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