Intro to International Business

• Business involves manufacturing and selling goods/services to satisfy consumer needs for profit.
• A transaction is an exchange of value, like in a lemonade stand.
• A market is a group of potential customers for a good/service.
• Domestic business operates within its home country, exemplified by Chapman’s Ice Cream in Canada.
• Canadian domestic businesses are owned by Canadians, use Canadian goods/services, and sell to Canadians.
• International business conducts transactions in multiple countries.
• A foreign market is a country where a business sells its products outside its home country.
• Businesses go international by owning retail stores abroad, manufacturing plants abroad, exporting, importing, or investing in businesses abroad.
• Trade and Business are synonymous
• China, USA, Germany, Japan, and the UK are top exporters and importers; Canada ranks 14th in exports and 12th in imports.

History and Emerging Markets

• French and English ships reached Quebec via the St. Lawrence in the 1600s.
• BRIC countries (Brazil, Russia, India, China) are emerging markets.
• The Middle East is an emerging market due to its oil resources.
• India has high economic growth potential.

Simple Presentation Skills

• Know your audience's age, interests, and knowledge level.
• Be interesting and concise.
• Three key factors are appearance, speech/voice, and body language.
• Vary loudness for emphasis, pitch for interest, quality for emotion, and rate to hold attention during speech.

Simple Body Language Tips

• Maintain good posture.
• Use appropriate facial expressions.
• Make eye contact.
• Use gestures.
• Extemporaneous speaking involves speaking spontaneously.
• Prepared speaking involves developing material in advance.

Comparative Advantage

• Comparative advantage means producing goods at a lower cost or more efficiently than others and trading for other goods.

Globalization and Interdependence

• Globalization integrates national/regional economies and cultures.
• Factors increasing globalization: new transport, global communication, easy money flow, increased trade, foreign investment, and mobility/migration.
• Modern globalization began after WWII, accelerating rapidly.
• Interdependence is the reliance of nations or businesses on each other for products/services.
• Three areas of interdependence: primary industries, secondary industries, and tertiary industries.
• Primary industries include agriculture, fishing, forestry, energy, mining, and water.
• Secondary industries involve processing and manufacturing.
• Primary manufacturing involves processing.
• Secondary manufacturing includes capital and consumer goods.
• Tertiary industries are in the service sector, like banking, communications, retail, etc.
• A branch plant is a factory operated from outside the host country, such as Kellogg’s in Canada.
• Branch plants create jobs and improve customer access.
• Branch plants may hinder innovation and new product development.

Financial Crisis of 2008

• High oil demand in 2008 caused prices to spike, increasing food prices and global inflation.
• Widespread subprime mortgages in the U.S. had adjustable rates set to rise.
• Mortgage defaults rose as people couldn’t afford increasing costs and mortgage payments.
• Banks lost billions, leading to the collapse of Bear Stearns and Lehman Brothers.
• World credit markets were greatly impacted, and investors lost billions.
• The U.S. and other countries entered a recession, and housing markets crashed.

Trade barriers

• Trade barriers include tariffs/duties, quotas, sanctions, subsidies, foreign investment restrictions, and standards.
• Tariffs (duties) are taxes on imported goods, making local products more competitive, like the U.S. tariff on steel.
• Tariffs discourage imports, potentially causing trade disputes.
• Quotas limit the quantity of specific goods imported, like Canada's dairy quotas.
• Quotas restrict foreign supply, giving local producers an advantage.
• Sanctions are penalties on a country for political/economic actions, restricting trade.
• The U.S. and Canada have imposed sanctions on Russia.
• Sanctions limit trade, disrupting supply chains.
• Subsidies are government aid to local businesses, reducing production costs.
• The EU subsidizes farmers, making imported goods less competitive.
• Subsidies create unfair advantages and can lead to trade disputes.
• Foreign investment restrictions regulate foreign ownership in industries.
• Canada reviews large foreign investments to ensure they benefit the country.
• Standards, like ISO, are international rules for product quality/safety.
• Standards ensure goods meet specific requirements for sale.
• All these terms act as trade barriers, making it harder for foreign goods, services, or investments to enter a country’s market.
• Tariffs & Quotas raise the cost or limit the quantity of imports.
• Sanctions & Foreign Investment Restrictions block or regulate trade for political/economic reasons.
• Subsidies & Standards give an advantage to domestic businesses by lowering costs or setting requirements foreign products must meet.

The World According to Amazon

• Amazon is one of the largest companies globally by market value and revenue.
• Amazon started as an online bookstore.
• Amazon faces criticism for worker conditions, environmental impact, and monopolistic practices.
• While convenient and low-priced, Amazon raises ethical and economic concerns about its practices and market dominance.

History of Trade in Canada

• Native Americans and European settlers traded extensively.
• After the Seven Years’ War, trade between Canada and Great Britain grew, with Canada trading raw materials for finished goods.
• Raw materials are natural resources.
• American independence led to increased trade with Canada, supplying raw materials for inventions.
• Trade between Canada and Japan involves automobiles and electronics.
• Trade between America and China is frequent due to cheap, quality products, with past issues like Huawei.
• NAFTA allowed duty-free goods from Mexico and the U.S. into Canada; Mexico is a top-5 trade partner.
• Trade with the Middle East is related to oil, with the UAE as a key partner.
• Trade between Canada and Africa is limited but has future potential.

International Business Practices

• Reasons for trade: access to cheaper supplies/labor, expanded customer base, and additional financing.

Profit Calculation

• PROFIT = REVENUE - EXPENSES
• Importing involves bringing products/services into a country.
• Exporting involves selling goods to companies outside the home country.
• Licensing agreements grant permission to use products/brands for a fee alongside exclusive distribution rights
• Franchising licenses a company’s system, name, services, and marketing.
• Example: McDonalds Corporation as the Franchisor sells a franchise to Sally Smith, who is the franchisee.
• Joint ventures involve two companies forming a new company.
• Foreign subsidiaries are branch plants opened and run independently in another country.

Currencies

• Winners of a high Canadian dollar: Canadian travelers, importers, consumers, and investors abroad.
• Winners of a low Canadian dollar: Canadian exporters, the tourism industry, foreign investors in Canada, and local Canadian producers.

Types of Currency Systems

• Floating currency: Exchange rate changes based on supply & demand (CAD, USD, EUR).
• Fixed currency: Government sets a fixed exchange rate (historically used by China).
• Pegged currency: Currency tied to another but allowed to fluctuate slightly (Hong Kong dollar to USD).

Factors That Cause Currency Appreciation (Revaluation)

• Higher Interest Rates: Foreign investors demand more CAD.
• Strong Economic Growth: Attracts foreign investments.
• Increased Exports: Foreign buyers need CAD to buy Canadian goods.
• Political Stability: Encourages foreign investment.

Factors That Cause Currency Depreciation (Devaluation)

• Lower Interest Rates: Investors move money elsewhere.
• Weak Economic Growth: Reduces investor confidence.
• Increased Imports: More CAD is exchanged for foreign currencies.
• Government Printing More Money: Increases supply, reducing CAD value.

Currency Trading Concepts

• Currency Speculating: Buying and selling currencies to profit from exchange rate changes.
• Currency Hedging: Businesses use contracts to lock in exchange rates and avoid risks when making large transactions.