Types of Businesses p2

G7 countries

* US
* Canada
* France
* Germany
* Italy
* UK
* Japan

**Explain two reasons why corporations should be socially responsible.**

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* **Increased sales**: a current trend is that consumers will switch brands to buy from a firm associated with a good cause
* **Customer loyalty:** companies with a reputation of social responsibility gain a larger share of the consumer market

**Explain 2 arguments against corporations being socially responsible.**

**Reduced business profits**: there are more expenses to pay, which reduces profits. Revenue-expenses = profits

**Lack of public accountability:** your customers don’t trust you anymore and you could lose business. Ex. cheaper labour bad for business’s reputation

Fair Trade

A movement focused on helping workers (the producers of products) negotiate better wages and conditions. Usually involved in exports from developing countries ie. coffee, cocoa, sugar, tea, bananas, honey, cotton

Quotas

The specified value or quantity of imported goods allowed by a country.

Tariff

The percentage of the product price which is to be charged as duty. 

Protectionism

The economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations

Prohibited & Restricted Goods

This non tariff barrier is one way the government protects its citizens and the environment by only allowing products that meet a certain standrard to come in to the country. For example: In Canada children's clothes have to be fire resistant. 

Obstacles that businesses have to consider before going international

* Excise Taxes
* Currency Fluctuations
* Costs of Importing and Exporting
* Business Etiquette and Culture
* Packaging and Labeling Requirements

Two drawbacks of International Trade.

* Exploitation of Workers
* Environmental Degradation

Imports

Goods that flow into the country.

Exports

Products that flows out of the country.

Trade Deficit

If the country pays more for imports than it earns from exports.

World Trade Organization (WTO)

The principal international organization that deals with rules of trade between nations.

What country is not part of the G7?

Russia

NAFTA is:

North American Free Trade Agreement

Comprehensive Economic Trade Agreement (CETA)

This free trade agreement is between Canada and the Eurpoean Union

Asia-Pacific Economic Cooperation (APEC)

This is one of the largest trade agreements and was designed to increase trade among countries that share borders that border the Pacific Ocean

Canada’s top 5 Exports

M ineral Fuels including oil

V ehicles

M achinery including computers

G ems & Precious stones

W ood

Canada’s Top 5 imports

M achinery including computers

V echicles

E lectrical Macherinery

M inerals fuels including oil

P lastic (germany)

Canada’s top 5 import trading partners

1. United States
2. China
3. Mexico
4. Germany
5. Japan

Canada’s top 5 export partners

1. United states
2. China
3. United Kingdom
4. Japan
5. Mexico

Domestic Transaction

The selling of items produced in the same country.

International Transaction

The selling of items produced in other countries. These items contribute to the global economy.

5 benifits of international trade to businesses

Access to market

Cheaper labour costs

Increased quality goods

Increased quantity goods

Access to resources

Product

The ability the benefit of being able to access a variety of goods and services that may not be found in your local market

Proximity

This P in the 5P's gives the consumer the benefit of being able to purchase products that are closest to them keeping prices down.

The reduction of price comes from:

Cheaper labour, lower taxes, cheaper cost on materials

When it comes to the 5 P's of International Trade, Preference refers to the fact that some countries specialize or have a superior reputation for producing certain products and international trade allows the consumer to access these products.

True

With the increase in global communication systems like the internet, companies have been given a bigger incentive to reach consumers beyond their domestic markets.

True

Countries that trade together are unlikely to go to war with one another

True

International Trade decreases the sharing of knowledge of production processes, technology and marketing efforts.

False

The 5 P’s of international trade identify the:

Benefits of international trade to consumers

Joint venture

A business structure formed between two or more parties where the parties each bring their own expertise and together can benefit one another in anumber of ways. In this structure a new legal entity is formed to do business togerther while the original organizations still exist and operate independently. 

ex. Google Earth: google and nasa

Offshoring

This international business structure relocates some of a company’s operations to another country

•the company can take advantage of the lower labour costs in that area

•to take advantage of the proximity of new emerging markets

•to take advantage of the resources in that area ie. natural resources, employee skills, technology etc.

ex. Ford motor accounting to india - talent pool, cheaper labour

Outsourcing

This type if international business structure uses subcontractors (3rd party organizations) to do non-core work. The expertise and resources available to the 3rd party to accomplish this work helps streamline the business to reduce costs and improve efficiencies.

ex. Google - phone an email support to google ads, save money + focus on main objectives

Strategic Alliance

This is international business structure is when two or more companies come together to pursue a common goal but remain two distinct organizations. Much of the time these partners are customers, supplier, competitors, universities or divisions in the government.

ex. GM and Lyft: autonomous vehicles in US

Multinational Corporations (MNC’s)

This international business structure conducts business in several different countries and operate as if there are no borders. This structure is commonly chosen when going international as it focusses on strategically locating portions of their business to take advantage of the local situation whether it is education, resources, markets or expertise

ex. amazon, apple, microsoft

Merger

This international business structure combines of two or more companies into one larger company an example of this would be Tim Horton's and Burger King.

ex. kraft and heinz

International Franshising

This international business structure expands quickly because they sell the rights to run their businesses to local entrepreneurs. This allows the company to gain a competitive advantage as they  are able to expand their brand quickly around the world while reducing risks associated with opening up in foreign markets. These include cost to open up individual locations and understanding of the local laws, customs and needs and wants of their market. A successful example would be McDonald's

ex. boston pizza to US

Acquisition

This international business structure entails one larger company purchasing another with the goal of strengthening their operations, easily entering into new markets, acquiring new technologies, resources and skills. In this instance the preexisting companies cease to exist once the pruchase has been made. An example would be Disney with Marvel and Pixar.

ex. Chrome and android

Outsourcing can be (and often is) offshored, offshoring may not always involve outsourcing.

True

MNC's often hold a lot of power in the world due to the fact that they improve the economy in whatever market they operate in. This has lead to the exploitation of workers, the enviroment and resources. It has been because of public pressure that MNC's are now encouraged to implement various socially responsible initiatives to operate in a more ethical manner.

True

Corporate Social Responsibility

Ethical decisions made at the level of the organization to maximize their positive contribution to society.

Stakeholders

Groups in our society that are affected by businesses doing good or bad.

Truthful Advertising

This CSR principle protects customers from companies misleading them. 

Fair Labour Policies

This CSR principle covers anything related to wages, benefits, hours, vacation pay, leaves of absences.

The Occupational Health and Safety Act

The legislation that helps ensure corporations meet certain standards for the work environment is called:

The Employment Standards Act

This legislation ensure that people get paid a minimum wage, overtime pay after a certain amount of hours, are able to take a leave of absence/paternity leave and get severance pay where applicable. 

Business Agruments FOR Social Responsibility

* **Increased sales**:
* **Customer loyalty:**
* **Reduced operating costs:**
* **Access to capital:**
* **Stronger labour force:**

Business Agruments AGAINST being socially responsibly

* **Reduced business profits**:
* Higher business costs:
* Dilution of business purpose
* Too much social power for business
* Lack of public accountability

Examples of External stakeholders

Customers

Investors

Suppliers

Government Agencies

Shareholders

Examples of Internal Stakeholders

Employees

Board of directors

Project mangers

Using a specific example, explain why a country would implement protectionist economic policies.

Protectionism protects the domestic industries from unfair competition from foreign ones. So in Canada, we implemented protectionism on our milk farmers, so our economy is better and to protect our own country. Rather than depending on another country, like the US, for milk.

**Explain why Fair Trade is good.**

Fair trade is good because workers get higher or fair wages and experience safer labour conditions and environmental standards. It helps workers living in developing countries gain more money.

**Explain why protectionist policies could be bad?**

Protectionist policies could be bad because it makes the country and its industries less competitive in international trade. So, they were being over protected, which can take a toll on them if they enter the international market.

**Why wouldn't people buy Fair Trade products?**

People wouldn’t buy Fair Trade products because it is much more expensive and can take a toll on their expenses.