Q1. Explain PEST analysis. How is it used in international business?

Ans. PEST analysis is refers to the tool in which we have good technique to cover the entire factors which influence the business environment and making unfavorable conditions around us. So we need to use this technique to get over the problems with proper solutions. Hence we have to conclude the expert team who can cover up all these factors and make our market prospective more advance and wider in terms of sales.

Here we have some things which we have to think about it before applying it.

1. How much easy to put our domestic market business into international business.2. What benefit we get after foreign investment into another country.3. What is the nature of pure competition which is around our market and internationally

where we have huge numbers of competitors in unfamiliar conditions?

Here are the major factors of PEST which are playing important role as given below.

1. Political: In this we have to consider about the friendship of countries. If they are good friend than they will defiantly have strong tie ups with each other. Moreover some countries have good relations with each other which encourage the business around the world and the best example of this is European Union.

2. Economic: in this we have to consider all the factors which are playing role in economy. Before investing or start business in another country we have to study al the economic factors like GDP economic growth, income level, standard of living, poverty, employment opportunities etc.

3. Socio-cultural: In this we have to study society and cultural values of country. Because some countries are only use to prefer food with trade mark of HALAL which represent the Muslim community and we can’t ignore it. Few countries are similar upto certain extent otherwise every country is different than each other which make difference between them. So we need to familiar with each other’s culture and so that we can enhance our business in that country.

4. Technical: In this we have to see the technical things which are preferable in country. In this we also have to consider the various things like trend and innovations which are done in country. If they do many researches over the new technologies then we have to make our technology good then them. So that we can sell off our product easily.

Q2. Explain the various incoterms involved in international contract?

Ans. Incoterms are the basic thing of every international contract in which we have various payment options. So that we can get our payment in that mode of we have to sell our goods on that payment terms which is recognized under international law. This is good prospective by international chamber of commerce. Because by applying this we have proper way to sell goods and purchase goods on particular terms and it is universal at world level.

Here we have some incoterms as given below which are generally used by importers and exporters while making contract to each other.

1. Ex works: Ex works is refers to the term in which manufacturer sells goods to buyer with all cost in their manufacturing unit.

2. Free on Rail, Free on truck: FOR and FOT both are used by manufacturer to send goods on buyer’s request to their desire destination.

3. Free alongside ship: In this we have to put goods alongside of ship and notified the buyer. In this buyer already get freight booked with shipping line and catch the vessel and send goods to desired destination port.

4. Free on board: in this exporter have responsibility till the goods are not board on the ship. In this we have to put our cost increase and this term treated as FOB.

5. Cost and freight: In this we have to the contract with buyer only the cost of goods and plus freight included in the final invoice. .

6. Cost insurance freight: In exporter of goods put cost, insurance and freight till goods are not reached the port.

7. Freight or carriage paid: In this freight is already paid by seller to shipping line.8. EXS/Ex-Ship: in this seller bear all cost of insurance, loading, and losses till shipment

don’t reach its final destination.9. EXQ/Ex-quay: This is same like ex ship but in this we have only that risk is not bear by

seller until shipment don’t reach final port.10. Delivered at frontier.11. Delivery duty paid: In this we seller ensure buyer to send goods to his destination as

buyer’s warehouse and in that every transportation and duty will be paid by seller.12. FAQ/FOB airport: in this we have cost till goods are board in aircraft which has to take

goods to final destination.13. Free carrier: In this seller has is responsible for all losses and he has responsibility of all

cost till he doesn’t deliver goods to buyer. It can be seller’s premises. 14. Freight carriage and insurance paid. In this we have freight charges and insurance cost

paid by seller which ultimately increases the cost of product.

Q3. Discuss the general principles of the Law of Contract. What is an agreement?

Ans. Law of contract is refers to the law which comes under this section and we have to proceed the various things to contract or agreement as per this. In this when we have to send our offers to any person and after checking all the things then he accepts that offer without any alteration. In this condition we can say as mirror image. If there is any mismatch of any condition or any offer terms is refers as the contract need to amendment as per the requirement of buyer. Although we have to work upon the request of buyer. If we satisfy our buyers then they will contact us again and we have another order in future.

Here we have to point which required making a proper contract as given below.

1. A contract is formulated by an offer and an acceptance: in this we have proper contract in that we have various terms and conditions which need to make as supplier/manufacturer of any product/services. Because we need to be on safer side instead of making losses from our transactions. Hence first of all we need to make proper terms and conditions which make our contract more secure. In every start we have an offer which we have to give and other party have to accept it after checking all the terms and conditions.

2. An offer contains all the important terms of payment: An offer should contains all terms and conditions which comes under various parts of that offer. Every terms and conditions is to be shown while we make offer to concerned person and he should know all the prospective of that offer. If there we don’t have mentioned price or quantity then it will be difficult us to make what size and description of goods required by customer and how much quantity he requires.

3. Performance of contracts: In this term both has to agree after coming into contract. Both must fulfill the requirement of contract. After coming into contract we can’t make changes our own without intimating the buyer or supplier. Because that will leads to misunderstanding and it make contract void which we can say one sided. If both parties fulfill contract terms properly then it will be successful completion of contract performance.

Agreement is refers to the terms and conditions which makes every contract proper bound o fulfill according to the various terms and conditions which complies with that contract. Agreement is useful while coming into contract wherever we dealing with.

Q4. Write short notes on: a) Letter of credit

Ans. A written commitment to pay, by a buyer’s or importer’s bank (called the issuing bank) to the seller’s or exporter’s bank (called the accepting bank, negotiating bank or paying bank)

A letter of credit guarantees payment of a specified sum in a specified currency, provided the seller meets precisely-defined conditions and submits the prescribed documents within a fixed timeframe. These documents almost always include a clean bill of lading or air waybill, commercial invoice and certificate of origin. To establish a letter of credit in favor of the seller or exporter (called the beneficiary) the buyer (called the applicant or account party) either pays the specified sum (plus service charges) up front to the issuing bank, or negotiates credit. Letters of credit are formal trade instruments and are used usually where the seller is unwilling to extend credit to the buyer. In effect, a letter of credit substitutes the creditworthiness of a bank for the creditworthiness of the buyer. Thus, the international banking system acts as an intermediary between far flung exporters and importers. However, the banking system does not take on any responsibility for the quality of goods, genuineness of documents, or any other provision in the contract of sale.

b) Export financing

Ans. Export financing is refers to the financing for the export order to exporters. In this we have different prospects in which we have to make shipments according to the financing of funds from bank. While taking finance facilities we have to keep various things in mind that we have to repay it and on proper time. Here we have some types which are generally used in export financing.

1. Pre shipment: In this we can take finance from bank and get our production start and make shipment of goods.

2. Post shipment: In this we can take finance till we don’t make shipment of goods and after making shipment of goods we have to repay the finance as per guidelines of bank.

3. Short term finance: In this we have both options pre shipment and post shipment of finance in which we can’t take finance more than 180 days. This is only for short terms finance purpose.

4. Long term finance: Long term finance means we can take finance for long term use which is more than 180 days as per banking guidelines.

Q5. Discuss the rights of an unpaid seller. What are the remedies available to the buyer against seller for breach of contract?

Ans. Unpaid seller is refers to the seller who is unpaid by the buyer. As he also have some right to get his payment. Moreover he also can sue the buyer in terms if he doesn’t make any payment or any reply over the payment. According to section 45 here we have some terms which we need to give attention when seller is unpaid.

1. In this if buyer has not paid amount as requested by seller or not fulfill the contract as agreed.

2. In this after making bill of exchange buyer don’t entertain the terms and conditions of bill exchange which make him dishonor of the agreement.

In sub section 2 sellers have different rights against buyer.

1. Right against goods.2. Right against buyer personally.

Here we have buyer’s remedies against seller for breach of contract.

1. Suit for damages of non delivery: In this buyer can sue seller against non receipt of goods as per agreed time period given by seller. Moreover buyer can also take compensation from seller what the difference between prices which is fluctuating in time of non delivery of goods.

2. Suit for price: Buyer can also sue seller form higher price than market price which should be nominal.

3. Suit for specific performance: In this buyer can sue the seller against non performance of goods as per his expectations. Because every buyer pay the amount for the goods which he want to perform up to his expectations levels. For example of rare watch and unique gun which should have proof for their uniqueness and they should certified with proper authority.

4. Suit for breach of warranty: in this case if buyer don’t get proper warranty services from the seller than he can sue the seller and get compensation from them as much as losses occur in that damages

5. Suit for damage the reputation of contract before due date: In this buyer can sue seller for delay in shipment of goods and making lose. While calculating losses we can sue seller for damage the reputation of contract.

6. Suit for interest: In this after making the final amount we can sue seller with difference of price which was agreed as compare to present market price.

Q6. What are the modes of settlement of disputes in international business? Discuss.

Ans. In this we have a council who observe the problem which is facing by various countries with each other and it helps them to resolve it peacefully and respect each other. This is basic of every problem to resolve at their own level with implementing various below given tools.

Here we have various modes of settlement of disputes in international business.

1. Arbitration: In this both parties are agreed to settle their dispute by involving third party in their case to represent them. After submitting all evidence to the court then it will study whole things under their study and they will revert us after checking all things study their own.

2. Arbitration often is contractual: in this both parties agree to resolve the dispute thru with their expression of evidence along with their representatives along side. This is contractual in term because they both use arbitrator as per their suitability.

3. Judicial settlement: In this we have international court of justice which is organization of United Nations. Every party can go to UN and submit their proofs which are apply by the various companies and it will make a result after studying all the proofs related to matter. This is highest court of every international business. Here we have many experts who are from various countries to represent their client and they want to get results from judiciary.

4. Negotiations: Negotiations are the basic thing which we can use to resolve the problems sometimes are coming up in our business. In this both parties comes in contact to each other. They resolve their problems by negotiation with each other. Otherwise they just go to court and file their cases against each other.

5. Good offices: In this if two states have dispute with each other then third party can open office and do their work. This will make both states to resolve dispute and work with each other by making proper coordination.

6. Mediation: In this mediation we have third to enter between both parties who are facing conflict between each other. In this mediation helps both parties to come to an end with proper solution and work properly for better of their country.

7. Conciliation: In this both parties use conciliator who play role in both parties. He resolves the problem by checking both parties’ requirement and take action upon the reaction of each other. In this he make healthy environment where parties can talk with any stress or tension.

8. Enquiry: in this we have to make enquiry with both parties and check that where they are lacking their understanding with each other. This whole thing is to investigate by agency and they find out solution also.