Unit 2 for International Business

Globalization

Definition: The increasing connection and interaction between countries through trade, culture, and politics.

Example: A phone designed in the U.S., built in China, and sold in Canada.

Economic Globalization

Definition: The flow of goods, services, and money across countries.

Example: Canada importing cars from Japan.

Cultural Globalization

Definition: Sharing of ideas, values, and culture worldwide.

Example: Bollywood movies being watched in Canada

Political Globalization

Definition: Countries working together through international organizations.

Example: Countries cooperating through the United Nations.

Deglobalization

Definition: A slowdown or reversal of globalization.

Example: Countries putting tariffs to reduce imports (like U.S.–China trade tensions).

Nearshoring

Definition: Moving production closer to home instead of far-away countries.

Example: U.S. companies shifting factories from China to Mexico.

United States–Mexico–Canada Agreement (USMCA)

Definition: Trade deal between U.S., Canada, and Mexico replacing NAFTA.

Example: Cars can move tariff-free between Canada and the U.S.

Asia-Pacific Economic Cooperation (APEC)

Definition: Group promoting trade in the Asia-Pacific region.

Example: Canada working with Asian economies to boost trade.

European Union (EU)

Definition: Group of European countries with shared trade rules and policies.

Example: No tariffs between France and Germany.

World Trade Organization (WTO)

Definition: Sets global trade rules and resolves disputes.

Example: Countries challenge unfair tariffs at WTO.

 International Monetary Fund (IMF)

Definition: Provides financial support and advice to struggling countries.

Example: IMF loans to countries in economic crisis.

World Bank

Definition: Funds development projects in poorer countries.

Example: Building roads in developing nations.

 BRICS Bank (DSR/BRICS Bank)

Definition: Bank created by emerging economies to fund development.

Example: Infrastructure projects in India or Brazil.

Democracy

Definition: People elect their leaders.

Example: Canada elections.

Authoritarianism

Definition: One leader or group has strong control.

Example: Limited political freedom in some countries

Communism

Definition: Government controls economy and property.

Example: State owns major industries.

Theocracy

Definition: Religious leaders control government.

Example: Laws based on religion.

Regulatory Environment

Definition: Rules businesses must follow in a country.

Example: Health and safety laws for restaurants.

Political Risk

Definition: Risk of government actions affecting business.

Example: Sudden tax increase or nationalization.

Populism

Definition: Policies aimed at appealing to “ordinary people.”

Example: Promising jobs by limiting imports.

Protectionism

Definition: Protecting local industries using tariffs or limits.

Example: High tariffs on foreign steel.

Digital Governance

Definition: Government control/regulation of digital space.

Example: Data privacy laws.

Capitalism

Definition: Private ownership and free markets.

Example: Businesses owned by individuals.

Socialism

Definition: Government controls major industries.

Example: Public healthcare system

Mixed Economy

Definition: Combination of capitalism and government control.

Example: Canada (private business + public services).

Shareholder Capitalism

Definition: Focus on profits for owners/shareholders.

Example: Company maximizing stock price.

Stakeholder Capitalism

Definition: Focus on employees, customers, and society.

Example: Company investing in worker welfare.

State Capitalism

Definition: Government owns businesses but operates in markets.

Example: Government-owned oil companies.

GDP (Gross Domestic Product)

Definition: Total value of goods/services produced.

Example: Canada’s yearly economic output.

Inflation

Definition: Rising prices over time.

Example: Food costing more than last year.

Unemployment

Definition: Percentage of people without jobs.

Example: Job loss during recession.

Productivity

Definition: Output per worker.

Example: More sandwiches made per hour.

Financialization

Definition: Economy focused more on finance than production.

Example: Growth of stock markets over factories.

Platform Economy

Definition: Businesses connecting users via digital platforms.

Example: Uber.

Digital Currency

Definition: Money in digital form.

Example: Bitcoin.

Central Bank Digital Currency (CBDC)

Definition: Digital money issued by a government.

Example: Digital version of Canadian dollar.

Automation

Definition: Machines replacing human work.

Example: Self-checkout machines.

Free Trade Area (FTA)

Definition: Countries remove tariffs between them.

Example: USMCA.

Customs Union

Definition: FTA + same external tariffs.

Example: EU trade rules.

Common Market

Definition: Free movement of goods, services, and people.

Example: Workers moving freely in EU.

Economic Union

Definition: Shared policies and sometimes currency.

Example: Eurozone.

PESTLE Analysis

Definition: Tool analyzing external factors: Political, Economic, Social, Technological, Legal, Environmental.

Example: Studying a new country before opening a business.

Porter’s Diamond

Definition: Framework explaining why countries are competitive.

Key factors:

• Firm strategy

• Demand conditions

• Factor conditions

• Supporting industries

• Government

• Chance

Example: Germany’s strong car industry due to skilled workers + demand.

Developed markets

Wealthy, stable economies with mature stock markets, like the US, Canada, or Germany. Lower risk, steady returns.

Emerging markets

Growing economies with developing financial systems, like Brazil, India, or China. Higher risk, higher potential reward.

Frontier markets

Smaller or less-developed economies, like Vietnam or Nigeria. Very high risk but also potential for strong growth.

Allocation

is how you divide your money among different investments. It affects your risk (chance of losing money)

investment horizon

how long you plan to keep your money invested. A longer horizon allows you to take on more risk for potentially higher returns and to benefit more from compounding. A shorter horizon may require safer, more stable investments.