1.1 - fundamentals of international business

Question 1

trading partner

Answer 1

when a country develops a relationship with a foreign business. businesses are the ones that trade, not governments

Question 2

domestic business

Answer 2

a business which makes most of its transactions within its home country. ex. chapman’s ice cream

Question 3

international business: what is it, and what can a business do to be considered international?

Answer 3

it is the economic system of transactions conducted between businesses located in different countries.

things that international businesses include:
1. owning a foreign retail/distribution outlet (ex. tim hortons)
2. owning a foreign manufacturing plant (ex. magna)
3. exporting to a business in another country (ex. barrick gold)
4. importing from foreign businesses (ex. bombardier)
5. investing in foreign businesses (ex. rbc)

Question 4

interdependence

Answer 4

the reliance of two or more nations on each other for their products and services.

Question 5

what are the three main areas of interdependence?

Answer 5

• primary: extracting natural resources from the earth or sea
  major industries include agriculture, trapping/hunting, fishing, forestry/logging, energy, and mining
• secondary: creating a finished, usable product
  produces capital goods (products used by businesses) and consumer goods (products purchased by individuals)
• tertiary: doing a service business (ex. banking)
  examples include banks, communication, transportation, construction, and retail sales.

Question 6

branch plants

Answer 6

a factory owned by a foreign company based in another country

Question 7

how does international business help canadians?

Answer 7

• brings a larger variety of products into the country
• creates new markets which means the creation of new jobs
• allows for foreign investments
• speeds up the development of new processes and technologies

Question 8

how does international business hurt canadians?

Answer 8

• “destroying” canadian companies by overtaking their market
• the loss of culture/identity
• increased foreign ownership of companies in canada
  
  • foreign companies are loyal to their home country
  • research and development is usually carried out in that home country
• reduced exports, as products manufactured in branch plants stay in canada
• profits leave canada to pay head office costs
• risk of economic destabilization if companies pull out
  
  • ex. quebec referendum in the 90s
  • that is the consequence of having a branch-plant economy

Question 9

companies will often outsource production for many reasons including:

Answer 9

• being closer to the target market
• being closer to the resources used to make their products