International Business Exam Flashcards
What is self-sufficiency?
Is the ability to provide for all of your basic needs, such as food, clothing, shelter, and water without relying on anyone else.
Countries do this but using their own resources and agriculture to provide for their own country.
We aren’t self-sufficient, we don’t make our own clothing, we don’t get our own water, we may grow food.
A small portion of our population is self-sufficient, we rely on other people.
What is interdependence?
The reliance of two or more groups on the actions of one another to fulfill certain wants or needs.
This can be referred to as Worldwide dependence between countries.
Rely on a country to export it to us (Canada).
Our ecosystem is interdependent as well.
Ex. Honeybees dying out. Honey would disappear.
What is primary industry?
6 major primary industries
1. Agriculture
- Food (apple)
2. Fishing
- Fish
3. Hunting and trapping
- Foxes (Use the fur)
4. Forestry and logging
- Lumber and production of lumber, production resources
5. Energy and mining
- Gold
6. Water
- Surrounded by water, never have to worry about freshwater
Primary Manufacturing (processing)
taking raw materials and creating a finished good.
Forest, trees, makes pulp (almost paper): pulp is primary manufacturing
Canada is known for having a strong primary manufacturing sector!
What is secondary manufacturing?
Industries that make or process large quantities of raw materials into finished products, usually with machines.
Secondary Manufacturing (fabrication)
Capital goods (products used by businesses)
Consumer goods
From pulp, it makes paper
What is tertiary/service industry?
Do not make or extract anything from the earth.
Provide necessary services to other businesses and consumers.
Also known as the service sector.
Banking
RBC
Construction
Communications
Rogers
Transportation
TTC
Retail sales
Walmart
Most people have jobs from the service industry
What’s an import?
Goods and services produced in one country and brought in to another country for sale.
What’s an export?
Goods and services produced in one country and sold to another country.
What’s a trade surplus?
Is when a country’s exports are greater than their imports.
Means you are selling more goods/services internationally.
Means that more jobs are being provided domestically which can lead to higher employment, income and spending.
Ex. You are making more than you are buying, $50-$10=$10 profit
Ex. Canada exported $450 billion of goods/services worldwide.
Canada imported $420 billion of goods/services worldwide.
TRADE SURPLUS OF $30 BILLION WORLDWIDE!!
What’s a trade deficit?
Is when a country’s imports are greater than their exports.
You are not producing as much within your own country and you need to bring in goods/services from other countries.
Ex. Canada exported $9 billion of goods/services to Japan.
Canada imported $10 billion worth goods/services from Japan.
TRADE DEFICIT OF $1 BILLION WITH JAPAN!!
What is protectionism?
using barriers to trade to protect domestic (local) producers/industries from foreign competition.
What is a tariff?
(Tax - not the tax we know, taxes that are put on goods that we import/get from other countries)
Are taxes or duties put on imported products or services.
They raise the cost of imported goods.
Canada has a free trade agreement (no taxes) with the United States and Mexico (CUSMA).
What are the 6 trade barriers?
Trade quotas, trade embargos, trade sanctions, safety regulations, foreign investment, environmental restrictions
What is a trade quota?
Is a government imposed limit on the amount of product that can be imported in a certain time period.
What is a trade embargo?
Imposed by the government.
Bans trade on a specific product or with a specific country.
Often done to put pressure on foreign governments to change their policies or to protest human rights violations.
What is a trade sanction?
Done to influence the policies or actions of other nations such as:
Human rights issues
War or revolution
Terrorism
Slavery
Piracy
Smuggling
Can include:
Placing limitations on official and diplomatic contacts and travel
Seizing or freezing assets in Canada to the offending country
Legally restricting trade
What are safety regulations?
The government regulates and administers commerce and trade in specific goods under many acts.
Packaging and Labelling Act
Food and Drugs Act
Hazardous Products Act
Foreign companies may need to make costly changes to conform to the laws.
What are foreign investment restrictions?
Investment Canada Act
Is to ensure that all foreign investments are reviewed to determine how they will benefit Canada.
The Broadcasting Act, Telecommunications Act, The Bank Act, The Transportation Act
E.g. Transportation Act limits foreign ownership of a Canadian airline to 25%
What are environmental restrictions?
Import restrictions are in place to protect Canadian crops and livestock, fish, and animals.
Must comply with Canadian standards.
Certain toxins
Hazardous chemicals
Waste products
Vehicles without proper emission controls
What are the 5 trade ways in the modern world?
Licensing agreement; exclusive distribution rights; franchising; joint venture; foreign subsidiary
What are licensing agreements?
Gives a company permission to use a product, service, brand name or patent in exchange for a fee or royalty.
Often it is only applicable in a specific region.
What are exclusive distribution rights?
Another form of licensing agreement.
Allows a company to be the only distributor of a product in a geographic area or in a specific country.
Most frequently used for manufacturing processes.
What is franchising?
A franchise is an agreement to use a company’s name, services, products and marketing.
The franchisee (buyer) signs a contract and agrees to follow all of the franchisor’s rules.
What is a joint venture?
Occurs when 2 businesses (one of which is usually located in the foreign country) form a new company with shared ownership.
One main reason companies do this is to be allowed into a country.
Allows companies to gain access to new markets, products and customers.
Share financial, managerial expertise, technology, cultural information and risk reduction.
What are foreign subsidiaries?
When a parent company allows a branch of its company in another country to be run independently.
Ex. Bombardier makes snowmobiles, etc.
Ex. In Canada it’s TD Canada Trust. In America it’s just TD.
What is a currency exchange rate?
It refers to the value of the Canadian dollar against the currencies of other countries. Among other things, it helps determine how much we pay for imported goods and services and how much we receive for what we export.
The exchange rate plays a particularly important role in the Canadian economy because compared with other countries, imports and exports (trade) are a relatively large part of Canada’s economy. Most of our trade is with the United States, which is why the value of our dollar against the U.S. dollar is especially important.
What is a floating exchange rate?
Canada has a floating exchange rate. That means there is no set value for our currency compared with any other currency. The exchange rate is affected by the supply and demand for Canadian dollars in international exchange markets.
If demand exceeds supply, the value of the dollar will go up.
If the supply exceeds demand, its value will go down.
What are the 5 types of political systems?
Theocracy
Monarchy
Democracy
Autocracy
Totalitarianism
What is theocracy?
A form of government in which a god or deity is recognized as the state’s supreme civil ruler.
Ex. Vatican City, Pope Francis runs it
What is monarchy?
Is a form of government in which all political power is with an individual, known as a monarch (“single ruler”), or king or queen.
Ex. England, Saudi Arabia, King Salman runs it
What is democracy?
A state governed by all eligible members of the population through elected representatives. (You elect people, vote on provincial, federal, local stuff)
Characteristics
free and fair elections
the rule of law
free speech and press
the right to assembly, and freedom of religion
economic opportunity for all citizens
politicians may be more concerned with re-election than the good of the country
Ex. Canada, United States, European Union
What is autocracy?
A state governed by a single individual or a small group of people with unlimited power. (One person or a group)
Characteristics
Usually has strong military presence
Strives to control all aspects of citizens’ lives
Citizens have no influence on government
Closest economic system is a centrally planned one
Ex. Cuba, Fidel Castro ran it
What is totalitarianism?
Similar to an autocracy
One ruling party
Illusion that it’s some kind of democracy that you get to vote for one party (Will be told who to vote for)
Ex. North Korea, Workers Party Of Korea, Kim Jong-Un (He represents a party, one party you get to vote for)
