Post on 02-Jan-2016
BBI2O – Introduction to Business | Mr. Ruston
International Business
International BusinessBenefits of International Business
Access to marketsMuch bigger than domestic market
Access to resourcesMore resources in other countries
Cheaper LabourReduces cost of production and maximizes
profit
Increased quality of goodsCan take advantage of what countries have to
offer
Increased quantityIncrease sales and increase production to
meet demand
International Business
PromotionEase/difficulty of promotion
E.g. internet usageProduct
Availability of resources to make products/services
E.g. Canada cannot produce many citrus fruits so we buy them from warmer places such as US and Mexico, however we have lots of lumber so we sell that to Japan and England
“5Ps” of Int’l Business
PreferenceSome countries specialize in certain products
Eg. Italian fashion, French cooking, Japanese electronics
PriceCost of wages, taxes and raw materials may be
lower in other countriesProximity
E.g. Windsor is near Detroit so Detroit influences economic activity in Windsor (ie “Motor City” Automotive Industry)
“5Ps” of Int’l Business
Offshore outsourcing – practice of hiring service providers from countries where labour costs are lower to complete some or all of the steps in the production process
Sustainable development – process of developing that meets the needs of the present without compromising the ability of future generations to meet their own needs
Environmental degradation – occurs when nature’s resources are being used up faster than nature can replenish them
Social Costs, Offshore Outsourcing, Sustainable Development
Tariffs (customs duties) – form of tax on certain types of importsGives price advantage to Canadian producers
Non-tariff barriers – standards of the quality of imported goods that are set so high that foreign competitors cannot enter the marketE.g. European ban on hormone-treated beef
Tariffs, Non-Tariffs, Landed Cost, Excise Tax
Landed cost- actual cost of an imported item including all charges (transport costs, vendor costs, tax)
Excise tax – tax on the manufacture, sale or consumption of a particular product within a countryTo encourage to buy Canadian goodsTo discourage people from doing a certain
activity (example: smoking)Raises money for the government
Tariffs, Non-Tariffs, Landed Cost, Excise Tax
Trading bloc – group of countries that share same trading interests
GATT – General Agreement on Tariffs and Trade, international organization where members negotiate, resolve trade and collect data
Trade surplus – more earnings from exports than imports
Definitions
Trade deficit – pays more for imports than earnings from exports
Balance of Trade – relationship between a country’s total imports and total exports
Culture – sum of a country’s way of life, beliefs and customs
Definitions