IB CH 2

Question 1

Protectionism

Answer 1

The theory or practice of shielding domestic industries from foreign competition, often through trade barriers such as tariffs.

Question 2

Trade quotas

Answer 2

A government-imposed limit on the amount of product that can be imported in a certain period of time.

Question 3

Trade embargo

Answer 3

A government-imposed ban on trade of a specific product or with a specific country, often declared to pressure foreign governments to change their policies.

Question 4

Trade sanctions

Answer 4

Economic action taken by a country to coerce another to conform to an international agreement or norms of conduct.

Question 5

Which two countries are the largest trading partners in the world

Answer 5

The U.S. and Canada

Question 5

Exchange rate

Answer 5

The amount of one country’s currency in relation to the currency of another country.

Question 5

Standards

Answer 5

Countries have different standards for products in areas such as environmental protection, voltage, and health and safety

The ISO (International Organization for Standardization) is a network of standardization groups from over 170 countries established to set quality regulations

Question 6

Foreign investment restrictions

Answer 6

Canadian law with the greatest impact is the Investments Canada Act

Ensures that all foreign investments are reviewed to determine how they will benefit Canada

Question 7

Losers of a High Canadian Dollar

Answer 7

Exporters
Canadian tourism
Canadian retailers

Question 7

Winners of a High Canadian Dollar

Answer 7

Importers
Canadian travellers
Major league sports teams in Canada©iStockphoto.com

Question 8

Floating Rate

Answer 8

An exchange rate that is not fixed in relation to other currencies. The price at which currency with a floating rate is bought and sold fluctuates according to supply and demand.

Question 9

Currency devaluation

Answer 9

The increase in value of a currency because the demand for that particular currency is greater than the supply

Question 9

Currency revaluation

Answer 9

The increase in value of a currency because the demand for that particular currency is greater than the supply

Question 10

Joint venture

Answer 10

A common type of international business, in which a new company with shared ownership is formed by two businesses, one of which is usually located in the country where the new company is established.

Question 11

Franchise

Answer 11

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 franchisee in the areas of financing, operations, human resources, marketing, advertising, quality control, etc.

Question 12

Who are Canada’s major trading partners

Answer 12

United States, European Union and China

Question 13

Exporting

Answer 13

To send goods or services to another country, for use by a business or for resale

Question 14

Licensing agreement

Answer 14

An agreement that grants permission to a company to use a product, service, brand name, or patent in exchange for a fee or royalty

Question 15

Exclusive distribution rights

Answer 15

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.

Question 16

Foreign subsidiaries

Answer 16

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. The parent company often sets financial targets, and allows the subsidiary to manage its own day-to-day operations as long as those targets are being met.

Question 17

Tariffs

Answer 17

Tariffs, the most common type of trade barrier, are taxes or duties put on imported products or services. Tariffs raise the cost of imports, so that locally manufactured products are less expensive and more appealing to consumers.

Question 18

Describe the impact technology has had on the international business environment

Answer 18

Communication technology allows the world of international business to operate twenty-four hours a day

Certain methods of communication can be used at any time (email); other methods (telephone) require knowledge of time zones

Some methods offer immediate feedback and interaction; others do not