A bunch of other stuffs Flashcards
Business
Manufacturing and/or sale of goods and services to satisfy the wants & needs of consumers to make profits
Transaction
An exchange of things of value
Domestic business
Business that makes most of its transactions within the borders of country in which its based
Domestic business in Canada is:
- Owned by Canadians
- Relies on Canadian products & services
- Sells products & services to Canadians
In’tl business
Economic system of transaction conducted between business located in diff. countries
Domestic market
Customers of a business who live in the country where hte business operates
Foreign market
Customers of a business who live in a diff. country than the one where business operates
5 ways for business to be considered an in’tl business:
- Own a retail or distribution outlet in another country
- Own a manufacturing plant in another country
- Export to business in another country
- Import from business in another country
- Invent in business in another country
Trading partner
When business in Canada develops a relationship w/ a business in another country, that country becomes a trading partner in Canada
Globalization
Process whereby national and regional economics and cultures have become integrated through:
- new global communication technologies
- foreign direct investments
- int’l trade
- migration
- new forms of transportation
- flow of money
Interdependence
reliance of two or more nations on each other for products and services
Primary industries
sector of economy characterized by the extraction of natural resources from earth to sea
what are the 5 major primary industries?
agriculture, fishing, forestry, energy and mining
Secondary industries
industries that create finished, usable product.
-produces capital goods (used by business) and consumer goods (by individuals)
Branch plant
factory owned by a company based in another country
tertiary industries (service sectors)
Industries that do not make products or extract resources from earth, but provide services to consumers and other business
-examples include banking, transportation, retail sales and construction
How in’tl business helps Canadian:
- variety of products
- foreign investments
- new markets, more jobs
- new processes and technologies
How in’tl business hurts Canadian:
- loss of culture/identity
- increased foreign ownership of companies -> foreign companies are loyal to investors and executives in home country
- Revenues leave Canada to pay head offices costs
- economic destabilization
- research and development usually carried out in home country
- exports are reduced as products manufactured in branch plants stay in Canada
Industry is dominated by the “Big Six”
- Royal Bank
- TD Bank
- CIBC
- BMO
- Scotia Bank
- National Bank
How have gov’t regulations made Canada’s banking system the best?
- Banking system is tightly regulated by the federal gov’ts
- Designed to handle ups and downs of the business cycle
What is “fast fashion”?
Cheap and affordable clothes which are the result of catwalk designs moving into stores in the fastest possible way in order to respond to the latest trends
Why did clothing companies race to Bangladesh for manufacturing?
- For very cheap labour and “road to mecha”
- For Canadian companies, 18% terra was cancelled
- Canada left China and went to Bangladesh
Why were a lot of Canadian and American clothing manufacturing plants forced to close or outsource?
It was getting too expensive to produce clothing in the US/Canada and the high standards were also problematic
-> moving to countries like Bangladesh would be much more profitable
Explain ethical sourcing
simply making products using ethical standards. It means that employees are treated well and paid in full, they do not work in sweatshops. The environment was not destroyed to make their products, they used recyceable materials, etc
Pretty much like fair trade
Importing
To bring products or services into a country, for use by another business or for resale.
-Majority of the goods that Canada imports come from the US
Global sourcing
The process of a company buying equipment, capital goods, raw materials, or services from around the world
Exporting
To send goods or services to another country for use by a business or for resale
Licensing agreement
An agreement that grants permission to a company to use a product, service, brand name or patent in exchange for a fee or royalty
Exclusive distribution rights
A form of licensing agreement that grants a company the right to be the only distributor of a product in a specific geographic area or country
Franchise
An agreement granted to an individual or group by a company to use that company’s name, services, products, and marketing. For a fee, the franchisor provides support to the franchise in the areas of financing, operations, human resources, marketing, advertising, quality control, etc.
Joint venture
A common type of in’tl business in which a new company w/ shared ownership is formed by 2 businesses, one of which is usually located in the country where the new company is established
Foreign subsidiaries
Often referred to as a wholly owned subsidiary, a branch of a company that is run as an independent entity in a country outside of the one in which the parent company is located
Tariffs
Most common types of trade barrier that put taxes or duties on imported products and services
-Tariffs raise the cost of imports so that locally manufactured products are less expensive and more appealing to consumers
Protectionism
The theory or practice of shielding domestic industries from foreign competition often through trade barriers such as tariffs
Trade quotas
A gov’t-imposed limit on the amount of product that can be imported in a certain period of time
Trade embargo
A gov’t-imposed ban on the trade of a specific product or within a specific country, often declared to pressure foreign gov’ts to change their policies
-ex: mad cow disease in Alberta
Trade sanction
Economic action taken by a country to coerce another to conform to an in’tl agreement or norms of conduct
Foreign investment restrictions
- Canadian law with the greatest is the investments Canada Act
- Ensures that are foreign investments are reviewed to determine how they will benefit Canada
Standards
- Countries have diff, standards for products in areas such as environmental protection, voltage and healthy & safety
- The ISO is a network of standardization groups from over 170 countries established to set quality regulations
Exchange rate
The amount of one country’s currency in relation to the currency of another country
Canada and US are the 2 largest trading partners in the world
Pros and cons of high Canadian $?
Pros: Importers, Canadian travellers, major league sports teams in Canada
Cons: Exporters, Canadian tourism, Canadian retailers
Floating rate
An exchange rate that is not fix in relation to other currencies
-The price at which currency w/ a floating rate is bought and sold fluctuates according to supply and demand
Currency revaluation
Increase in value of currency b/c the demand of that particular currency is greater than demand for it
Currency devaluation
Decrease in value of currency b/c the supply of that particular currency is greater than demand for it
What are the factors that affect exchange rate?
- Economic conditions in Canada, between different countries
- politics
- psychological factors
Hard currencies
Stable currencies, such as
- euro
- CAD
- USD
- > easily converted to other currencies on world exchange markets
Soft currencies
Currency belonging to a country w/ small, weak economy is difficult to convert into other currencies such as YMB and RUB
How does Value Added affect Canada’s exports and imports?
Value added is the amount of worth that is added to a product as it is processed.
Canada’s problem is that there is a lack of value added inherent in the products for exports and imports.
Specific example: Production of a dining room table
-Lumber needed comes from a company in British Columbia
-To build a table, $50 worth of lumber is required
-An American company buys the wood to create a table that is sent back to a Canadian retailer for $3000
=Canadian retailer sells it to a customer for $4500 and the American company gets the greatest profits
