Quiz 2 Flashcards
6 Reasons for trade
- Company growth
- Expanded customer base
- increased profits
- inexpensive supplies
- cheap labour
- access to addtional financing
what is an foreign portfolio investment and an example
Securities and other financial assets held by investors in another country.
Ex. GameStop: They had their stock price shoot through the roof - Because their stock price was as high as it was, they made another offering and made a large sum on that.
What is debit financing
Borrowing money from the general public. This means offering loans to anybody who wants to loan
what percentage of the bond/stock market does the canadian economy have
2%
What does importing mean
Bringing product/services into a country
and
Global sourcing/B2B (Business to Business)
Buying equipment, capital goods, raw materials
what does exporting mean and give examples
Selling goods to companies outside of the home country
ex. selling products outside of canada
Canada exports:
Motor vehicles, aircraft, chemicals,
what are the 2 licensing agreements and what is the easiest entry strategy
- licensing agreement = Permission to use a product, service, brand name or patent
Specific to a geographic region
- exclusive distribution rights = Allow company to be only distributor of a product in a certain area
a licensing agreement is the easiest for startup
what are franchising and joint ventures with examples
- franchising = agreement to use a corporations name, services, products, and marketing
ex. mcdonalds
- join venture = 2 companies form a new company the main reason for starting one is to be allowed in another country
50% fail
what is an fdi
a foreign direct investment is any type of investment in a country that involves anything besides a first portfolio strategy
name 4 benefits for international businesses
- product variety
- new markets/jobs
- foreign investment
- new processes/technologies
name 2 disadvantages for international businesses
- loss of culture/identity
- foreign ownership of canadian corporations
describe the product variety benefit for international businesses
Provides Canadians with a wide variety of choice (Ex. Shoes, movies, channels)
Lower costs = lower prices!!
describe the new markets/jobs benefit for international businesses
as businesses expand, they need to hire, allowing for more canadian workers/more oppertunity
describe the new proccesses/technologies benefit for international businesses
Easy to search for more efficient, modern and/or economical equipment
describe the loss of culture/identity drawback for international businesses
what is the government doing about this?
canadians becoming consumers of US culture through media, politics, etc.
the government protection on this is the CRTC which is the canadian radio and telecommunications commission. - this is a radio that plays primarily canadian artists to reduce the US ones.
describe the foreign ownership of canadian corporations drawback to international businesses
Foreign Co.’s have foreign loyalties
Revenue Leaves Canada
Economic Destabilization
what are the good and bad reasons for a high canadian dollar
good = Imports are cheaper leading to lower prices = increased spending.
bad = Exports are more expensive, domestic tourism declines, Canadian travel…AND SPEND…abroad.
what is a forex market
Forex Market = The global electronic marketplace for trading international currencies.
what is fx
it is foreign exchange, meaning trading from one currency to another
what are the 3 winners to the canadian dollar?
- importers
- canadian travellers
- canadian companies who pay salaries in US dollars (its cheaper)
what are the 3 losers to the canadian dollar?
- exporters
- canadian tourism
- canadian realtors
what are 4 factors effecting the exchange rate
- canadian economy =
Inflation rate, unemployment rate, GDP, interest rates - terms of trade = Exports to imports comparison
- politics = Political instability = lower demand for currency (devaluation)
- psychological
Hard currencies (safe havens)
Ex. USD, Swiss Franc, Euro, CAD!
Soft currencies (not so safe havens)
Ex. Russian Ruble, Chinese Yuan
