Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C.I., 2007...
Transcript of Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C.I., 2007...
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Chapter 2 – The Importance of
International Business
2-1 – Aspects of International Business
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
International Trade – Definitions
• Importing– Bringing in products & services to satisfy
needs & wants of a country’s consumers
• Exporting– Fulfilling a country’s needs & wants by selling
products to companies, organizations or governments in that country
• Products– Goods or Services
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Importing• Why?
– Products in which other countries specialize
1. Must be Demand2. Research3. Contact foreign suppliers4. Finalize the purchase
– Shipping?– Delivery?– Payment?– Check that goods arrived OK
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Exporting1. Must be Demand for product 2. Find potential customers3. Must meet customers’ needs4. Agree on sales terms5. Other challenges
• Production capacity• Coping with potentially high cost of doing business
internationally• Understanding the differences of doing business in other country
6. Pack goods for shipping
• Faster Shipping = Higher Costs• Ontario = >50% of Canadian Export Revenue
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Starting an Import/Export Business
• When are we ready to trade internationally? This depends on…
1. Management commitment2. Competitive advantage3. Cash flow4. Capacity to produce
• A plan is needed• Markets must be chosen carefully• The more aggressive the expansion plan, the more
cash flow you’ll need.
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Trade Missions• Outgoing or incoming• Mission organized, participants can focus
on doing business• Canada Trade Missions are led by the
Minister of International Trade• Team Canada Missions
– Led by the Prime Minister– Usually focused on one particular country– Set up face-to-face meetings with counterparts
in other nation– Where have recent trade missions been?
(Image source: http://www.tcm-mec.gc.ca/ctm-en.asp & http://pm.gc.ca/eng/cabinet.asp?featureId=8, October 17, 2007 & November 19, 2008)
Peter Van Loan
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Trade Shows
• Matches potential buyers and sellers• Usually focused on one industry
– Eg. Canadian Western Agribition (livestock!)
• Promoted via– Internet– Trade publications– Advertisers– Suppliers
• My Friend Phil!
(Image source: http://money.howstuffworks.com/trade-show.htm and http://esask.uregina.ca/management/app/assets/img/enc2/selectedbig/51B69C99-1560-95DA-43914C6D96D2460B.jpg, October 17, 2007)
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Exporting (Goods &) Services
• Buying services: pay for the knowledge, creativity or manual work of the provider
• Many Canadian companies can do this without leaving Canada
– Eg. Call centres– Online courses
• Cirque du Soleil – exporting a combination of
goods and services
(Image source: http://www.nytimes.com/2006/07/10/arts/10cirq.html?_r=1&oref=slogin, October 17, 2007)
Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007
Foreign Investments
• Public-Sector Investments– Putting money in state-owned assets
• Private Sector Investments– Putting money in private or public
companies
• Foreign Direct Investments (FDI)– Establishing a subsidiary– Setting up a joint venture
• Portfolio Investments – Buy a share of a foreign company with no controlling
interest(Image source: http://academicaffairs.ucsd.edu/images/clipart/Kathy%20F.jpg, October 17, 2007)