1.2: The language of Internationl business

Question 1

What is Balance of trade?

Answer 1

Is the relationship between a nation’s imports and exports. Its the difference between the monetary value of exports and imports in an economy over time.

Question 2

What does a trade deficit mean?

Answer 2

• imports are greater than exports
• a country is more reliant on other nations are the goods they use
• most of 2016 CAN

Question 3

What does a trade surplus mean?

Answer 3

• exports are greater than imports
• a country is less reliant on other nations for the goods they use
• mid 2014 in CAN

Question 4

What does a boycott means?

Answer 4

is an act of voluntarily abstaining from using, buying, or dealing with a person, organization or country as an expression of protest usually for political reasons.

Question 5

What are Customs?

Answer 5

Is an authority or agency responsible for:
- collecting the duties levied by a government on imported and exported goods
- controlling the flow of goods, including plants animals and hazardous items in and out of a country
- example: Canada Border Services Agency

Question 6

What does Business cycle refer to?

Answer 6

to recurring periods of increased and decreased economic activity or expansions and contractions

Question 7

Describe the for main stages of Business cycle.

Answer 7

1. Recession (low production of goods)
2. Trough (lowest level)
3. Expansion (Recovery): jobs begin to appear
4. Peak: economic activity at its highest

Question 8

What does currency devaluation refer to?

Answer 8

refers to a lowering of the value of a nation’s currency. This is done by the country’s policy-makers: the government.

Question 9

What is a gateway city?

Answer 9

is a city that is used as the entry and departure point for international shipments and travel. Generally, they are major gateways to and from Canada and have large port facilities.

Question 10

What are Candas’s gateway cities?

Answer 10

1. Toronto and Windsor (Ontario)
2. Montreal (Quebec)
3. Halifax (Nova Scotia)
4. Vancouver (British Columbia)

Question 11

What are economies of sale?

Answer 11

Economies of scale happen when more products are made in a single factory (or location) with the same overhead costs and labor as making fewer products. Each unit becomes cheaper to make and a higher profit can be achieved.

Question 12

What is a GDP

Answer 12

• Gross Domestic Product
• It is essentially the monetary value of all goods and services produced within a country in a given period of time.

Question 13

Monopoly

Answer 13

A monopoly occurs when one business is the only supplier of a good or service. For instance, if Dell was the only supplier of computers in an economy, they would hold a monopoly on the computer market.

Question 14

Protectionism

Answer 14

is the practice of protecting domestic industries from foreign competition, often by taxing imported goods.

For example, to protect the domestic automobile industry, the Canadian government imposes a 15% tariff (tax) on cars imported to Canada. It means that Canadians pay more for a vehicle manufactured in the United States than Americans would pay.

Question 15

Rationalization

Answer 15

refers to any attempt to increase a business’s effectiveness or overall efficiency. The tactics used include downsizing, cutbacks, or relocating to countries with cheaper labour costs.

Question 16

List the six major types of international businesses:

Answer 16

strategic alliances
import/export businesses
joint ventures
licensing
franchising businesses
wholly owned subsidiaries

Question 17

What does strategic alliances

Answer 17

Strategic alliances are when two companies offering different products or services partner together to achieve a common goal.

Question 18

What does import/export businesses?

Answer 18

Are businesses who export and import goods. (for example cars in Japan)

Question 19

What is a joint venture?

Answer 19

are created when two or more companies join forces to create a new company

Question 20

What is the difference between Joint ventures and strategic alliance?

Answer 20

The key difference between a joint venture and a strategic alliance is that in a joint venture, a new separate entity is created from the partnership. Whereas in a strategic alliance, the participating companies still operate separately. Its helpful when someone wants to open a new company where they can partner together with a local one.

Question 21

What is a licensing?

Answer 21

are agreements allowing others to use a piece of intellectual property that they otherwise may not own such as a name, logo, image or slogan. A licensor, the individual or organization that owns the intellectual property, makes an agreement with a licensee, giving them permission to do so.

Question 22

What is a franchises?

Answer 22

Franchisors are allowed to open up their own companies. Franchisees pay fees and share profits with the corporation

Question 23

What are wholly owned subsidiaries?

Answer 23

are companies that are owned by other companies

Question 24

What is an advantage of wholly owned subsidiaries?

Answer 24

A major advantage of this form of ownership is that each subsidiary is a separate legal entity. (More organized in manageable pieces)

Question 25

Explain the difference between licensing agreements and franchising. Provide one example of each.

Answer 25

Licensing agreements pertain to intellectual property in which the licensor, who owns that intellectual property, gives permission to a licensee to use it.

Franchisors allow franchisees to open up their own “branch” of a company. Franchisees pay fees and share profits with the corporation. Franchisors specify particular guidelines, processes, and procedures in the franchise agreement to ensure consistency and conformity with the corporate brand.