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International
International Business
| Term | Definition |
|---|---|
| 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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