Interdependence (primary, secondary, tertiary industries), IB hurts/helps Canadians, types of businesses

Question 1

Canada’s export strength is still in the ________ industry sector.

Answer 1

primary

Question 2

What does the primary sector consist of? aka the definition

Answer 2

The extraction and initial processing of all raw materials.

Question 3

What are the five major primary industries?

Answer 3

agriculture, fishing, hunting/trapping, forestry/logging, energy, and mining

Question 4

Where are primary industries situated in Canada?

Answer 4

West and East (near oceans, good for exporting)

Question 5

Canada is the largest exporter of ______ and _______________ to the US

Answer 5

oil, petroleum

Question 6

What are secondary industries made up of?

Answer 6

Primary manufacturing (aka processing) and secondary manufacturing (producing capital goods and consumer goods)

Canada has a weak manufacturing sector.

Question 7

Give examples of capital goods.

Answer 7

They are products used by businesses, like machinery, trucks, and heavy equipement

Question 8

Give examples of consumer goods.

Answer 8

clothing, packaged foods, television sets

Question 9

What are tertiary industries?

Answer 9

Aka service sector
Industries that do not make product or extract resources from the earth, but provide necessary services to consumers and other businesses. Ex. Banking, construction, communications, transportation, and retail sales.

Question 10

How does International business help Canadians?

Answer 10

1. Variety of products - clothing, shoes, movies
2. New Markets, More Jobs - example is Tim Hortons increasing in demand, needs more suppliers, more opportunities to hire people from around the world.
3. Foreign Investment - foreign direct investment (control some or all of a business’s operations) or foreign portfolio investment (purchasing stocks/bonds/other financial instruments). Can help save or grow Canadian businesses
4. New Processes and Technologies - able to reach other businesses that can help Canadian businesses become more modern/efficient

Question 11

How does International business hurt Canadians? (page 30-31)

Answer 11

1. Loss of Culture/Identity - we are basically like Americans
2. Increased Foreign Ownership of Companies in Canada - foreign investment leads to foreign loyalties, lack of research and development, reduced exports, revenues leaving Canada, and economic stabilization

Question 12

What are licensing agreements?

Answer 12

gives companies permission to use a product, service, brand name, or patent in exchange for a fee or a royalty

ex. Bell using Virgin Mobile brand in Canada

Question 13

What are exclusive distribution rights?

Answer 13

Allows companies to be the only distributor of a product in a geographical area or a specific country. It is a form of licensing agreements.

Question 14

What is a franchise?

Answer 14

A franchise is an agreement to use a company’s name, services, products, and marketing.
ex. mcdonalds, menchies, subway, tim hortons

Question 15

What are joint ventures?

Answer 15

two businesses, one of which is usually located in a foreign country, form a new company with shared ownership. Successful joint venture: Sun Life Financial

Question 16

___ - ___% of all foreign investment is in the form of joint ventures.

Answer 16

25-40

Question 17

___% of all joint ventures fail.

Answer 17

50

Question 18

Pros and cons - franchises

Answer 18

Pros
Lays ground work, “formula to success”
Recognition, yet low advertising costs for you

Cons
Little room to grow business on your own terms (restrictive)
Hinder creativity
Can be expensive

Question 19

Pros and cons - joint ventures

Answer 19

Pros
Companies can be allowed into another country, and has a company there that understands the market
Gaining access to new markets, products, customers
Sharing financing, managerial expertise, technology, cultural information, economies of scale, and reducing risks

Cons
Take longer to negotiate and establish due to needs and wants of the two companies
High risk of failing if attention to detail is ignored

Question 20

What is a foreign subsidiary?

Answer 20

Most comprehensive type of international business. Also referred as a wholly owned subsidiary. Foreign Subsidiary exist when a parent company allows a branch of its company, in another country, to be run as an independent entity.

Question 21

Pros and cons - foreign subsidiary

Answer 21

Pros
Saves on distribution costs
Access to well-educated workforce
Above factors lead to increased profitability
Frees management times

Cons
taxation on companies
Possible loss of control over a company’s business processes
Problems related to quality and turnaround time
Sluggish response times coupled with slow issue resolutions
Issues pertaining to lingual accent variation

Question 22

Pros and cons - licensing agreements

Answer 22

The advantages of a licensing arrangement include:

quick, easy entry into foreign markets, allowing a company to “jump” border and tariff barriers
lower capital requirements
potential for large return on investment (ROI), which can be realised fairly quickly
low risk, since you enter with an established product and you take fewer financial and legal risks.

On the downside:

You will have only a low level of control.
Your licensee may become a competitor.
You may lose intellectual property.
The licence period is usually limited.
Poor quality management can damage your brand’s reputation in other licence territories.

source: http://www.tcii.co.uk/2012/10/26/licensing-arrangements-the-pros-and-cons/