International Business Test 1

Define globalization

When countries' economies and cultures become more connected.

What factors have increased globalization?

• Better global communication

• More foreign investment

• More international trade

• More migration

• Better transportation

• More money moving between countries

What causes countries to depend on each other?

→ International business.

Why do countries specialize in certain products?

→ They have economic advantages in producing them.

What is a competitive advantage?

When a company does something better or more efficiently than competitors.

What can give a company a competitive advantage?

Lower costs, better customer service, or higher-quality products.

What does competitive advantage lead to?

higher sales- more profit

What is absolute advantage?

A: When a country can produce more of something using the same resources as another country more effenciently

example:Canada can produce 100 cars with the same resources that 🇺🇸 USA uses to produce 80 cars.
→ Canada has an absolute advantage in cars.

what is comparative advantage

A: When a country can produce something at a lower opportunity cost than another country.

Example:
🇨🇦 Canada is better at producing wheat, while 🇺🇸 USA is better at producing cars.
→ Canada specializes in wheat and USA specializes in cars because each has a comparative advantage.

: What is the main benefit of lower labour costs?

Lower production costs, which can help keep prices lower and profits higher.

opportunity cost meaning and example

Opportunity cost = what you give up when you choose something else.

Example:
If Canada can make wheat or cars, and chooses to make wheat, the cars it could have made are the opportunity cost.

What is a domestic business?

A: A business that makes transactions within its own country.

What is a domestic market?

The market within a business’s own country.

What is international business?

A business that makes transactions between different countries.

What is a foreign market?

A market outside the business’s home country.

Five ways for a business to be considered an International Business

1.Own a retail or distribution outlet in another country​

2.own a factory in another country.

3.Export to businesses in another country​

4.Import from businesses in another country​

5.Invest in businesses in another country​

What is scale of operation?

How large a business is and how much it operates.

How do international businesses affect employment?

They provide jobs for many people.

What currencies do international businesses use for payments?

Foreign currencies from different countries.

How do international businesses improve people’s standard of living?

By providing high-quality goods to people in different countries.

What are the two types of foreign investment?

Portfolio Investment and Foreign Direct Investment (FDI).

What is Portfolio Investment?

: Buying stocks or bonds in a foreign company without controlling it.

What is FDI?

: Investing directly in a foreign business with the intention of having control and a lasting interest.

what can FDI involve?

Building factories, opening branches, or buying a controlling stake in a company.

How does foreign investment help the domestic economy?

Foreign investors put money into Canadian businesses, which can help them expand, build new facilities, hire workers, and create more business opportunities.

disadvantages to international trade

reduced exports

reduced revenues

reduced loyalty to canada

Q: What are trade barriers?

A: Government restrictions that make international trade more difficult or expensive.

Q: What are examples of trade barriers?

A: Tariffs, trade blocs, and foreign exchange restrictions.

Q: What is a tariff barrier?

A: A tax on imported goods, making foreign products more expensive.

Q: How does international business benefit Canadian consumers?

It gives Canadians a wider variety of products and services to choose from.

Q: How does foreign investment help Canadians?

Foreign companies bring money into Canada, creating jobs, business opportunities, and economic growth.

Q: How does competition benefit Canadians?

A: Competition encourages businesses to improve the quality of their goods and services.

Q: How does international business help Canadian businesses expand?

A: It lets them enter growing foreign markets, reach new customers, and increase sales.

Q: How does international business provide new technology?

A: Canada can use new technologies, discoveries, and production methods from other countries to improve businesses and products.

3 ways that International Business Hurts Canadians 

1.loss of culture/identity

2.increased foreign ownership of companies in Canada

3.environmental issues

Q: Why can Canada be affected by economic problems in other countries?

A: Canada relies heavily on foreign businesses and global markets, so problems in another major economy can affect Canada’s economy.

How did the fur trade influence Métis people's livelihoods?

It provided jobs and income through transporting, trading, and making goods.

What roles did Métis people play?

They worked as boatmen, guides, and traders.

How did the METIS PEOPLE adapt to market changes?

They changed the goods they traded and the work they did when demand changed.

1. What was the importance of Métis women in the fur trade?

A: They helped run fur trade posts, made supplies, and provided food and clothing.

2. How did the labor force change in the Montreal fur trade?

A: French-Canadian voyageurs were gradually replaced by Métis boatmen.

Q: What was the Silk Road?

A: A network of trade routes connecting China, Europe, and the Middle East.

Q: What goods came from China in the silk road

A: Horses, spices, salt, glassware, and precious metals.

Q: How were goods transported in the silk road

A: By camel caravans across deserts.

Q: How did the Silk Road create economic interdependence?

A: Countries depended on each other for goods.

Q: Why is the Silk Road an example of globalization?

A: It connected different regions through trade and cultural exchange.

why is exporting important

1.product availability

2.lower prices

3.better quality

exporting process 5 steps

1. find potential customers

2. meet the needs of customers

3. agree on sales terms

4. provide g&s

5. complete transactions

Reasons not to export

-Expensive

-Complex (legal system, business procedures)

-No company representatives in foreign country

4 major categories to consider in the international business environment

1.economic conditions

2.political and legal

3.cultural and social

4.geography

what is a sector

a group of businesses that do similar types of work or provide similar products/services

4 economic activities

1.primary

2.secondary

3.tertiary

4.quaternary

primary sector definition and example

draws raw materials from the natural environment

ex: agriculture, raising animals, fishing, mining

secondary sector definition and example

transforms raw materials into manufactured goods

ex: refining petroleum into gasoline, turning metals into tools, food processing

Tertiary sector defintion and example

involves services rather than goods

ex: construction, finance, real estate, trade

quaternary sector definition and example

seen as a subset of the tertiary sector

companies engaged in knowledge, research, technology

example: research and development, technology and innovation

money market definition

A market where businesses, banks, and governments borrow or lend money for short periods, usually less than 1 year

Example: A Canadian company temporarily borrows money from a bank to pay its bills while waiting for customers to pay

capital markets definition

Market where businesses and governments raise long-term money by selling stocks or bonds

Example: a company sells shares to investors to raise money to build a new factory

exclusive rights distribution definition

A company gives one distributor the exclusive right to sell its products in a specific country or region

joint venture meaning and example

two separate companies team up and pool their money and skills to create a brand-new separate business together

ex:toyota and subaru creating twin cars which is a new design

export-import trade def and ex

buying foreign goods or services for domestice use and selling domestic goods or services to foreign buyers

ex: walmart, amazon

licensing def and ex

one company gives permission for another company to use their products/services for a fee

ex:disney licenses its characters and brands to other companies

franchising def and example

: When a business allows someone else to use its name, products, and business model for a fee.

ex;A person opens a McDonald’s franchise and operates it using McDonald’s brand and rules.

4 reasons why governments set up trade barriers

1.protect local businesses

2.protect local jobs

3.generate revenue

4.protect citizens from harmful products

free trade meaning

unrestricted flow of goods, services, and productive resources between countries

trade quotas meaning

Limits on the amount of a product that can be imported or exported.

trade embargo meaning

government bans trade with a specific country

Trade sanctions:

Legal rules or penalties that restrict or stop trade with a specific country.

what does iso stand for

international organization for standardization

whats iso used for

An international organization that helps set common standards for products and quality.