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International Business Gr.12 > Unit 1: International trade > Flashcards

Unit 1: International trade Flashcards

1
Q

What is the definition of a business

A
  • An organization that produces a good in for money to make a profit.
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2
Q

What is the definition of a transaction

A

An exchange of things of value.

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3
Q

What is a domestic business? Give an example.

A
  • A business that makes most of its transactions within the border of the country in which it is based.
  • Ex. Pizza Nova buys from Saputo Cheese
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4
Q

What is an International business

A
  • Any company that conducts financial transactions outside of their native country is considered an international business
  • Ex. Transactions between a Canadian company and a U.S.A
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5
Q

What are example of International Business

A
  • Companies - McDonalds
  • Government organizations - W.T.O
  • Non-profit organizations - Unicef,
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6
Q

What are the Five Ways for a Business to be considered “International”?

A
  1. Export to business abroad
  2. Import from business abroad.
  3. Invest in business abroad
  4. Own a retail or distribution outlet in another country.
  5. Own a manufacturing plant in another country
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7
Q

What is trade and why do we do it?

A
  • Trade: Exchanging goods and services
  • We trade in order to get goods that we don’t have
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8
Q

What is Interdependence, give an example

A
  • Interdependence: The reliance of people on each other for goods, services, or ideas
  • Ex. Canada is dependent on tropical countries for various fruits and vegetables.
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9
Q

What is the difference between an import and an export?

A
  • Imports: Are products or services brought into a country for trade
  • Exports: are products or services sent from one country to another
  • Want more exports than imports
  • Canada exports: Oil, wood, beef, pork, fish
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10
Q

Define the balance of trade; trade surplus; and trade deficit.

A
  • Balance of Trade: The difference between a country’s exports and imports.
  • Trade surplus: When a country exports more goods than it imports.
  • Trade deficit: When a country imports more goods than it.
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11
Q

What is CETA? And why is it significant?

A
  • CETA stands for the comprehensive economic and trade agreement.
  • It’s important because it was a major deal with Canada and the EU, eliminating 99% of the duties on imports between Canada and 27 EU countries.
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12
Q

What are the main changes in the new USMCA from NAFTA?

A

The large Mexican market allows for
* new sales
* lower labor costs for Canadian companies

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13
Q

What are the 7 Advantages of International Trade?

A
  1. Variety of products
  2. Lower prices
  3. Access to new markets
  4. Cultural development
  5. Job creation
  6. foreign investment
  7. New Technology
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14
Q

What is the difference between foreign direct investment and portfolio investment?

A
  • Foreign direct investment (ownership)- to control some or all of a business’s operations
  • Portfolio investment (Investment) - the purchase of stocks, bonds, and other financial instruments issued by Canadian firms
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15
Q
A
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16
Q

What are the 2 disadvantages of international trade?

A
  • Canadian jobs can be lost if the foreign investors move their business elsewhere.
  • The Canada branches of the company need to pay the home country’s companies salaries and costs. This reduces the amount of taxes the Canadian government receives and increases foreign jobs.
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17
Q

What are 5 problems that are associated with foreign ownership of Canadian business?

A
  1. Job loss
  2. Revenues leave Canada to pay head-office costs
  3. Research and development challenges
  4. Reduced exports
  5. Economic destabilization
18
Q

What is Globalization ?

A
  • Globalization is the spread of products, technology, information and jobs across national borders and cultures.
  • The world is one giant market.
19
Q

What are the 7 Positive Effects of Globalization?

A
  1. Outsourcing: Some countries offer cheap raw materials and labor, which enables businesses to offer lower prices
  2. Lower prices: from added competition
  3. Decrease in poverty: people earning more
  4. Innovation: Open borders enable more sharing of knowledge
  5. Optimal Use of Resources: Increase productivity leads to improved standard of living
  6. Better Jobs: export jobs usually require higher education and skill level, which means higher pay.
  7. Increased capital flow: companies have more options to borrow money outside of their home nation. Used to invest or get out of debt.
20
Q

What are the 9 Negative Effects of Globalization?

A
  1. Lost jobs
  2. Fear of job loss
  3. Loss of Canadian Productivity:
  4. Exploitation of cheap labor: such as children and migrant workers. Ex. FIFA 2022 world cup
  5. Increased pollution: companies may move to countries that have less pollutionlaws
  6. Safety Concerns: Business in other nations do not have strict regulations
  7. Spread of disease: foreign diseases may be brought into Canada. Ex. Covid, West Nile, or Zika.
  8. Increase in income gap: gap between rich and poor growing throughout the world
  9. Influence of MNCs: Powerful multinational corporations can manipulate global politics
21
Q

What is populism

A
  • an ideology that is concern for oridinary people, and often promotes protectionism in trade policies
22
Q

What is protectionism

A
  • an economic policy that aims to restrict imports through tariffs, quotas, and regulations in an effort to boost democratic industry
23
Q

What is Brexit and why is it important for the U.K.?

A
  • Britain leaving the European union,
  • leaving the EU will help regain control over immigration and borders
  • This will allow more job opportunities for working class people in the UK
  • It will create distrust between UK and EU government
  • Some companies are leaving the UK
  • Restrict the movement of people creating less diversity
24
Q

What are the 7 types of international business?

A
  1. Foreign portfolio investment
  2. Importing
  3. Exporting
  4. Licensing agreements
  5. Franchising
  6. Joint ventures
  7. Foreign subsidies
25
Q

What is the difference between “money markets” and “capital markets”?

A
  • Foreign Portfolio Investment Many Canadians invest in businesses by purchasing stocks, bonus, and other financial instruments
  • Money markets: Investments are short-term and liquid
  • Capital Markets: Directly purchasing a company’s stock on the stock market
  • Reasons to invest outside of Canada:
  • Diversification
    *Better rate of return in some cases
26
Q

Define: global sourcing. Give an example.

A
  • Global Sourcing: The process of buying equipment, capital goods, raw materials or services from around the world
    Services can also be imported such as call centers
27
Q

What is a licensing agreement? Give an example.

A
  • Licensing agreements gives a company permission to use a product, service, brand name or patent in exchange for a fee or royalty
  • Ex. Virgin Mobile (Britain) has licensing agreement with Bell Canada
28
Q

Define: franchising. Give some examples of Canadian and foreign owned franchises.

A
  • an agreement to use a company’s name, services, products, and marketing
  • Tim Hortons, Boston Pizza, Mr. Sub, Booster Juice, Kernels
29
Q

What are the advantages and disadvantages of franchising?

A

Advantages:
* Lower risk
* Access to expert knowledge and research
* Financial aid
Disadvantages:
* Less profit
* Stringent guidelines
* Loss of control

30
Q

What is a joint venture? Give an example.

A
  • Occurs when two business, form a new company with shared ownership
  • Joint ventures make it easier for Canadian companies to enter markets such as Cuba and China
  • Ex.Sun Life operates in China with Everbright
31
Q

What is a foreign subsidiary? Give an example.

A
  • A foreign subsidiary exists when a parent company allows a branch of its company in another country, to be run as an independent entity
  • Toyota Canada (Japan)
  • Mars Canada (USA)
  • McDonald’s company (USA)
  • Aviva Canada (United Kingdom
32
Q

List 3 reasons governments implement trade barriers.

A
  • Protect local businesses
  • Generate revenue
  • Protect citizens from harmful products.
33
Q

Describe the 6 examples of trade barriers discussed in class?

A
  1. Tariffs
  2. Trade Quotas
  3. Trade embargoes and sanctions
  4. Foreign investment restrictions
  5. Standards
  6. Time zones
34
Q

What is an exchange rates

A
  • The exchange rate is the amount of currency in relation to the currency in another country
35
Q

Who are the winners and losers of a low Canadian dollar?

A

Winners
* Exporters: Foreign businesses want to buy Canadian goods when dollar is lower
* Canadian tourism: foreigners’ dollars can buy more when they visit Canada
* Canada retail: goods may be chapear to buy in Canada
Losers
* Importers: More expensive to import and sell goods in Canada
* Canadian Travelers: Costs more to travel to USA or Europe
* Major Sports Teams: Many athletes want to be paid In US funds

36
Q

What is floating exchange rate

A

Canada has a floating exchange rate (Our exchange rate changes with respect to other currencies

37
Q

What is currency devaluation

A

When supply is greater than demand and the value of the Canadian dollar decreases

38
Q

Describe the 4 factors that affect the exchange rates.

A
  1. Economic conditions in Canada
  2. Trading between countries
  3. Politics
  4. Psychological factors
39
Q

What are Economic conditions in Canada

A
  1. Inflation: the rate at which the prices of goods are rising. A low rate would attract investors because of the perception of a stable market
  2. Unemployment: the number of people without jobs. A low unemployment rate signals a stable, healthy economy causing a stronger dollar.
  3. Gross domestic product (GDP): the value of finished goods and services produced in a country in a specified period of time. A stable GDP indicates healthy economy and a rising dollar
  4. Interest Rates: The cost of borrowing money. A country with higher interest rates attracts foreign investment
40
Q

What are Trading between countries

A

The greater a country’s exports in comparison to its imports (trade surplus), the greater the demand for its currency

41
Q

what are politics

A
  • The political stability of the government can affect the exchange rate
  • If investors are worried about political tension or the threat of terrorism, the demand for that countries currency decreases
42
Q

What is Psychological factors

A
  • Many currencies have historical significance on the international market
  • Examples: US Dollar and the Euro as seens as safe
    currencies

International Business Gr.12 (4 decks)

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