International Business

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Questions and Answers

Which of the following best describes a business transaction?

  • An exchange of value between two entities. (correct)
  • A company's annual financial audit.
  • The process of developing a new product.
  • A business's internal communication strategy.

International trade primarily occurs between countries rather than between individual businesses.

False (B)

What term describes the scenario when a country's exports exceed its imports?

trade surplus

The purchase of stocks and bonds of Canadian firms by foreign investors is known as ______ investment.

<p>portfolio</p> Signup and view all the answers

Match each business activity with its corresponding type of international business involvement:

<p>Owning a retail store in another country = Direct foreign investment Selling goods to a company in another country = Exporting Purchasing raw materials from a supplier in another country = Importing Investing in a company located in another country = Foreign Investment</p> Signup and view all the answers

Which factor has significantly contributed to globalization by enabling real-time communication across different time zones?

<p>Advancements in global communication technologies (A)</p> Signup and view all the answers

A domestic business is one that conducts transactions primarily with businesses located in other countries.

<p>False (B)</p> Signup and view all the answers

What term describes the reliance of two or more nations on each other for products or services?

<p>interdependence</p> Signup and view all the answers

When a country develops a business relationship with another country, the latter becomes its ______.

<p>trading partner</p> Signup and view all the answers

Match the following scenarios with their potential impact on domestic businesses:

<p>Increased foreign ownership of domestic firms = Potential job losses and economic destabilization Adoption of new international technologies = Improved efficiency and innovation Growing demand for local products in foreign markets = Increased export opportunities Increased import competition = Pressure to reduce costs and enhance quality</p> Signup and view all the answers

Which of the following is not one of the ways for a business to be considered an international business?

<p>Hiring employees from another country. (A)</p> Signup and view all the answers

The United States is Canada's largest trading partner due to Canada's limited natural resources.

<p>False (B)</p> Signup and view all the answers

Define 'foreign investment' in the context of international business.

<p>Foreign investment is when citizens or entities from one country invest capital into businesses in another country, often to control some or all of its operations.</p> Signup and view all the answers

The process where national economies and cultures become integrated through global communication, foreign direct investment, and international trade is known as ______.

<p>globalization</p> Signup and view all the answers

Match the term with its correct definition:

<p>International Business = Business making transactions with other countries Domestic Business = Business making transactions within its country Foreign Market = Customers in a different country from the business's origin Domestic Market = Customers within the business's own country</p> Signup and view all the answers

Which outcome is most likely a disadvantage of increased foreign ownership of Canadian companies?

<p>Potential job losses and economic destabilization. (C)</p> Signup and view all the answers

A balance of trade always results in a surplus for every country involved.

<p>False (B)</p> Signup and view all the answers

Define the term 'domestic market'.

<p>The domestic market refers to the customers of a business who reside within the country where the business operates.</p> Signup and view all the answers

Products or services sent from one country to another are known as ______.

<p>exports</p> Signup and view all the answers

Match each type of interdependence with the appropriate activity:

<p>Primary Industries = Extraction of raw materials Secondary Industries = Manufacturing of goods Tertiary Industries = Provision of services</p> Signup and view all the answers

Which of the following best represents an example of portfolio investment?

<p>A foreign investor purchasing shares in a Canadian technology firm. (A)</p> Signup and view all the answers

Increased international trade always leads to a strengthening of cultural identity within a country.

<p>False (B)</p> Signup and view all the answers

What is the key difference between 'foreign investment' and 'portfolio investment'?

<p>Foreign investment typically involves gaining control over business operations, whereas portfolio investment is primarily about financial returns without seeking operational control.</p> Signup and view all the answers

Products or services brought into a country for trade are known as ______.

<p>imports</p> Signup and view all the answers

Match each trade scenario with its correct label:

<p>Canada sells wheat to Japan = Export Canada buys cars from South Korea = Import Canada's exports exceed its imports = Trade Surplus Canada's imports exceed its exports = Trade Deficit</p> Signup and view all the answers

Flashcards

Business

The manufacturing or sale of goods/services to make a profit.

Transaction

An exchange of value between two parties.

Domestic Business

Business transactions occurring within a company's home country.

International Business

Business transactions occurring between a company and businesses in other countries.

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Domestic Market

The customers of a business who reside in the country where the business is based.

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Foreign Market

The customers of a business who reside in a country different from where the business is based.

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Trading Partner

A country with which another country has a business relationship, involving importing and exporting goods/services.

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Foreign Investment

Investment made by citizens of one country into the businesses of another country, for operational control.

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Portfolio Investment

The purchase of stocks, bonds, and other financial instruments issued by firms.

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Globalization

The process by which national and regional economies and cultures integrate through global communication, foreign investment, and international trade.

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Interdependence

The reliance of two or more nations on each other for products or services.

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Imports

Products or services that are brought into a country for trade.

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Exports

Products or services that are sent from one country to another.

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Balance of Trade

The difference between the value of a country's imports and exports.

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Trade Surplus

A situation where a country's exports are greater than its imports.

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Study Notes

  • Business involves the manufacturing or selling of goods/services for profit.
  • A transaction is an exchange of value between two parties.
  • Domestic businesses operate within their own country.
  • International businesses engage in transactions with businesses in other countries.
  • A domestic market consists of customers within the business's country.
  • A foreign market consists of customers in a different country than the business.

How a Business Can Be Considered International

  • Owning a retail outlet in another country qualifies a business as international.

  • Owning a manufacturing plant in another country

  • Exporting to businesses in another country

  • Importing from businesses from other countries

  • Investing in businesses in another country

  • A trading partner relationship involves countries importing and exporting goods/services to each other, with trade occurring between businesses, not countries.

  • The U.S. is Canada's largest trading partner, mainly because Canada possesses many natural resources.

  • Foreign investment sees individuals or entities from one country investing in a business in another country to gain operational control.

  • Portfolio investment involves buying stocks, bonds, and other financial instruments from Canadian firms.

  • This investment helps start new businesses or support struggling ones

Advantages of International Trade

  • Introduction of new processes and technologies.
  • Real-time processing of business transactions internationally.
  • Sourcing of parts, ingredients, and supplies via the internet.

Disadvantages of International Trade

  • Potential loss of culture and identity.

  • Increased foreign ownership leading to job loss and economic instability.

  • Globalization is the integration of national/regional economies through communication technologies, foreign investment, international trade, migration, new transportation, and the flow of money.

  • Advances in tech facilitates establishing relationships with foreign countries through communication despite time zones, fostering integration

  • Interdependence is the reliance of two or more countries on each other for products or services.

Three Types of Interdependence

  • Primary industries

  • Secondary industries

  • Tertiary industries

  • Imports are products/services brought into a country for trade.

  • Exports are products/services sent from one country to another.

  • The balance of trade is the difference between a country's imports and exports.

  • Exports exceeding imports results in a trade surplus.

  • Exports less than imports results in a trade deficit.

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