intro to int. business Flashcards
domestic transaction
selling of items produced in the same country
international transacation
selling of items produced in other countries (these contribute to global economy)
benefits of global markets
access to more large markets, cheaper labour costs, increased quality of goods, increased quantities of goods, connections/relationships with other countries
5 ps of international business
- product - what goods and services it produces.
- price - cost of producing goods and services varies from country to country.
- promotion - incentives for consumers
- proximity - more advantageous and profitable for some businesses to sell products and services to consumers near a neighbouring country’s border rather than to its domestic customers
- preference - Consumers often purchase foreign goods and services based on their reputation and specialization, even though similar products are produced domestically
offshore outsourcing
occurs when businesses decide to produce all or part of their goods in countries where labour costs are lower.
Sustainable development
process of developing land, cities, businesses, and communities that meet the needs of the present generation without compromising those of the future.
Environmental degradation
the consumption of natural resources, such as trees, water, earth, habitat, and air, faster that nature can replenish them.
Tariffs
(also called customs duties) are a form of tax on certain types of imports
excise tax
a tax on the manufacture, sale, or consumption of a particular product within a country.
Non-tariff barriers
controls or standards for the quality of imported goods set so high that foreign competitors cannot enter the market.
eg. licenses, quotas
trade deficit
a trade deficit in which a country pays more for imports than it earns from exports
trade surplus
a trade surplus in which a country earns more from exports than it pays for imports
Five Ways to Offset the Risk of Importing
- Measure consumer interest.
- Use care when selecting foreign suppliers.
- Learn about a foreign partner’s culture.
- Carefully scrutinize the purchase agreement and then sign it.
- Check goods for quantity and quality upon arrival.
direct exporting
exporting a product directly to an importer without using an intermediary.
indirect exporting
exporting a product to an intermediary who then conveys the product to the importer. Larger established companies usually use direct exporting while newer ones utilize indirect exporting.
Define International Business
refers to any commercial transaction that involves the exchange of goods, services, technology, capital, or knowledge across national borders.
What are five ways that a business could be considered an international business?
- exporting
- importing
- operating in many countries
- hiring/sourcing help from foreign countries
- partnering with other businesses from foreign countries
International businesses have vast scales of operation. True or false?
true
List and describe 7 main characteristics of international business.
- large scale of operations
- advanced technology
- international competition
- currency exchange
- regulations and laws
- global networking
- cultural awareness
What is Trade?
exchange of goods/services/captial between businesses/countries
What is self sufficiency?
+ How were Canada’s aboriginal people self-sufficient?
+ We know self-sufficiency is Possible, BUT is it Desirable?
ability of an individual/business to meet all basic needs without relying on others
+ aboriginal people were self sufficient by relying on natural resources for food, shelter, clothes (sustainable)
+ it is not desirable because it can lead to limited resources, inefficiency, lack of specialization, and can hinder economic growth
What are communes?
communities that share resources and responsibilities
What did early trade in Canada look like?
+ What was the result of trade between native groups in Canada?
involved barter systems and non-monetary exchanges of goods/services (eg. fur, tools, crop)
+ trade improved relationship, facilitated cultural exchange, and encouraged specialization
Describe early trade during the Roman Empire.
Describe what trade was like during feudal (old fashioned) times
Describe the relationship between Guilds and Trade
romans established extensive trade networks in asia, europe, africa, exchanging goods like olive oil, wine, textiles, spices.
during feudal times, local trade was dominant, bartering, less international trade because of transportation barrier
guilds were organizations of artisans that regulated trade by setting regulations, controlled prices, and protected local economy
In which centuries did the Portuguese, English, Spanish, French, and Dutch set out across the Atlantic Ocean to find a westerly route to the spice markets in Asia? And why?
during 15th and 16th century
they were motivated to find and control new land, find gold, and spread religion/beliefs
Why did the Portuguese want to go west instead of going east?
to find faster means of reaching asia to find gold and resources
What was the name of the Spanish explorer who claimed the Caribbean islands for Spain in 1942?
christopher columbus
By the 16th and 17th centuries, which other countries were claiming territories around the world and what motivated them to do so?
england, france, netherlands
motivations: wealth (resrouces), trade dominance, spreading religion/beliefs
What is interdependence?
mutual reliance for goods and services, resources, knowledge, fostering global, economic, and political connections
describing the trade relationship between
1) the USA and Canada
2) Canada, Mexico, and the US as a result of NAFTA
3)Canada and Asian countries.
1) canada and us are each other’s largest trading partners due to proximity and integrated supply chains. they trade oil, machinery, vehicles.
2) nafta (now USMCA) created a free trade policy, allowing for no tariffs in trades which encouraged stronger relationships between + reduced costs for all 3 countries
What is an Emerging Market?
an economy transitioning from developing to developed characterized by rapid industrialization and growing consumer base
Who were Canada’s top 5 Export and Import partners in 2019?
exports: USA, China, UK, Japan, Mexico
imports: USA, China, Mexico, Germany, Japan
What are at least 5 reasons Canada trades?
- resources no available locally
- economic growth/job opportunities
- consumer access to diverse products
- strengthening international relationships
- specialization and competitive advanatge
What are Foreign portfolio investments?
investments in foreign companies or financial assets (stocks, bonds) without direct control over them
define importing
purchase of goods/services from foreign countries to resell locally
define exporting
sale of goods/services made locally to foreign countries to be sold there
What is Value added
difference between cost of making product (cost of raw materials) and final sale price (reflecting cost of labour and production)
What is a Licensing agreement?
contract allowing one company to use another’s intellectual property
What are Exclusive distribution rights?
right granted to distributor to be the sole seller of a product in a specific area/market
Direct Foreign Investment
company invests in physical operations in other countries to establish a presence and control activity there
International Restrictions
regulations/policies set by gov to limit international trade such as tariffs, quotas, sanctions
tariffs, quotas, sanctions, embargoes
tariffs are a tax placed on imports/exports
quotas are certain (number or monetary) limit of a good/service that can be imported/exported
sanctions are lighter or partial restrictions on imports/exports with a country/individual/company
embargoes are harsh, permanent, complete prohibition of trade with a certain country/individual/company
Benefits to participating countries
gains from int. trade include stronger relationship between countries, economic growth, increase job opportunities, access to diverse goods
Integration of economies
process where countries become interconnected thru trade, investment, tech, market
Sensitive in nature
What need does international trade satisfy?
the need for goods/services that are not available or made efficiently domestically
What is scarcity and how does it relate to choice?
scarcity refers to limited resources and it forces individuals to make choices based on availability and how to allocate resources efficiently
Explain opportunity cost
the value of the next best alternative that someone is foregoing when making a decision. (the cost of giving up one thing when you choose another)
What is a sunk cost?
cost that as already been incurred (cost that can’t be recovered)
What is gross domestic product
total monetary value of all goods/services produced in a country over a year typically
Explain GDP and GDP per capita
GDP measures a country’s economic performance, GDP per capita is the average income or economic output an individual produces
Explain competitive advantage
when a company can produce goods/services more efficiently and/or at a lower cost than another
Compare comparative and absolute advantage.
comparative:
- ability to produce more efficiently/at lower cost
- cost is primary factor
absolute advantage
- ability to produce more of the good using the same resources
- specialized/best at producing the good at better quality
- production priority over cost
Define outsourcing
practice where a third party performs a service on a contract or ongoing basis.
What is rationalization
What are the objectives of rationalization in business
+ 4 advantages and disadvantages
process of reorganizing a company’s structure to improve efficiency and reduce costs
advantages
- reduce operational costs
- increase efficiency/productivity
- eliminate redundancies
- enhance competitiveness
disadvantages
- job losses
- may require significant investment
- uncertainty of success
- employee uproar and insecurity
