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International Business

International Business Any business transaction that involves 2 or more countries. Includes all business activities needed to create/ship/sell goods & services internationally from producer to consumer.
Globalization The growth & spread of interactive international business around the world.
Business Sale of goods and/or services to satisfy the needs & wants of consumers to make a profit.
Transaction An exchange of things of value.
Domestic Business A business that buys all their supplies from their country and sells their product solely to their country.
Export Any goods that leave a country.
Import Any goods that are brought into a country.
Foreign Direct Investment Investment made by a company based in one country, into a company based in another country.
Portfolio Investment The provision of capital to a company in exchange for the possibility of earning a return on that capital (ex. buying stocks and bonds).
Strategic Alliance A company that enters into an agreement with another company from another country in order to run a business together (ex. Walmart & McDonalds).
MNE or MNC MNC: Multinational Corporation MNE: Multinational Enterprise Operating in several countries but managed from one (home) country.
Global Presence When a company has a global presence it's recognized internationally for its reliability, uniqueness and profits as well as fairness/integrity of business dealings and standards of products & services.
Competitive Advantage Advantage over competitors, leading to bigger sales/margins than the competition.
Productivity Amount of work accomplished in a unit of time using the factors of production (land, labour, capital, technology, and entrepreneurship).
Tariff A tax imposed by the local government on goods/services coming into a country (imports). Good because it increased the price of the product therefore protecting local businesses. Bad because it can discourage trade.
NAFTA North American Free Trade Agreement. Free trade amount Canada, USA, and Mexico.
Exchange Rate The rate given by one country for another country's currency. It is always changing.
Currency Fluctuations Can greatly affect the final cost of imported/exported goods, could result in decreased profit, rates fluctuate daily. An increase in the CAD can discourage countries from purchasing our goods (Costs more money to import goods).
ICA Investment Canada Act reviews significant investments in Canada by Non-Canadians in order to ensure such benefit to Canada Non-WTO: > $5 million WTO: > $192 million Or: > $5 million in nuclear power, financial services, transportation or culture
CITIES Convention on International Trade in Endangered Species of Wild Flora/Fauna: An agreement that prohibits trade on 30,000 wild animal/plant species.
Floating Rate There is no fixed rate of our currency with respect to other currencies. Supply/Demand dictate the price at which the CAD is bought/sold.
Currency Revaluation If demand is greater than supply, CAD increases.
Currency Devaluation If supply is greater than demand, CAD decreases.
Hard Currency Stable currencies that are easily converted to other currencies on the world exchange markets.
Soft Currency Not as stable currencies that are not easily convertible.
Purchasing Power Parity (PPP) Theory: In the long run, identical products/services in different countries should cost the same in different countries.
What is International Business and why is it important? Business between 2 or more countries, important because it is believed that the prosperity of a country is reliant on their ability to compete in the global marketplace.
What are the 5 ways to conduct International Business? 1. Export 2. Import 3. Investment 4. Strategic Alliance 5. MNC/MNE
Canada's top 3 imports? 1. Machinery & Equipment 2. Motor Vehicles & Parts 3. Crude Oil
Canada's top 3 exports? 1. Motor vehicles & Parts 2. Industrial Machinery 3. Aircraft
Canada's top 3 import partners? 1. USA (50.6%) 2. China (11%) 3. Mexico (5.5%)
Canada's top 3 export partners? 1. USA (74.5%) 2. China (4.3%) 3. UK (4.1%)
How did the Trade Simulation in class reflect International Business in the real world? Not all countries had equal resources and supplies and some countries had more/less people to provide for. This shows that international business is not conducted on a even plane.
Canada's 6 competitive advantages? 1. Effective Social Organization 2. Speed of Adaption 3. Open to ideas and to competition beyond a border 4. Need for openness within natural borders 5. Have an entrepreneurial flair 6. People must be empowered with knowledge and skills
What factors influence a country's productivity? (PART 1) 1. Efficient use of resources 2. Amount of labour costs 3. Accessibility & quantity of usable natural resources 4. Quality/Availability of technology 5. Quality of education & government services 6. Quality of business leadership
What factors influence a country's productivity? (PART 2) 7. Efficiency of plants & organizational structure 8. General work ethic & healthy lifestyle 9. Amount of support for research & development
Advantages of trade 1. Meeting our domestic needs 2. Job Creation 3. Attracting Investment 4. New technology and materials 5. Diverse products and services
Disadvantages of trade 1. Support of Non-Democratic Systems 2. Cultural Identity Issues 3. Social Welfare Issues 4. Environmental Issues 5. Political Issues
What are the 7 barriers to trade? 1. Tariffs 2. Currency Fluctuations 3. Investment Regulations 4. Environmental Restrictions 5. Foreign Relations/Trade Sanctions 6. Safety Regulations 7. Immigration Policies
Who are the winners of a high Canadian Dollar? Importers: Companies gain when the purchase US made equipment because they spend less money Canadian Travelers: Less Expensive for Canadians to travel to USA
Who are the losers of a high Canadian Dollar? Exporters: More difficult for businesses to compete, exports sell less because of an increased price Canadian Travelers: Increased price of tourist trips here Canadian Retailers: Domestic retailers suffer, people import more buy online b/c it's cheaper
What factors affect a currency's exchange rate? 1.Economic Conditions in Canada 2. Trading between countries 3. Politics 4. Psychological factors
Lessons learned from the BIG MAC INDEX? Some currencies are over-evaluated and some are under-evaluated. Using the PPP it becomes easier to see what currencies might rise of decrease in value from "evening out".
Created by: AStasysh



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