesses grow globally.
International business offers many benefits to companies, countries, and consumers:
(i) Larger Market Access: Companies can expand sales by reaching global customers.
(ii) Profit Maximization: It helps businesses earn more due to higher demand and pricing in foreign markets.
(iii) Efficient Resource Use: Countries specialize in products where they have comparative advantage, improving global efficiency.
(iv) Technology Transfer: Developing countries gain access to new technologies and practices from developed nations.
(v) Employment Generation: FDI and multinational operations create jobs in host countries.
(vi) Cultural Exchange: People get to know different cultures, values, and lifestyles.
(vii) Improved Quality and Competition: Exposure to global competition improves quality, reduces cost, and fosters innovation.
International business contributes to economic development, builds international relations, and promotes global peace through economic ties.
International business refers to the exchange of goods, services, technology, capital and knowledge across national borders and at a global or transnational scale. It involves transactions that take place between two or more countries. The main aim of international business is to satisfy the needs and wants of consumers in foreign markets by providing products and services at a competitive price. Companies engage in international business to expand markets, increase profits, acquire resources, reduce risks, and benefit from economies of scale.
Modes of Entry into International Business:
Firms can enter international markets through various methods. The choice of mode depends on factors such as cost, control, risk, and the nature of products and services.
(i) Exporting: Exporting is the simplest and most common mode. The company produces goods in its home country and ships them to foreign markets. Direct exporting means selling directly to foreign customers; indirect exporting involves intermediaries.
(ii) Licensing: Under licensing, a domestic company (licensor) permits a foreign company (licensee) to use its intellectual property, such as patents, trademarks, or technology, for a fee or royalty. This allows expansion with less investment.
(iii) Franchising: Franchising is similar to licensing but more specific to services. The franchisor allows the franchisee to use its business model, brand, and processes in exchange for fees. It is common in fast food chains like McDonald’s.
(iv) Joint Ventures: A joint venture is when two or more companies from different countries create a new business entity, sharing ownership, control, and profits. This helps companies access local markets, share risks, and combine strengths.
(v) Strategic Alliances: This is an agreement between companies to cooperate in certain areas, such as research or production, without forming a separate entity. It helps firms gain market access and resources.
(vi) Turnkey Projects: In turnkey projects, a company designs, constructs, and equips a plant for a client in another country and hands over the ‘ready-to-operate’ facility to the client. This is common in construction and engineering projects.
(vii) Wholly Owned Subsidiaries: This involves setting up or acquiring a fully owned company in a foreign country. It can be done through Greenfield investments (building new facilities) or mergers and acquisitions. This mode provides full control but involves higher costs and risks.
(viii) Contract Manufacturing: A company contracts a local manufacturer in the foreign country to produce its products. This helps reduce costs and meet local demand without owning production facilities.
Conclusion:
Choosing the right mode of entry is crucial for success in international markets. It depends on factors like cost, control, level of risk, and long-term strategic goals. Firms often use a combination of these modes to benefit from global opportunities.
Foreign Direct Investment (FDI) plays a vital role in boosting international business and economic development in India. FDI refers to investment made by a company or individual in one country into business interests located in another country, typically by acquiring assets or establishing business operations like subsidiaries or joint ventures.
Role of FDI in India:
(i) Capital Inflow: FDI brings much-needed foreign capital into the country. This helps finance development projects, infrastructure, and industrial expansion, leading to economic growth.
(ii) Employment Generation: FDI creates direct and indirect employment opportunities. Multinational companies set up factories, offices, and service centers, which generate jobs for skilled and unskilled workers.
(iii) Transfer of Technology: One major benefit of FDI is access to advanced technology. Foreign companies introduce modern machinery, production methods, and management practices, enhancing the efficiency of Indian industries.
(iv) Boost to Exports: FDI helps expand India’s export capacity by establishing production units that cater to global markets. Many export-oriented units (EOUs) are set up with foreign investment.
(v) Development of Infrastructure: Foreign investors contribute to the development of infrastructure such as roads, ports, power supply, and telecommunications, which are essential for industrial growth.
(vi) Improved Competitiveness: FDI brings competition and pushes domestic companies to adopt better practices and improve product quality, leading to increased competitiveness in international markets.
(vii) Growth of Ancillary Industries: FDI promotes the development of supporting industries like logistics, packaging, and supply chain management, which further strengthens the business ecosystem.
(viii) Contribution to Government Revenue: Companies with FDI contribute to the government through taxes, duties, and licensing fees, increasing public revenue.
(ix) Regional Development: FDI promotes balanced regional development by investing in backward or underdeveloped regions, generating jobs and infrastructure there.
FDI in India – Current Scenario:
The Indian government has implemented policies to attract more FDI by easing regulations, offering tax incentives, and allowing automatic routes in many sectors like retail, telecom, and defense. ‘Make in India’, ‘Digital India’, and other initiatives have created a favorable environment for foreign investors.
Conclusion:
FDI plays a pivotal role in integrating India into the global economy. It accelerates growth, promotes industrialization, and brings modern technology and skills. For sustained growth, India needs to ensure investor-friendly policies, political stability, and a transparent regulatory framework.
The World Trade Organization (WTO) is an international organization that deals with the global rules of trade between nations. Established in 1995, the WTO replaced the General Agreement on Tariffs and Trade (GATT). Its main goal is to ensure that international trade flows smoothly, predictably, and freely.
Objectives of WTO:
(i) Promote Free Trade: The WTO aims to remove trade barriers and encourage free and fair trade among member nations.
(ii) Raise Living Standards: By promoting trade, the WTO aims to boost economic growth, create employment, and improve people’s living standards worldwide.
(iii) Ensure Fair Competition: The WTO sets rules to ensure fair competition and prevent unfair practices like dumping and subsidies.
(iv) Integrate Developing Countries: One of the key objectives is to help developing countries integrate into the global trading system by providing technical assistance and special provisions.
(v) Settle Trade Disputes: The WTO provides a platform to resolve disputes between member countries through a well-defined mechanism.
(vi) Reduce Trade Barriers: The organization works continuously to negotiate and reduce tariffs and other barriers to trade.
Functions of WTO:
(i) Administer Trade Agreements: The WTO administers and implements various multilateral trade agreements like GATT, GATS, TRIPS, etc.
(ii) Forum for Negotiations: It serves as a forum for trade negotiations and discussions among member countries to revise and update trade rules.
(iii) Handle Trade Disputes: The WTO’s Dispute Settlement Body (DSB) plays a crucial role in resolving trade conflicts between member countries impartially.
(iv) Monitor Trade Policies: Through Trade Policy Review Mechanism (TPRM), the WTO monitors and analyzes the trade policies and practices of member countries.
(v) Technical Assistance and Training: It provides training, technical support, and capacity-building to developing and least developed countries to help them participate effectively in global trade.
(vi) Cooperation with Other Organizations: The WTO cooperates with the International Monetary Fund (IMF) and World Bank to ensure global economic stability.
(vii) Transparency: The WTO promotes transparency by requiring member countries to publish their trade policies and regulations.
Conclusion:
The WTO plays a vital role in promoting a stable and transparent global trading environment. By setting rules, monitoring compliance, resolving disputes, and supporting developing countries, the WTO ensures that trade contributes to economic growth and development globally.
Meaning:
The Product Life Cycle (PLC) Theory explains the stages a product goes through from its introduction to decline. It was developed by Raymond Vernon in the 1960s. The PLC describes how sales of a product grow, peak, and eventually fall as the product becomes outdated or replaced by new innovations.
According to the theory, a product's life cycle has four stages:
(i) Introduction: The product is launched; sales are low, costs are high, and profits may be negative.
(ii) Growth: Sales increase rapidly as more customers adopt the product.
(iii) Maturity: Sales reach a peak and stabilize due to market saturation.
(iv) Decline: Sales fall as newer products replace the old one.
The PLC theory helps companies plan production, marketing, and sales strategies at each stage.
Defects of the Product Life Cycle Theory:
While the theory is useful, it has several limitations:
(i) Not Universally Applicable: Not all products follow a clear life cycle. Basic goods like salt or sugar stay in the maturity stage for decades.
(ii) Difficult to Identify Stages: It is often hard for managers to determine which stage a product is in, making it risky to plan marketing strategies.
(iii) Ignores External Factors: The theory does not consider economic changes, government policies, or sudden market disruptions that can alter a product's life cycle.
(iv) No Fixed Duration: The length of each stage is not fixed. Some products have very short life cycles (like fashion items), while others last for decades.
(v) Does Not Explain Decline Prevention: The theory assumes that all products will decline. But with innovation and rebranding, companies can extend a product's life.
(vi) Focus on Developed Countries: The original PLC theory assumes that products are developed in rich countries and later produced in poorer countries, but in today's world, innovation happens globally.
(vii) Underestimates Brand Power: Strong brands like Coca-Cola can remain in the maturity stage for an indefinite period due to customer loyalty.
(viii) Oversimplified Model: The real market is more dynamic than the PLC model suggests. Changes in customer taste and technology can reshape a product's path unexpectedly.
Meaning:
The Product Life Cycle (PLC) Theory explains the stages a product goes through from its introduction to decline. It was developed by Raymond Vernon in the 1960s. The PLC describes how sales of a product grow, peak, and eventually fall as the product becomes outdated or replaced by new innovations.
According to the theory, a product's life cycle has four stages:
(i) Introduction: The product is launched; sales are low, costs are high, and profits may be negative.
(ii) Growth: Sales increase rapidly as more customers adopt the product.
(iii) Maturity: Sales reach a peak and stabilize due to market saturation.
(iv) Decline: Sales fall as newer products replace the old one.
The PLC theory helps companies plan production, marketing, and sales strategies at each stage.
Defects of the Product Life Cycle Theory:
While the theory is useful, it has several limitations:
(i) Not Universally Applicable: Not all products follow a clear life cycle. Basic goods like salt or sugar stay in the maturity stage for decades.
(ii) Difficult to Identify Stages: It is often hard for managers to determine which stage a product is in, making it risky to plan marketing strategies.
(iii) Ignores External Factors: The theory does not consider economic changes, government policies, or sudden market disruptions that can alter a product's life cycle.
(iv) No Fixed Duration: The length of each stage is not fixed. Some products have very short life cycles (like fashion items), while others last for decades.
(v) Does Not Explain Decline Prevention: The theory assumes that all products will decline. But with innovation and rebranding, companies can extend a product's life.
(vi) Focus on Developed Countries: The original PLC theory assumes that products are developed in rich countries and later produced in poorer countries, but in today's world, innovation happens globally.
(vii) Underestimates Brand Power: Strong brands like Coca-Cola can remain in the maturity stage for an indefinite period due to customer loyalty.
(viii) Oversimplified Model: The real market is more dynamic than the PLC model suggests. Changes in customer taste and technology can reshape a product's path unexpectedly.
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