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96 Cards in this Set
- Front
- Back
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Domestic Business |
A business that makes most of its transactions within the country it is based. |
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International Business |
Economic transactions between two or more different countries. |
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Domestic Market |
Consumers of the product within the country in which the company is based. |
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Foreign Market |
Consumers of the product from a different country than the one in which the company is based. |
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Five ways for a company to be considered international |
- invest in another country - import from another country - export into another country - set up a retail or distribution plant in another country - set up a manufacturing plant in another country |
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Gross Domestic Product |
The total goods or services sold within a country within the a year |
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NAFTA |
North American Free Trade Agreement Signed in January of 1994 Between Mexico, USA, and Canada |
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Pros of NAFTA |
- tripped trade between three countries - biggest trade agreement by area in the world |
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Cons of NAFTA |
- loss of Canadian jobs to outsourcing in Mexico - Foreign countries bought out Canadian companies - fear of job loss |
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Trade with Emerging Markets |
Middle East - focused around oil, but is unsustainable India - major source of outsourcing and manufacturing Africa - hard to trade with due to unstable government |
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Globalization |
The process whereby national or regional economies and cultures have become integrated through: - advanced technology - new transportation - migration - international trade |
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Interdependance |
The reliance of two or more nations on each other. (USA & Canada) |
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Three Main Areas of Interdependence |
Primary - agriculture, fishing, hunting, etc. Secondary - usable goods (capital and consumer) Tertiary - a service (banking, garbage man) |
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Importing |
Brining a product or service into the country from another country. |
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Exporting |
Sending a product or service to a different country. |
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Trade Surplus |
When the value of a countries exports exceeds the value of their imports. |
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Trade deficit |
When the value of a countries imports exceeds the value of their exports. |
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Franchise |
When a company grants an individual or business the right to use their marketing, product, logo, and services for a fee. |
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Joint Venture |
When two or more companies come together to form a new company or have a shared ownership. |
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Foreign Subsidary |
When a company puts an independent entity of their company into another country. |
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Trade Barrier/Protectionism |
Something that the government implements to protect similar companies in the country that are selling the same thing. (tax or tariffs put on imports) |
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Tarriff |
A popular kind of trade barrier, a form of tax or duties put on a product being imported into the country. |
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Trade Quotas |
A certain limit the government puts on a certain import of how much it can be imported. |
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Trade Embargo |
Government imposed ban of a certain product from entering the country. |
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Trade Sanctions |
Governments ban on import or exports to try and persuade another country to take political action, sign a treaty, etc. |
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Winners of a High Canadian Dollar |
- importers - Canadian travellers - Pro Sport teams |
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Losers of a High Canadian Dollar |
- Exporters - Tourism into Canada - Canadian retail |
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How do we want our dollar as a country? |
High |
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Culture |
The knowledge, beliefs, values, experiences, beliefs, attitudes, religion, symbols, and possessions acquired by a group of people who have lived in the same region for multiple generations. |
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Cultural Determents |
The main factors that form a culture (politics, topography, religion, etc.) |
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What does the level of cultural awareness depend on? |
- how much business a company does with a foreign country - if they just import/export they don't need to know too much about their culture - if they do business within the other country they should know |
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Polychronic |
time is seen as flexible, schedules are not strictly followed and punctuality is not most important. |
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Monochronic |
Punctuality is important and time is seen as scheduled and linear. |
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Blood Diamonds |
Diamonds minded in a conflict zone and sold to finance war by a rebel group. |
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Who is Geert Hofstede? |
A professor who conducted research on how values in the workplace are effected by culture. |
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What does a score of 80 on individualism say about Canada? |
That Canada is an individualistic country and that everyone is expected to take care of themselves. |
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Economic System |
The way a country organizes its resources and distributes goods and services among its citizens. |
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Political System |
The type of government by which a country is run. |
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Market Economy |
Capitalism An economic system determined by free competition, in which businesses, consumers, and government act independently of one another, and market forces and self interest determine what goods are created and sold. - people are encouraged to own property - people keep all their profits - companies have an incentive to innovate from lots of competition |
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Mixed Economy |
An economic system that sits between a market economy and a centrally planned economy, combining government intervention and private enterprises. - profits are encouraged but taxed to support the government - property is owned by individuals, government, and corporations - disadvantages: higher taxes - advantages: innovative |
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Centrally Planned Economy |
(Dictatorship) An economic system where the government controls all elements of the economy, including prices, wages, and production. (China, Russia, Korea) - all profit belongs to the government - ownership of property is restricted - advantages: poor benefit, equal quality of life - disadvantages: no freedom, corruption, lack of innovation |
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Democracy |
Every person gets a vote, and an elected individual is chosen by the citizens of the country to represent them. |
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Autocracy |
A state governed by a single individual or group with all the same ideas and unlimited power. (dictatorship) |
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Underdeveloped Countries |
- severe poverty - low literacy rate - poor infrastructure - agricultural or resource based economy |
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Developing country |
- improved literacy rate - increased access to health care and other services - the economy moving towards manufacturing based - population moving towards cities - import more than export because they do not have everything a developed country has |
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Developed Country |
- reliance on secondary or tertiary industries - high standard of living and literacy rate - major advancements in health and tech. |
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Business Cycle |
Recession - the downfall of the economy, decline in consumerism, businesses contract or close. Trough - (great depression), the lowest point of the economy Expansion - the economy begins to pick up, employment, profit, wages, and production all increase Peak - highest part of the economy |
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Absolute Advantage |
The ability for one country to produce one product or service more efficiently than another country |
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Comparative Advantage |
The ability for one country to be able to produce a product or service at a lower cost than another country. |
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Opportunity Costs |
The cost of giving something to get something. (a kids life in school: the opportunity cost is that they are receiving education for all the hours that they could have been working and making money.) |
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Why Invest in Canada? |
- Strong Growth Record - Financial Stability - Low Business Tax |
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Pros of Globalization |
- outsourcing - lower wages - improved human rights - more innovation - increased capital flow |
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Cons of Globalization |
- loss of jobs in developed nations - exploitation of cheap labour -increased population - unhealthy products - spread of disease - increase in income gaps |
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Globalization Stratagies |
- Transnational - respects needs of local market while maintaining efficiency of global strategy - Multi Domestic - custom product, services, and marketing for each new culture and region (make up - different ethnic background, different skin tone, different product) - Global - the world is one big market and the product stays the same throughout the world, does not respond to individual culture |
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EU |
- signed in 1993 - treaty made to run coal and steel under the same management - protects war between countries by preventing one country to make weapons - created the EURO |
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Pros of EURO |
- decreased rate of currency fluctuation - increased market - price transparency |
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Cons of EURO |
- initial cost of implementation - lack of national control - loss of culture |
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World Trade Organization |
- established in 1955 to promote world trade - acts as a forum for negotiation - set rules for trade - forum for trade disputes |
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International Monetary Fund |
- promotes financial stability - encourages countries to adapt responsible economic properties - lends money to emerging nations - provides exchange rate policies |
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UN |
- keeps peace throughout the world - develops friendly relations among nations - helps poor countries out of poverty |
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G8 |
8 industrialized nations that come together to discuss terrorism, global security, energy, economic growth, and crisis management. |
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G20 |
An assembly of 20 government leaders that come together to discuss world issues. |
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Business Ethic |
A set of rules or guidelines that a company makes for employees to follow to make sure they hold up the companies morals when making decisions. |
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Test of Disclouser |
“How would we feel if everyone knew about the decision we made?” |
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Cultural Relatism |
Every country has its own background and ethnic culture and what is wrong in one country may be right in another country. |
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Ethical Imperialism |
What is wrong in one country is wrong in all country and everyone that believes otherwise is wrong. |
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Sustainability |
development that meets the needs of the present without compromising the ability of future generations to meet their own needs. |
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Ethical Issues |
- environmental issues - poverty - sweatshops - corporate corruption - dumping |
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Sweatshops |
Factories in under developed and developing countries that pay very little for people to do unsafe work in bad environments. |
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Corporate Corruption |
Involvement in illegal activities such as bribery |
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Dumping |
Selling products in a foreign country for way cheaper than the cost to make it, making the competitor go out of business, only to raise the price. |
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Fake Trade |
When a company or stock appears to lean towards one decisions but then stops and does the opposite. |
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Microcredit |
A small loan to an under developed or developing nation to start up a business like farming or weaving baskets. |
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Primary Stakeholder |
People who directly affect the company and profits. (consumers, employees) |
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Secondary Stakeholder |
People who indirectly affect the company and profits, but not as much as a primary stakeholder. (community, society, NGO) |
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Corporate Social Responsibility |
The duty of a companies management to work in the best interest of the community/countries it relies on for its consumers, resources, manufacturing, etc. |
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Ways a company can be socially responsible |
- make donations to a charity - sponsor a sports team - promoting diverse work environments - being eco friendly - treating employees ethically |
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Benefits of being Socially Responsible |
- can be used as marketing - can divert the government from putting laws in place - helps attract excellent emplyees |
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Cons of being Socially Responsible |
- costs money - uses time and energy - a company can be socially responsible in one country and not in another |
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Predatory Dumping |
A strategy used by foreign companies to sell their products internationally at a low cost so that they can make their competitors go out of business and then hike up the prices. |
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Lobbying |
When an individual or group is payed by a company to persuade government officials into doing something that would benefit the company. |
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Kimberly Process |
A volunteer organization that vows they will not import or sell conflict diamonds. |
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Four P's of International Marketing |
Price Product Promotion People |
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Centralized Strategy |
All manufacturing and marketing is done in the same area. |
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Decentralized Strategy |
A company does business in multiple locations. |
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Licensing Agreement |
Giving someone the right to use a patent agreement. Franchising Agreement - right to use patent, marking, product, etc. Manufacturing Agreement - right to make Distribution Agreement - right to sell |
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Acquisitions |
In a foreign market, to buy the competitor out in order to sell it or use its resources to expand ones own market. |
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Labour Costs |
Labour in foreign countries are often cheaper than Canada. |
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Shipping Costs |
the costs to ship goods long distance |
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Legal Costs |
The costs to conform to standards in a foreign market. |
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3 ways to promote and advertise in a foreign market |
Use existing ads Translate ads Make new ad |
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Two C's of International Marketing |
Consumer - target market Competition: - direct - businesses that offer almost identical services or products. - indirect - takes the consumers spending money, but are not directly related or have similar products. example: The Keg and McDonalds |
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What does SWOT stand for? |
Strengths - advantages against competition Weaknesses - disadvantages against competition Opportunities - external trends Threats - external movements which may cause a problem |
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What does PEST stand for? |
Political - laws, global issues, etc. that may affect your business Economical - taxes, interest rates, etc. Social - changes in life style (eating healthier) Technological - innovations, licensing, access to tech, etc. |
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Disposable Income |
The money left over after an income has been taxed. |
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Discretionary Income |
The amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. |
