Total No. of Questions : 5] SEAT No.

PA-3747 [Total No. of Pages : 3

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M.B.A.
SC-IB-02 : Global Trade and Logistics Management
(2019 Pattern) (Semester - IV) (404IB)
Time : 2½ Hours] [Max. Marks : 50
Instructions to the candidates :
1) All questions are compulsory.
2) All questions carry equal marks.

Q1) Solve any Five :

a) What is full form of CHA?

b) Which of the following theories suggests that firms seek to penetrate

new markets over time?

i) Imperfect market theory

ii) Product cycle theory

iii) Theory of Comparative Advantage

iv) None of the above

c) Market in which currencies buy and sell and their prices settle on is
called the

i) International bond market

ii) International capital market

iii) Foreign exchange market

iv) Euro currency market

 d) Explain barter system practiced among various tribal communities in the
word.

e) What are the freight types?

f) Define and explain exworks.

g) Define and explain FOB.

h) Define and explain FCA.

a) What is full form of CHA?

CHA stands for Customs House Agent. A CHA is a person or company that is
licensed to act on behalf of importers and exporters to clear goods through
customs. CHAs provide a range of services, including:
• Preparation of customs documentation
• Negotiation of customs duties
• Arrangement of transport and storage
• Provision of customs clearance advice

b) Which of the following theories suggests that firms seek to penetrate new
markets over time?
The answer is (ii) Product cycle theory. The product cycle theory is a theory of
international trade that suggests that firms tend to start production in their home
market and then gradually move production to other markets as the product
matures. The theory argues that firms initially produce goods in their home market
because it is easier to do so. However, as the product matures, the firm may find it
more profitable to produce the product in other markets where labor costs are
lower.

c) Market in which currencies buy and sell and their prices settle on is called the
The answer is (iii) Foreign exchange market. The foreign exchange market is a
global marketplace where currencies are traded. It is the largest financial market in
the world, with a daily trading volume of over $5 trillion.
d) Explain barter system practiced among various tribal communities in the world.
The barter system is a system of exchange in which goods or services are traded
directly for other goods or services without the use of money. Barter systems have
been practiced by various tribal communities throughout history. In some cases,
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barter systems are still used today.
There are a number of advantages to using a barter system. For example, it can
help to reduce the need for money, which can be scarce in some communities.
Additionally, barter systems can help to build relationships between people and
communities.
However, there are also some disadvantages to using a barter system. For example,
it can be difficult to find someone who has the goods or services that you want and
who is willing to trade them for the goods or services that you have. Additionally,
barter systems can be inefficient, as they can require a lot of time and effort to
negotiate trades.

e) What are the freight types?

There are four main types of freight:
• Ocean freight: This is the most common type of freight and is used to
transport goods by sea.
• Air freight: This is a faster and more expensive type of freight and is used to
transport goods by air.
• Rail freight: This is a slower but more cost-effective type of freight and is
used to transport goods by rail.
• Road freight: This is the fastest type of freight and is used to transport goods
by road.

f) Define and explain exworks.

Exworks is a term used in international trade to describe a type of delivery where
the seller delivers the goods to the buyer's premises, but the buyer is responsible
for all costs and risks associated with the goods from that point onwards.

g) Define and explain FOB.

FOB stands for "Free on Board". It is a term used in international trade to describe
a type of delivery where the seller delivers the goods to the buyer's ship, but the
buyer is responsible for all costs and risks associated with the goods from that
point onwards.

h) Define and explain FCA.

FCA stands for "Free Carrier". It is a term used in international trade to describe a
type of delivery where the seller delivers the goods to the buyer's carrier, but the
buyer is responsible for all costs and risks associated with the goods from that
point onwards.

Q2) Solve Any Two :

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 a) Define and explain INCOTERM.

Here is the definition and explanation of INCOTERM:

INCOTERMS, or International Commercial Terms, are a set of standardized terms
used in international trade to define the responsibilities of the buyer and seller for
the costs and risks associated with the transportation of goods. INCOTERMS are
published by the International Chamber of Commerce (ICC).
There are 11 INCOTERMS, each of which is a three-letter acronym. The first
letter indicates the mode of transport, while the second and third letters indicate
the point at which the buyer takes responsibility for the goods.
For example, EXW stands for "Ex Works," which means that the seller delivers
the goods to the buyer's premises, but the buyer is responsible for all costs and
risks associated with the goods from that point onwards.
INCOTERMS are used by businesses around the world to ensure that there is a
clear understanding of the responsibilities of the buyer and seller for the
transportation of goods. This helps to avoid disputes and to ensure that the goods
are delivered smoothly and efficiently.
Here is a table of the 11 INCOTERMS:
INCOTERM Meaning Mode of Transport
EXW Ex Works Any mode
FCA Free Carrier Any mode
CPT Carriage Paid To Any mode
CIP Carriage and Insurance Paid To Any mode
DAP Delivered At Place Any mode
DPU Delivered at Place Unloaded Any mode
DDP Delivered Duty Paid Any mode
FAS Free Alongside Ship Sea
FOB Free on Board Sea
CFR Cost and Freight Sea
CIF Cost, Insurance and Freight Sea
INCOTERMS are updated every few years to reflect changes in the way that
goods are transported. The current version of INCOTERMS is INCOTERMS
2020.

b) Explain Third Party Logistics.

Here is an explanation of third-party logistics (3PL):
Third-party logistics (3PL) is a business model in which a company outsources its
logistics operations to a third-party provider. 3PL providers offer a wide range of
services, including warehousing, transportation, and customs clearance.
3PL providers can help businesses to improve their efficiency and reduce their
costs. They can also help businesses to expand into new markets and to comply

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with government regulations.
Here are some of the benefits of using a 3PL provider:
• Improved efficiency: 3PL providers can help businesses to improve their
efficiency by taking over the day-to-day logistics operations. This can free
up businesses to focus on their core competencies.
• Reduced costs: 3PL providers can help businesses to reduce their costs by
negotiating better rates with carriers and by optimizing their supply chain.
• Expanded reach: 3PL providers can help businesses to expand into new
markets by providing access to their network of warehouses and
transportation partners.
• Compliance: 3PL providers can help businesses to comply with government
regulations by handling the documentation and paperwork associated with
shipping goods.
Here are some of the risks of using a 3PL provider:
• Loss of control: When businesses outsource their logistics operations to a
3PL provider, they lose some control over the process. This can be a risk if
the 3PL provider does not meet the business's expectations.
• Data security: 3PL providers handle a lot of sensitive data, such as customer
information and financial data. Businesses need to make sure that the 3PL
provider has strong data security measures in place.
• Dependency: Businesses that rely on a 3PL provider for their logistics
operations may become too dependent on the provider. This can be a risk if
the provider goes out of business or if the relationship between the business
and the provider sours.
Overall, 3PL can be a valuable tool for businesses that need to improve their
logistics efficiency and reduce their costs. However, businesses need to carefully
consider the risks before outsourcing their logistics operations to a 3PL provider.

c) Explain Comparative Cost advantage theory.

Here is an explanation of the comparative cost advantage theory:

The comparative cost advantage theory is a theory of international trade that
suggests that countries should specialize in the production of goods and services
that they can produce more efficiently than other countries. This theory is based on
the idea that countries have different levels of productivity, which means that they
can produce some goods and services at a lower cost than other countries.
The comparative cost advantage theory was first developed by David Ricardo in
the 19th century. Ricardo argued that countries should specialize in the production
of goods and services that they have a comparative advantage in, meaning that
they can produce those goods and services at a lower opportunity cost than other
countries.
For example, if a country has a comparative advantage in the production of wheat,
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it should specialize in the production of wheat and export wheat to other countries
that do not have a comparative advantage in the production of wheat. This will
allow the country to produce more wheat with its available resources, and it will
also allow the country to import goods and services that it cannot produce as
efficiently.
The comparative cost advantage theory has been used to explain why countries
trade with each other. It is also a powerful tool for understanding international
trade. It can help businesses to make decisions about where to produce goods and
services, and it can help governments to develop trade policies.
Here are some of the benefits of the comparative cost advantage theory:
• Increased efficiency: Countries can specialize in the production of goods
and services that they have a comparative advantage in, which can lead to
increased efficiency.
• Increased trade: Countries can trade goods and services with each other,
which can lead to increased economic growth.
• Increased specialization: Countries can specialize in the production of goods
and services that they have a comparative advantage in, which can lead to
increased innovation.
Here are some of the limitations of the comparative cost advantage theory:
• It does not take into account transportation costs: Transportation costs can
make it difficult for countries to trade goods and services with each other.
• It does not take into account government policies: Government policies,
such as tariffs and quotas, can also affect trade.
• It does not take into account economies of scale: Economies of scale can
make it difficult for countries to compete with each other in the production
of certain goods and services.
Overall, the comparative cost advantage theory is a valuable tool for understanding
international trade. However, it is important to be aware of its limitations when
using it to make decisions about trade policy.
I hope this helps! Let me know if you have any other questions.

Q3) Solve Any One :

a) Explain Global Trade and it’s significance.

Here is an explanation of global trade and its significance:
Global trade is the exchange of goods and services between countries. It is a major
driver of economic growth and prosperity. Global trade allows countries to
specialize in the production of goods and services that they have a comparative
advantage in, which leads to increased efficiency and productivity. Global trade
also allows countries to access goods and services that they cannot produce
domestically, which improves the standard of living for consumers.
Here are some of the benefits of global trade:
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 • Increased efficiency: Countries can specialize in the production of goods
and services that they have a comparative advantage in, which leads to
increased efficiency.
• Increased productivity: Countries can specialize in the production of goods
and services that they have a comparative advantage in, which leads to
increased productivity.
• Increased innovation: Countries can compete with each other to produce the
best goods and services, which leads to increased innovation.
• Increased consumer choice: Consumers have access to a wider range of
goods and services when countries trade with each other.
• Increased economic growth: Global trade is a major driver of economic
growth and prosperity.
Here are some of the challenges of global trade:
• Trade barriers: Countries can impose trade barriers, such as tariffs and
quotas, which can make it difficult to trade goods and services.
• Currency fluctuations: Currency fluctuations can make it difficult to trade
goods and services.
• Political instability: Political instability can make it difficult to trade goods
and services.
• Environmental impact: Global trade can have a negative impact on the
environment.
Overall, global trade is a complex and multifaceted issue. It has both benefits and
challenges. However, the benefits of global trade generally outweigh the
challenges.
Here are some additional points about the significance of global trade:
• Global trade is a major source of jobs: Global trade creates jobs in both
exporting and importing countries. In exporting countries, jobs are created
in the production and transportation of goods and services. In importing
countries, jobs are created in the distribution and sale of goods and services.
• Global trade promotes peace: Global trade can help to promote peace
between countries by increasing interdependence and reducing the risk of
conflict.
• Global trade helps to reduce poverty: Global trade can help to reduce
poverty by providing developing countries with access to new markets and
technologies.

b) Explain types of warehouse used for import & export of goods.

There are four main types of warehouse used for import and export of goods:
• Bonded warehouses: These warehouses are located in customs-bonded areas
and are used to store goods that are not yet cleared for import or export.
Goods in bonded warehouses are not subject to duty or taxes until they are
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 cleared.
• Container freight stations (CFS): These warehouses are used to store and
consolidate containers of goods that are being imported or exported. CFSs
typically have large yards where containers can be stacked and stored.
• Cold storage warehouses: These warehouses are used to store perishable
goods, such as food and produce. Cold storage warehouses have
temperature-controlled environments that keep goods at a constant
temperature.
• Distribution centers: These warehouses are used to store and distribute
goods to retailers and consumers. Distribution centers are typically located
near major transportation hubs, such as airports and seaports.
The type of warehouse that is best for a particular import or export shipment will
depend on the specific requirements of the shipment. For example, if a shipment
contains perishable goods, it will need to be stored in a cold storage warehouse. If
a shipment contains goods that are not yet cleared for import or export, it will need
to be stored in a bonded warehouse.
Here are some of the factors that businesses need to consider when choosing a
warehouse for import and export of goods:
• The type of goods being stored: The type of goods being stored will
determine the type of warehouse that is needed. For example, perishable
goods need to be stored in a cold storage warehouse, while goods that are
not yet cleared for import or export need to be stored in a bonded
warehouse.
• The size of the shipment: The size of the shipment will determine the size of
the warehouse that is needed. For example, a large shipment of goods will
need a larger warehouse than a small shipment of goods.
• The location of the warehouse: The location of the warehouse will
determine the transportation costs associated with the shipment. For
example, a warehouse that is located near a major transportation hub will
have lower transportation costs than a warehouse that is located in a remote
location.
• The security of the warehouse: The security of the warehouse is important to
protect the goods from theft and damage. Warehouses with good security
measures will typically have higher rates than warehouses with poor
security measures.

Q4) Solve Any One :

a) Explain different modes of operation of shipping.

Here are the different modes of operation of shipping:
• Ocean freight: This is the most common mode of shipping and is used to
transport goods by sea. Ocean freight is a cost-effective way to transport
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 large quantities of goods over long distances.
• Air freight: This is a faster and more expensive mode of shipping than ocean
freight. Air freight is used to transport goods that need to be delivered
quickly, such as perishable goods or high-value goods.
• Rail freight: This is a slower but more cost-effective mode of shipping than
ocean freight. Rail freight is used to transport goods over long distances,
especially within a country or region.
• Road freight: This is the fastest mode of shipping within a country or region.
Road freight is used to transport goods over short distances, such as from a
warehouse to a store.
• Pipeline freight: This is a mode of shipping that is used to transport liquids
and gases over long distances. Pipelines are a cost-effective way to transport
large quantities of liquids and gases.
The mode of shipping that is best for a particular shipment will depend on the
specific requirements of the shipment. For example, if a shipment needs to be
delivered quickly, air freight would be the best option. If a shipment needs to be
transported over a long distance, ocean freight would be the best option.
Here are some of the factors that businesses need to consider when choosing a
mode of shipping:
• The type of goods being shipped: The type of goods being shipped will
determine the best mode of shipping. For example, perishable goods need to
be shipped by air, while heavy machinery needs to be shipped by road.
• The size of the shipment: The size of the shipment will determine the best
mode of shipping. For example, a large shipment of goods would need to be
shipped by ocean freight, while a small shipment of goods could be shipped
by air.
• The distance the goods need to be shipped: The distance the goods need to
be shipped will determine the best mode of shipping. For example, goods
that need to be shipped over a long distance would need to be shipped by
ocean freight, while goods that need to be shipped over a short distance
could be shipped by road.
• The cost of shipping: The cost of shipping will vary depending on the mode
of shipping and the distance the goods need to be shipped. Businesses need
to consider the cost of shipping when choosing a mode of shipping.

b) Explain port operations in detail.

Here are the different port operations in detail:

• Cargo handling: This includes the loading and unloading of cargo from
ships, as well as the storage and handling of cargo within the port.
• Terminal operations: This includes the management of the terminals within
the port, such as container terminals, bulk terminals, and cruise terminals.
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 • Vessel traffic management: This includes the coordination of the movement
of ships within the port, as well as the provision of safety and security
services.
• Cruise operations: This includes the provision of services to cruise ships,
such as passenger and baggage handling, provisioning, and waste disposal.
• Pilotage: This includes the guidance of ships into and out of the port, as well
as the provision of advice on the safe navigation of ships within the port.
• Towage: This includes the provision of assistance to ships in maneuvering
within the port, as well as the provision of emergency towing services.
• Waterfront infrastructure: This includes the provision of infrastructure such
as wharves, docks, and piers, as well as the provision of utilities such as
water, power, and telecommunications.
• Security: This includes the provision of security services to protect the port
from terrorism, smuggling, and other threats.
Port operations are complex and involve a wide range of activities. The specific
operations that are carried out at a particular port will depend on the type of port
and the cargo that it handles.
Here are some of the factors that affect port operations:
• The type of cargo: The type of cargo that a port handles will determine the
types of operations that need to be carried out. For example, a port that
handles containerized cargo will need to have different operations than a
port that handles bulk cargo.
• The size of the port: The size of the port will determine the capacity of the
port and the types of operations that can be carried out. For example, a large
port will be able to handle more cargo and more types of operations than a
small port.
• The location of the port: The location of the port will determine the types of
cargo that the port can attract and the types of operations that can be carried
out. For example, a port that is located near a major shipping lane will be
able to handle more cargo than a port that is located in a remote location.

Q5) Solve Any One :

a) Mr. Pranav is a tin manufacturer in India.

Mr. Jack of England sells goods to M/S Frank.

Corporation in North America & Mr. Williams of USA buys various

goods from Brazil.

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 i) Who is importer?

ii) Who is manufacturer?

iii) Who is exporter?

also explain answers of all above questions.

• Importer: An importer is a person or business that brings goods into a

country from another country. In this case, M/S Frank Corporation in North
America is the importer, as they are buying goods from Mr. Jack of
England.
• Manufacturer: A manufacturer is a person or business that makes goods. In
this case, Mr. Pranav is the manufacturer, as he is making tin in India.
• Exporter: An exporter is a person or business that sends goods out of a
country to another country. In this case, Mr. Jack of England is the exporter,
as he is selling goods to M/S Frank Corporation in North America.
Here are some explanations of the answers:
• Importer: An importer is a person or business that brings goods into a
country from another country. The importer is responsible for clearing the
goods through customs and paying any import duties or taxes.
• Manufacturer: A manufacturer is a person or business that makes goods.
The manufacturer is responsible for the production of the goods, as well as
the quality control of the goods.
• Exporter: An exporter is a person or business that sends goods out of a
country to another country. The exporter is responsible for finding buyers
for the goods, as well as arranging for the transportation of the goods.

b) Anurag is selling goods to Japan. Kavita is buying goods from USA

where as Ganesh is buying raw materials from South Africa & after
processing its sells finished goods to Malaysia.

i) Who is exporter?

ii) Who is importer?

iii) What is Enterpot Trade?

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 • Exporter: An exporter is a person or business that sends goods out of a
country to another country. In this case, Anurag is the exporter, as he is
selling goods to Japan.
• Importer: An importer is a person or business that brings goods into a
country from another country. In this case, Kavita is the importer, as she is
buying goods from the USA.
• Entrepot Trade: Entrepot trade is a type of trade in which goods are
imported into a country for processing or re-export. In this case, Ganesh is
engaging in entrepot trade, as he is importing raw materials from South
Africa and then exporting finished goods to Malaysia.
Here are some explanations of the answers:
• Exporter: An exporter is a person or business that sends goods out of a
country to another country. The exporter is responsible for finding buyers
for the goods, as well as arranging for the transportation of the goods.
• Importer: An importer is a person or business that brings goods into a
country from another country. The importer is responsible for clearing the
goods through customs and paying any import duties or taxes.
• Entrepot Trade: Entrepot trade is a type of trade in which goods are
imported into a country for processing or re-export. The country that the
goods are imported into is called the entrepot country. Entrepot trade can be
beneficial for both the entrepot country and the countries that the goods are
being exported to. For the entrepot country, entrepot trade can generate
revenue from customs duties and taxes, as well as create jobs in the logistics
and transportation sectors. For the countries that the goods are being
exported to, entrepot trade can provide access to goods that they would not
otherwise be able to obtain.

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