FINAL EXAM Flashcards
Transaction
an exchange of things in value
International business
Any business that conducts financial transactions outside its native country
Why trade?
In order to get the goods we do not have in exchange for the goods we do have
Balance of trade
The difference between a country exports and imports
Trade surplus
Exports>imports
Trade defeceit
imports>exports
Advantages of international trade
variety prices and foreign markets, product diversity, lower prices, access to foreign markets, new processes and technologies
Increased foreign ownerships of companies in Canada
Foreign companies are loyal to investors and executives in home countries, Research and development are carried out in home country, exports reduced as products manufactured in branch plants stay in Canada
Joint venture
Occurs when two businesses, one of which is usually located in a foreign country, form a new company with shared ownership
Licensing agreements
Gives a company permission to use a product, service, brand name or patent, in exchange for a fee or royalty
Trade embargo
when trade between countries is banned completely
Trade quota
a government imposed limit on the amount of product that can be imported in a certain period of time. Protects producers by limiting the amount of product imported and decreasing foreign competition
Trade tariff
taxes or duties charged on imported products or services
What are some reasons for the Canadian dollar to be low
Inflation, unemployment, GDP, interest rates, politics, physiological factors
The Big Mac index
Measures disparities between nations and measures economic health
How can Canada improve Productivity
Increasing investment in machinery and equipment, attracting more foreign investment, expanding Canadian investment in foreign countries, rationalization, increasing spending on science and technology, graduating more Canadians in the fields of science, math, computer science, and engineering, encouraging employers to increase and improve training programs, increase post-secondary funding, creating mentorship programs to help immigrants become qualified in their fields of expertise
Competitive advantage
A product that a country or company is better at producing than its competitors
Canadas competitive advantage
Banking industry, service industry (scientific and technical services), cultural industry, technology sector
Culture
Encompasses knowledge, experience, beliefs, values, attitudes, religion, art, symbols, and possessions acquired by a group over time
Cultural determinant
Include ethnicity, race, country of origin, language, social grouping
Monochronic
Time is linear, sequential
Polychronic
Many things happen simultaneously
5 Reasons Canada is attractive to foreign investment
Supportive business environment, gateway to the world (geographically and economically), infrastructure advantage (transportation, seaports and air), great place to live and attracts great employees, cultural diversity
What sector is most of Canada’s economy derived from
Service industry
Why are Canada’s banks profitable in comparison to the US and EU counterparts
Thanks to regulations in Canada’s banking system, banks in Canada were not as badly affected by the 2008recession
The big 6 banks: RBC, TD, CIBC, BMO, Scotia Bank, National Bank
What can affect a country’s productivity
Business etiquette in Mexico
Personal relationships matter and take time to develop, business decisions are made in a structured hierarchy, do not criticize people in front of others in meetings, time is flexible, appearance matters dress appropriately, a Spanish translator may be needed
Business etiquette in China
Managers tend to be directive, business card exchanged at the beginning of meeting, avoid being direct (don’t say no directly), it may take many meetings to come to a conclusion, allow Chinese partners to leave firs
Business etiquette in India
Never touch/pat someone’s head, don’t open gift in front of gift giver, do not thank hosts after a meal, women should not wear tight/revealing clothing
Political system
The type of government that runs a country, both economic and political systems have direct effects on how international business is conducted
Market economy
Known as capitalism/private enterprise, businesses, consumers and government act independently of one another, market forces and self-interest determine what goods are created and sold, government has little direct involvement in business
Centrally planned economy
communism/command economy, government controls all elements of the economy and how income is distributed, government provides education, healthcare, and housing to all members society
Mixed economy
Also known as modified free enterprise system, The majority of economies in the world are mixed economies meaning they have characteristics of both centrally planned and market economies
Democracy
Government through elected representatives, characterized by free and fair elections, the rule of law, free speech, the right to assembly, free press, freedom of religion
Autocracy
State governed by a single individual or a small group of people with unlimited power
Developed economies
High per capita income, strong GDP, high standards of living, advances in healthcare and technology, rely less on primary industries and more on tertiary industries, have strong alliances
Economy in transition
moves from centrally planned economy to Markey economy, transition includes decreasing the role of government, privatization, problems like inflation, increased unemployment, and widening income gaps are possible during transition
Developing economies
move away from agriculture and natural resources toward more industrialization, manufacturing and technology, these economies are often characterized by lack of social services, poor infrastructure and low literacy levels
The business cycle
Economies expanding and contracting over time (recession, trough, expansion, peak)
Fiscal policy
The way government at all levels, collect and spend money
Monetary policy
A set of decisions a countries federal government makes through its central bank
Trade agreement
An enforceable treaty by two or more countries that address the movement of goods and services. Eliminates trade barriers, establishes terms of trade, and encourages foreign investment
Trade organization
Group established to help with free flow of goods and services between countries
Global strategy
Regards world as one big market, product and marketing are uniform across the globe, key decisions are centralized at the corporate headquarters, allows companies to take advantage of economies of scale, develops product faster, and co-ordinate activities
Multi-domestic strategy
Tries to customize products, services, and marketing to local culture, effective when cultural differences are prominent, decisions are decentralized, less political and exchange rate risks, increased product differentiation, greater responsiveness to local needs
Transnational strategy
Tries to combine best elements of global and multi-domestic strategies, attempts to respect needs of the local market while maintaing efficiency of global strategy, products are manufactured at least expensive source, while Human Resources and marketing are managed at local levels
Criticisms of CSR
Costs companies’ money which reduces profit, Companies spend valuable time and employee energy on CSR instead of concentrating on maximizing shareholders wealth, good corporate practices can be used to distract customers from problems a company may be creating, companies may use CSR to enhance their reputation with domestic consumers but may not act ethically in other countries
Stakeholder analysis
Analyzes which stakeholders have the most power and influence in the decision making process
Primary stakeholder
Including customers, suppliers, competitors and employees, directly affect the companies profitability. They are of critical importance and their interests should be considered first
Business ethics
A set of rules or guidelines that management or individuals follow to make good decisions for their company. Includes domestic and international law, the company’s code of ethics and corporate governance, and the personal values of the individual making the decision
Ethical imperialism
certain universal truths or values are standard across all cultures, if something is wrong in one country it is wrong in all countries
Cultural relativism
States that the values are of different cultures should be respected, as the ethics of one culture are not seen as better than this of another
Subzidizing
Occurs when the importing of a good is helped through financial assistance from the foreign government
Microcredit
The granting of very small loans-often as little as $100-to spur entrepreneurship. Money from private or corporate investors is used to start a small business
Test of disclosure
“How would we feel if everyone knew about the
decision we made?” If they are not concerned, they
have likely made an ethical decision. If they are
concerned, they have probably not made the right
choice.
Main purpose of marketing
Sell the output of production
Penetration pricing
entering market at a lower price than the competition
Price skimming
Entering market at a high price during the introductory phase
Premium pricing
Setting the price higher than the competitions price to evoke the illusion of luxury and high quality
Discount pricing
Often used in B2B situations where the producer wants to sell high volumes to a wholesaler or retailer
Psychological pricing
Setting a price at $199 will sell more product than $200
Ethnocentrism
A belief that your own culture, values, beliefs and customs represent the right way of doing things, and that value systems of other countries are not important
Demographics
Are studied by dividing a large market into age, gender, education, marital status, lifestyle and household formation
Discretionary income
The amount left after the necessities of life have been paid
Logistics
The acquisition, transportation, and storage of materials from the point of origin to the point of consumption. Part of the daily routine of manufacturing companies, retail stores, service businesses, homeowners, and government agencies. Successful logistics gets the right item to the right place at the right time in the right quantity at the right price. Can be domestic, international or a combination of both.
Forward logistics
The steps that involved delivering products from producer to consumer
Reverse logistics
The activities that occur after the product has been sold and received by customer
Horizontal integration
Method of expanding by acquiring competitors
Supply chain
The sum of all activities involved in moving raw materials, processed goods, and finished products into an organization and moving the semi-processed or finished goods out of the organization toward the end consumer.
