KSLU Solved Question Papers
International Business
Previous Year Question Paper with Solution
B.Com. LL.B. (Five Years) · Sem 4
2025 Jan Examination
munotes.in
Mumbai
B.Com. LL.B. (Five Years) Sem 4 International Business 2025 Jan Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2025 Jan examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2025 Jan examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2025 Jan examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note/problem is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answers should be written either in English or Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)What is International Business ? Discuss the reasons why a country enters in to International Business ?[10]
Answer
For full marks, cover: the meaning and scope of international business; the reasons why a country takes part in it: differences in resources, specialisation and comparative advantage, larger markets and economies of scale, earning foreign exchange, obtaining essential imports, access to technology and capital, growth and employment, competition and efficiency, consumer welfare, stability and diplomacy; India's reasons with official figures; and a conclusion.
What is international business?
International business means all commercial transactions that take place across national borders. It includes the export and import of goods, trade in services, foreign investment, licensing, franchising and the work of multinational corporations. It is wider than international trade, which covers only the exchange of goods and services.
The scope of international business therefore covers:
- merchandise exports and imports;
- exports and imports of services, such as software, tourism and banking;
- foreign direct investment and portfolio investment;
- licensing, franchising and management contracts; and
- the operations of multinational firms in many countries.
Why a country enters into international business
- Unequal spread of resources. No country has all the resources it needs. Some have oil, some have fertile land, some have skilled labour. Trade lets each country obtain what it lacks.
- Specialisation and comparative advantage. A country gains by specialising in goods it can produce at a lower opportunity cost than others, and trading them for other goods. Total world output and welfare rise.
- Larger markets and economies of scale. The home market may be too small for efficient production. Selling abroad lets firms produce on a large scale and lower costs.
- Earning foreign exchange. Exports earn foreign currency, which a country needs to pay for imports and foreign debts.
- Essential imports. A country must import goods it cannot produce enough of, such as crude oil, fertilisers, machinery and certain medicines.
- Access to technology and capital. Trade and foreign investment bring in modern technology, machines and capital.
- Economic growth and employment. Export industries create jobs and raise incomes. Trade also brings new skills and ideas.
- Competition and efficiency. Foreign competition pushes domestic firms to cut costs and improve quality.
- Consumer welfare. Consumers get more choice, better quality and often lower prices.
- Stability. Selling in many markets reduces dependence on the home market and smooths out shocks.
- Diplomacy and influence. Trade ties strengthen friendly relations and a country's voice in world affairs.
A simple illustration of gains from specialisation
Take a simple example. In one day, a worker in Country A can make 10 units of software or 5 units of cloth. A worker in Country B can make 2 units of software or 4 units of cloth. For each unit of software, A gives up half a unit of cloth, while B gives up 2 units. So A has the comparative advantage in software and B in cloth. Now let A move 4 workers from cloth to software, and B move 5 workers from software to cloth. A gains 40 units of software and loses 20 of cloth. B gains 20 units of cloth and loses 10 of software. Cloth output is unchanged, but the two countries together have 30 more units of software to share through trade. This is why countries trade even when one is better at making everything.
Risks a country accepts
Entering international business is not free of cost. A country becomes exposed to world price swings, foreign recessions, exchange rate changes and the trade policies of other countries. Some domestic industries may shrink under import competition. A country therefore opens up step by step and keeps safeguards, such as the power to restrict imports that cause serious injury to domestic industry.
India's reasons, with evidence
- Foreign exchange and stability. In March 1991, India's reserves had fallen to about USD 5.8 billion, enough for only about 1.3 months of imports. Trade and investment since then raised reserves to USD 701.4 billion by 16 January 2026.
- Export earnings. India's exports of goods and services reached a record USD 863.1 billion in 2025-26.
- Essential imports. India imports much of its crude oil and many electronic goods. Its merchandise imports were about USD 775 billion in 2025-26 (provisional), which exports and remittances help pay for.
- Comparative advantage in services. India's skilled, English-speaking workforce gave it an edge in IT and business services. Services exports reached USD 421.3 billion in 2025-26.
- Capital and technology. India received a total FDI inflow of about USD 94.5 billion in 2025-26 (provisional).
- Market access. India signs trade agreements to open foreign markets for its producers. Examples are those with the UAE (in force 1 May 2022) and the United Kingdom (in force 15 July 2026).
Summary table
| Reason | What the country gains | Indian example |
|---|---|---|
| Resources | Goods it lacks | Crude oil imports |
| Comparative advantage | Higher output and income | IT services exports |
| Foreign exchange | Ability to pay for imports | Record reserves in 2026 |
| Capital and technology | Modern industry | FDI inflows |
| Market access | Larger markets | Trade agreements |
Conclusion. International business is trade, investment and other business activity across national borders. A country enters into it because resources are unevenly spread and because specialisation raises output. It also needs larger markets, foreign exchange, essential imports, technology and capital. It also gains growth, jobs, efficiency, consumer welfare, stability and influence. India's journey from the reserve crisis of 1991 to record exports in 2025-26 shows these reasons at work.
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