International Business and Trade - Comprehensive Notes

Key Terms

• Culture - Beliefs, customs, and traditions of a group or country.
• International Franchises - Big brand businesses that operate in other countries (e.g., McDonald's).
• USMCA - Trade agreement between U.S., Mexico, and Canada (replaced NAFTA).
• Imports - Goods brought into a country from another country.
• Exports - Goods sent out from your country to another.
• Domestic Transaction - Buying or selling that happens within your own country.
• International Transaction - Buying or selling that happens between different countries.
• Strategic Alliances - Two businesses from different countries working together but staying separate.
• Mergers - Two companies join to become one company.
• Tariffs - Taxes placed on imported goods.
• Trade Deficit - When a country buys (imports) more than it sells (exports).
• Trade Surplus - When a country sells (exports) more than it buys (imports).
• Joint Ventures - Two companies create a new shared business in a different country.
• MNCs (Multinational Corporations) - Companies that do business in multiple countries.
• Landed Cost - The full cost of a product once it arrives, including shipping, taxes, and fees.
• WTO (World Trade Organization) - Organization that helps countries trade fairly.
• Bilateral Trade - Trade between two countries only.
• Direct Exporting - A company sells its products directly to another country.
• Indirect Exporting - A company sells through a middleman who handles foreign sales.
• Offshoring - Moving a part of your business (like manufacturing) to another country.
• Non-Tariff Barriers - Rules (like health or safety standards) that limit imports.
• G8 - Group of 8 powerful countries (including Canada, USA) that discuss world economics and politics.
• Monochronic - Culture where people focus on doing one task at a time and value punctuality.
• Polychronic - Culture where people do many things at once and are more flexible with time.

Stock Market Terms

• Stock Exchange - A place where people buy and sell stocks (like the TSX in Canada).
• Stockbrokers - Professionals who help others buy and sell stocks.
• Blue Chip Stocks - Stocks from large, successful, stable companies.
• Common Stock - A type of share where you can vote and might get dividends.
• Preferred Stock - No vote, but usually higher chance of receiving steady dividends.
• Growth Stocks - Stocks from companies that are growing fast.
• Penny Stocks - Cheap stocks from small or risky companies.
• Ticker Tape - A screen or list showing updated stock prices and trades.

Short Answer Questions: Why Get into International Business?

• More customers.
• Higher profits.
• Access to cheaper materials.
• Spread business risks.

Negatives of International Business

• Language and culture barriers.
• Higher costs for shipping.
• Complicated laws and taxes.

Questions to Ask Before Going International

• Do people in that country want this product?
• What are the local laws?
• How much will it cost to ship there?

Potential Problems

• Language differences.
• Different product standards.
• Unstable governments.

Costs to Consider

• Shipping and tariffs.
• Marketing in a new place.
• Adapting the product.

Standards in Other Countries

• Health and safety rules.
• Labeling and packaging laws.
• Environmental rules.

Logistics and Infrastructure

• Roads, ports, and airports.
• Shipping times.
• Internet and communication.

5 Ps of International Business

1. Product – What you sell.
2. Price – Cost of the product.
3. Place – Where to sell it.
4. Promotion – How people learn about it.
5. People – Customers and workers.

Country & Trade Knowledge: Benefits of Doing Business in China

• Large population.
• Fast-growing economy.
• Lower production costs.

Benefits of Offshoring

• Lower labor costs.
• Access to skilled workers.
• Focus on other parts of the business.

Pros of MNCs

• Creates jobs.
• Brings in new technology.
• Better prices and choices.

Cons of MNCs

• May hurt local businesses.
• Take profits out of the country.

Social Costs of Trade

• Job losses in home country.
• Pollution from shipping.
• Unfair working conditions abroad.

Canada’s Last Trade Surplus

• 2002 - energy related.

Top 3 Transport Modes for Trade

1. Ship
2. Truck
3. Plane

Advantages of Being in the G8

• Strong global influence.
• Good partnerships.
• More trade deals.

How Does TSX Make Money?

• Charges companies to list their stock.
• Makes money from every trade done on the exchange.

Thinking Questions: How Does a Tariff Work?

• It adds a tax to imported goods, making them more expensive.
• This helps local businesses compete.

Why Use Tariffs?

• Protect local jobs.
• Raise money for the government.

Example of Cultural Problem

• Selling beef jerky in India might fail because many people don’t eat beef.

Why Hire a Local Translator?

• Understands local language and culture better.
• Helps avoid miscommunication.

Why Does Canada Have a Trade Deficit?

• Canada buys more goods from other countries than it sells.

Why is Canada-USA Trade Important?

• Close in location.
• Similar culture and language.
• Strong trade history.

Ethical Issues in Outsourcing

• Low pay.
• Poor working conditions.
• Fewer jobs in Canada.

Effect of Currency Exchange Rates

• A low Canadian dollar = cheaper exports.
• A strong dollar = cheaper imports but harder to sell abroad.

Gift Giving and Time Culture Examples

• Japan: Give gifts with both hands.
• Germany: Be on time (monochronic).
• Mexico: Flexible with time (polychronic).

Currency Conversion Example

• If 1 USD = 1.3 CAD, then 10 USD = 13 CAD.
• $1 \text{ USD} = 1.3 \text{ CAD}$, then $10 \text{ USD} = 13 \text{ CAD}$

Trade Surplus vs. Deficit

• Surplus = Exports > Imports.
• Deficit = Imports > Exports.

Stock Calculation Example

• You buy 100 shares at $10 and sell at $12 → Profit = ($12 - $10) × 100 = $200.
• Profit = $(12-10) \times 100 = 200$