CBSE Class 11 Business Studies Chapter 11: International Business-I NCERT Solutions

Reviewed by NCERT Help Editorial Team · Updated on 29 Jul 2026

NCERT Solutions PDF Class 11 PDF

This chapter delves into the fundamental concepts of International Business for Class 11 Business Studies students. It explores various modes of entering foreign markets, such as licensing, franchising, contract manufacturing, and joint ventures, explaining the associated risks and benefits. The solutions also highlight the advantages of international trade, including optimal resource utilization, increased standard of living, and economies of scale through large-scale production. Furthermore, it touches upon the underlying reasons for trade between nations, rooted in the theory of comparative cost advantage due to uneven resource distribution. These NCERT Solutions provide clear, step-by-step explanations to help students understand complex topics, prepare for exams, and build a strong foundation in international business principles.

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Board	CBSE
Class	Class 11
Subject	Business Studies
Session	2026
Language	English
Type	NCERT Solutions
Chapter	11 International Business-I

Chapter summary

Chapter 11, 'International Business-I,' focuses on the foundational aspects of engaging in business beyond national borders. The NCERT Solutions cover key entry strategies like licensing, franchising, contract manufacturing, and joint ventures, detailing their pros and cons. It also explains the core advantages of international trade, such as efficient resource allocation and improved living standards, and the economic rationale behind trade between countries based on comparative advantage. This chapter is crucial for understanding global business operations.

Learning outcomes

Understand the different modes of entering international markets.
Analyze the advantages and risks associated with various international business entry strategies.
Explain the benefits of international trade for nations.
Identify the primary reasons for trade between countries.
Differentiate between international trade and international business.
Recognize India's major export and import items and trading partners.

Topics covered

Paper topics

International Business
International Trade
Modes of Entry
Licensing
Franchising
Contract Manufacturing
Joint Ventures
Wholly Owned Subsidiary
Advantages of International Business
Reasons for International Trade
Comparative Cost Advantage
India's Export and Import Items
India's Trading Partners

Important topics

Modes of International Business Entry
Advantages of International Business
Theory of Comparative Cost Advantage
Difference between International Trade and Business
India's Major Export/Import Items and Partners

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Questions and Solutions

Multiple Choice Questions

Question 1. In which of the following modes of entry, does the domestic manufacturer give the right to use intellectual property such as patent and trademark to a manufacturer in a foreign country for a fee? (a) Licensing (b) Contract manufacturing (c) Joint venture (d) None of these

Solution: The correct option is (a) Licensing. Licensing is a mode of entry where a company (licensor) grants rights to another company (licensee) in a foreign country to use its intellectual property, such as patents, trademarks, or technology, in return for a fee or royalty.

Question 2. Outsourcing a part of or entire production and concentrating on marketing operations in international business is known as: (a) Licensing (b) Franchising (c) Contract manufacturing (d) Joint venture

Solution: The correct option is (c) Contract manufacturing. In contract manufacturing, a firm outsources its production to a manufacturer in a foreign country while retaining control over marketing and distribution of the final product.

Question 3. When two or more firms come together to create a new business entity that is legally separate and distinct from its parents it is known as: (a) Contract manufacturing (b) Franchising (c) Joint ventures (d) Licensing

Solution: The correct option is (c) Joint ventures. A joint venture is a strategic alliance where two or more companies pool their resources to form a new, independent business entity to pursue a specific business objective.

Question 4. Which of the following is not an advantage of exporting? (a) Easier way to enter into international markets (b) Comparatively lower risks (c) Limited presence in foreign markets (d) Less investment requirements

Solution: The correct option is (c) Limited presence in foreign markets. While exporting is an easier entry mode with lower risks and investment, it often leads to a limited presence and control in foreign markets, which is generally considered a disadvantage rather than an advantage.

Question 5. Which one of the following modes of entry requires a higher level of risks? (a) Licensing (b) Franchising (c) Contract manufacturing (d) Joint venture

Solution: The correct option is (d) Joint venture. While licensing, franchising, and contract manufacturing involve certain risks, joint ventures often entail higher risks due to shared control, significant investment, and potential conflicts between partners.

Question 6. Which one of the following modes of entry permits a greater degree of control over overseas operations? (a) Licensing/franchising (b) Wholly owned subsidiary (c) Contract manufacturing (d) Joint venture

Solution: The correct option is (b) Wholly owned subsidiary. In a wholly owned subsidiary, the parent company has complete ownership and thus the highest degree of control over its operations in the foreign market.

Question 7. Which one of the following modes of entry brings the firm closer to international markets? (a) Licensing (b) Franchising (c) Contract manufacturing (d) Joint venture

Solution: The correct option is (d) Joint venture. Joint ventures, along with direct investment modes like wholly owned subsidiaries, bring the firm physically and operationally closer to the international markets compared to licensing or contract manufacturing.

Question 8. Which one of the following is not amongst India's major export items? (a) Textiles and garments (b) Gems and jewellery (c) Oil and petroleum products (d) Basmati rice

Solution: The correct option is (c) Oil and petroleum products. While India exports some petroleum products, it is a major net importer of crude oil and refined petroleum products. Textiles, gems and jewellery, and Basmati rice are significant export items for India.

Question 9. Which one of the following is not amongst India's major import items? (a) Ayurvedic medicines (b) Oil and petroleum products (c) Pearls and precious stones (d) Machinery

Solution: The correct option is (a) Ayurvedic medicines. India is a significant exporter of Ayurvedic medicines. Major import items for India include oil and petroleum products, pearls and precious stones, machinery, electronic goods, and chemicals.

Question 10. Which one of the following is not amongst India's major trading partners? (a) USA (b) UK (c) Germany (d) New Zealand

Solution: The correct option is (d) New Zealand. India's major trading partners typically include countries like the USA, UAE, China, Japan, South Korea, Germany, and the UK. New Zealand is a trading partner but not among the largest.

Short Answer Type Questions

Question 1. Differentiate between international trade and international business.

Solution: The fundamental difference between international trade and international business lies in their scope and activities:

Scope: International trade is a component of international business. It specifically refers to the exchange of goods (exports and imports) across national borders. International business, on the other hand, is much broader, encompassing all business activities that cross national boundaries, including trade in services, foreign direct investment (FDI), licensing, franchising, contract manufacturing, and setting up wholly owned subsidiaries.
Activities Included: International trade primarily involves the buying and selling of tangible goods. International business includes trade in services (like tourism, banking, transportation, communication), foreign investments, technology transfer, and managing international operations.
Complexity: International business is generally more complex than international trade due to factors like managing different legal systems, cultural differences, currency fluctuations, and diverse political environments.

\nIn essence, international trade is a part of the larger domain of international business.

Question 2. Discuss any three advantages of international business.

Solution: International business offers several advantages to participating nations and firms. Here are three key advantages:

Optimum Utilization of Resources: International trade allows countries to specialize in producing goods and services where they have a comparative advantage, leading to more efficient use of their natural and human resources. This specialization prevents wastage and ensures that resources are employed in their most productive uses. It also helps in stabilizing prices by bridging supply-demand gaps across nations.
Increased Standard of Living: By facilitating access to a wider variety of goods and services, including those that a country cannot produce domestically, international business enhances consumer choice and welfare. Increased production to meet global demand also leads to higher employment opportunities and income levels, thereby raising the overall standard of living for the population.
Large Scale Production and Economies of Scale: Access to international markets allows firms to expand their production beyond domestic demand. This enables them to achieve large-scale production, which often leads to significant cost reductions through internal economies of scale (e.g., bulk purchasing, specialization of labor, efficient use of machinery). Lower production costs can translate into competitive pricing and higher profitability.

Question 3. What is the major reason underlying trade between nations?

Solution: The major reason underlying trade between nations is the **theory of comparative cost advantage**. This theory posits that countries engage in international trade because they cannot produce all commodities equally well or cheaply. Resources (like raw materials, labor, capital, and technology) are distributed unevenly across the globe. Consequently, some countries have an abundance of certain resources and can produce specific goods more efficiently and at a lower cost than others. Conversely, they may be scarce in resources needed for other goods. International trade allows countries to specialize in producing goods where they have a comparative advantage (i.e., can produce at a lower opportunity cost) and trade with other nations for goods where they have a comparative disadvantage. This specialization and exchange benefit all participating countries by increasing overall global production and consumption.

Common mistakes

Confusing the scope of international trade with international business.
Underestimating the risks involved in certain modes of international market entry.
Not fully grasping the concept of comparative cost advantage as the basis for trade.
Failing to distinguish between different entry modes like licensing and franchising.

Revision tips

Create a table comparing the advantages and disadvantages of each mode of entry.
Focus on understanding the 'why' behind international trade – the theory of comparative advantage.
Review India's trade data (exports/imports/partners) to connect theory with practice.
Practice differentiating between international trade and international business with examples.

Practice MCQs

Q1. Which mode of entry involves granting rights to use intellectual property like patents and trademarks in a foreign country for a fee?

Q2. Outsourcing production while focusing on marketing in international business is known as:

Q3. When two or more firms create a new, distinct business entity, it is called:

Q4. Which of the following is NOT considered an advantage of exporting?

Q5. Which mode of entry generally involves a higher level of risk?

Q6. Which entry mode allows for the greatest degree of control over overseas operations?

Q7. The primary reason for trade between nations is based on the theory of:

Frequently asked questions

What is the main difference between international trade and international business?

International trade involves the exchange of goods (exports and imports), while international business is a broader concept that includes trade in services, foreign direct investments, contract manufacturing, and setting up subsidiaries, encompassing all business activities across national borders.

What are the key modes of entering international markets discussed in this chapter?

The chapter discusses several modes of entry, including licensing, franchising, contract manufacturing, joint ventures, and wholly owned subsidiaries.

Why do countries engage in international trade?

Countries trade because resources are unevenly distributed, meaning no single country can produce all goods equally well or cheaply. This leads to the theory of comparative cost advantage, where countries specialize in producing goods they are relatively more efficient at.

What are the benefits of international business for a country?

International business offers advantages such as the optimum use of resources, increased standard of living through access to more goods and employment, and enabling large-scale production which reduces costs.

Which mode of entry offers the most control over operations?

A wholly owned subsidiary offers the greatest degree of control over overseas operations because the parent company owns the entire foreign entity.

How can understanding India's trade partners help a student?

Knowing India's major trading partners helps students connect theoretical concepts of international trade with real-world economic relationships and India's position in the global market.

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