Podcast
Play an AI-generated podcast conversation about this lesson
Questions and Answers
What is international business?
What is international business?
The buying, selling, and trading of goods across national borders.
What is absolute advantage?
What is absolute advantage?
- A country's ability to produce more goods than another country.
- A country's focus on services rather than goods.
- A country's ability to produce a good at a lower cost than others. (correct)
- A trade relationship based solely on imports.
What does outsourcing involve?
What does outsourcing involve?
- Transferring manufacturing to countries with higher labor costs.
- Hiring workers from the domestic market.
- Transferring manufacturing to countries with cheaper labor and supplies. (correct)
- Importing goods from foreign countries.
Canada has a trade surplus.
Canada has a trade surplus.
Signup and view all the answers
What is a trade deficit?
What is a trade deficit?
Signup and view all the answers
What is an exchange rate?
What is an exchange rate?
Signup and view all the answers
Why do countries impose tariffs?
Why do countries impose tariffs?
Signup and view all the answers
What challenges do businesses face in understanding international laws and regulations?
What challenges do businesses face in understanding international laws and regulations?
Signup and view all the answers
Flashcards are hidden until you start studying
Study Notes
International Business Overview
- Involves buying, selling, and trading goods across national borders.
- Technological advancements and reduced political barriers have boosted global trade.
- Major companies like Starbucks, Amazon, and McDonald's thrive internationally, facing ethical and logistical challenges.
Why Nations Trade
- Countries trade to acquire resources unavailable or costly domestically.
- Absolute Advantage: A nation can produce a good at a lower cost than others.
- Comparative Advantage: Specialization in goods produced at a lower opportunity cost, exemplified by Canada in agriculture and India/Ireland in services.
Outsourcing
- Transferring manufacturing and tasks to countries with cheaper labor and supplies.
- Controversial due to job shifts overseas; Canada is an attractive outsourcing location for the U.S. due to proximity and cultural similarities.
Trade Between Countries
- Involves exporting and importing goods and services.
- Canada exports around $550 billion in goods and services and imports a similar volume, creating a fluctuating trade balance.
- Canada typically experiences a trade deficit, importing more than it exports.
Balance of Trade
- A trade deficit indicates the value of imports exceeds that of exports; Canada had a deficit of $375 billion in 2020.
- Trade balances reflect economic conditions, impacting business decisions and employment.
- Important trading partners include the U.S. and China, influencing Canada's trade dynamics.
- The balance of payments concept illustrates monetary flow in and out of Canada.
International Trade Barriers
Economic Barriers
- Economic development disparities exist between nations, with advanced countries showing higher living standards.
- Less Developed Countries (LDCs) often lack infrastructure, impacting citizens' living quality.
- Infrastructure includes systems essential for transportation, communication, and utilities; investments are vital for LDCs to improve.
Exchange Rates
- The exchange rate defines how one currency converts to another, crucial for international trade.
- A stronger Canadian dollar makes imports cheaper and exports pricier for foreign buyers.
- Governments may devalue currency intentionally to stimulate exports and tourism.
Ethical, Legal, and Political Barriers
Laws and Regulations
- Canada enforces laws and regulations on international trade, guided by international agreements.
- Understanding foreign laws is essential for Canadian business operations, as regulations can vary widely.
- Countries like China and Hong Kong face issues with counterfeit goods, impacting their global standing.
Tariffs and Trade Restrictions
- Import tariffs are taxes on goods from abroad, aimed at protecting domestic industries by raising imported goods' prices.
- Tariffs can serve both political and economic purposes, with recent global events like COVID-19 affecting trade relationships and tariff implementations.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
