2.1 Types of international business 

• Why Canada trades/invest

Canada trades for these reasons…

Company growth • Entry into new markets • Expanded customer base • Increased profits • Access to inexpensive supplies • Lower labor costs • Access to financing.

• Foreign portfolio investment

Investing in businesses by purchasing foreign stocks bonds and other financial instruments

- money markets (short-term and are considered safe and liquid)

- Capital markets

Foreign portfolio investments are made because investors look for dividends

• Why do Canadians invest outside of Canada?

They invest outside of Canada to diversify and to spread out their investments as it’s less risky than investing in one area, their investments also provides a great rate of returns.

A disadvantage is that the risk is greater. (ROI = Return on investment)

High risk = High reward

Low risk = Low reward

• Why do Canadians invest?

^^to increase their wealth and to save money for retirement.^^

• Importing (Losers of Canadian dollar)

Bringing products or Services into a country

-- Machinery and equipment

-- motor vehicles, and parts,

-- oil,

-- chemicals,

-- electricity,

-- consumer goods. \n

• Exporting (Winners of Canadian dollar)

Selling goods or services to another country

Motor vehicles and parts

industrial machinery

aircraft

telecommunications equipment

chemicals,

plastics

fertilizers

wood pulp

timber crude petroleum

natural gas

electricity

aluminum.

\n

• Value added

The amount of worth that is added to a product as it is processed

Example; wheat To flour to bread

• Licensing agreements

a licensing agreement gives a company permission to use a product service brand name or patent in exchange for fee or royalty.

• Franchising

an agreement to use the company name service product and marketing

What’s included in the agreement?

1. The franchisee agrees to follow all the franchisers rules. ( The parent company's)

The franchise provides services like support and financing operations human resource in marketing advertisement and quality control for a fee

Pros of a Franchise

lower risk, access to expert knowledge and research, and financial aid

Cons of a Franchise

less profit, stringent guidelines, and loss of control.

• Joint ventures

When two businesses, one of which is usually located in a foreign country, forms a new company with shared ownership. (Companies create a joint venture to be allowed into a country.)

50% of joint ventures fail

Pros:

Cultural information

Cons:

• Foreign subsidiaries

Often referred to as a “wholly-owned subsidiary of foreign subsidiary” it exists when a parent company allows a branch of its company in another country to be run as an independent entity.