Exam Review Unit #1 Part 1

Question 1

Why do companies engage in International Business?

Answer 1

• Cheaper labor and manufacturing
• To get resources that a hard to obtain
• To gain resources there country might lac
• To build relationships in foreign markets
• Increase the standard of living

Question 2

Drawbacks of international trade for Canada
Drawbacks:

Answer 2

• Shows support for non-democratic countries like China
• Leads to more manufacturing which negatively impact the environment.
• Can cause social welfare issues(minimum wage, safety standards, worker compensation) costs Canadian companies and increases cost of goods

Question 3

What is Globalization and Interdependence?

Answer 3

On going process where nations and their economies become closely integrated with one another

Question 4

What is a Multinational Corporation/Enterprise

Answer 4

A company with operations in at least one other country

Question 5

What is Subsidiary? + Example

Answer 5

A company that’s run or owned by another company.
Ex: Walt Disney owning ESPN

Question 6

What is Service Importing?

Answer 6

Services bought or sold between countries or companies

Question 7

What is balance of trade?
Formula
(Surplus + Deficit)

Answer 7

Surplus (Favorable)= More exports than imports
Deficit (Non Favorable)= More imports than exports
Formula= Exports-Imports

Question 8

What is Franchising:

Answer 8

Allows other companies to sell products, services, and or brand name for a fee or royalty.

Question 9

What is a Joint Venture?

Answer 9

2 or more companies from different companies joining together to form a new company. (Shared Ownership)

Question 10

What is Licensing? Exclusive distribution?

Answer 10

Licensing allows another company to manufacture a given product or service.
Exclusive distribution rights is a form of licensing that gives a company the ability to be the only manufacturer and producer of a product in a particular region

Question 11

What’s the difference between direct and indirect exporting?

Answer 11

Direct is a company forming there own plan to distribute and sell to there countries.
Indirect is when a company uses a broker to connect them to buyers and sellers in a foreign market.

Question 12

What is foreign direct investing?

Answer 12

When a foreign company invests money to control some or all of a business operations.

Question 13

Management Contracting?

Answer 13

When a company sells management skills to a business.
Usually done when exporting to another country. To assist a business in selling a product