Business Unit - 1 (1) PDF

Chapter 1 Business: An organization or enterprising entity engaged in commercial, industrial, or professional activities. Transaction: An exchange or transfer of goods, services, or funds between two or more parties. Domestic business: Commercial activities conducted within a country's borders....

Chapter 1 Business: An organization or enterprising entity engaged in commercial, industrial, or professional activities. Transaction: An exchange or transfer of goods, services, or funds between two or more parties. Domestic business: Commercial activities conducted within a country's borders. International business: Commercial transactions that take place between countries. Trade: The buying and selling of goods and services between parties. Interdependence: A mutual reliance between two or more entities, often in economic contexts. Trading partner: A country or organization with which another country or organization conducts trade. Imports: Goods or services brought into a country from abroad for sale. Exports: Goods or services sent to another country for sale. Balance of trade: The difference between a country's imports and exports over a specific period. Trade surplus: When a country's exports exceed its imports in value. Trade deficit: When a country's imports exceed its exports in value. Domestic market: The market for goods and services within a country's borders. Duty (tariff): A tax imposed on imported goods by a government. Foreign markets: Markets for goods and services in countries other than one's own. Foreign direct investment (FDI): Investment made by a company or individual in business interests located in another country. Portfolio investment: Investment in foreign financial assets, such as stocks or bonds, without controlling interest. Branch plant: A production facility or subsidiary located in a foreign country but controlled by a parent company. Globalization: The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. Populism: A political approach that appeals to ordinary people who feel their concerns are disregarded by established elite groups. Protectionism: Government policies that restrict international trade to help domestic industries. Short answer questions: 1. A trade surplus occurs when a country's exports exceed its imports in value, while a trade deficit is when imports exceed exports. 2. CETA stands for the Canada-European Union Comprehensive Economic and Trade Agreement. It's important because it eliminates tariffs on 98% of EU tariff lines for Canadian goods, providing Canadian businesses preferential access to the EU market. 3. CKFTA likely refers to the Canada-Korea Free Trade It liberalizes or reduces barriers to: trade in goods, financial and other services, government procurement, intellectual property and investment. The agreement also addresses non-tariff trade barriers, movement of people for work and co-operation in labour and the environment. 4. Countries impose duties on imported products to protect domestic industries, raise revenue, and sometimes as a political tool to influence trade relationships. 5. Four ways international business helps Canadians: Creates jobs, strengthens economic relations, boosts trade with global markets and provides wider choice and lower prices for consumers 6. FDI stands for Foreign, and Direct Investment. It differs from portfolio investment in that FDI involves a controlling interest in a foreign business, while portfolio investment is passive investment in foreign financial assets without control.  7. Investment Canada Act (ICA) The ICA regulates foreign direct investment in Canada, ensuring it benefits the economy. It requires non-Canadians to submit notifications or applications for significant investments and allows for reviews based on national security concerns. The Act also clarifies factors for net benefit assessments, including intellectual property rights. 8. The MAPL system refers to the criteria used to determine Canadian content in music. Canadian radio stations must play at least 35% Canadian content during peak listening hours. This is to promote and protect Canadian identity and culture as well as the Canadian music industry. 9. Retaining R&D departments in Canadian businesses is crucial for fostering innovation, maintaining competitive advantage, and developing intellectual property. 10. Outsourcing refers to the practice of hiring external parties to perform certain business functions or services. 11. Brexit refers to the United Kingdom's withdrawal from the European Union. Chapter 2 Importing: Bringing goods or services into a country from abroad for sale. Global sourcing: Procuring goods or services from international markets to find the most cost-effective and efficient suppliers. Exporting: Selling and shipping goods or services to foreign markets. Value added: The increase in worth of a product or service as it goes through various stages of production. Licensing agreement: A contract allowing a party to use intellectual property, like trademarks or technology, owned by another party. Franchise: A business model where a company grants others the right to use its brand and business system. Exclusive distribution rights: An agreement giving a distributor sole rights to sell a product in a specific territory. Joint venture: A business arrangement where two or more parties agree to pool resources for a specific project. Foreign subsidiary: A company controlled by a parent company located in another country. Tariff: A tax imposed on imported goods by a government. Protectionism: Government policies that restrict international trade to help domestic industries. Trade quota: A government-imposed limit on the quantity of a good that can be imported. Trade embargo: A ban on trade with a particular country. Trade sanctions: Economic penalties imposed by one country on another to influence its behavior. World Trade Organization (WTO): An international body that regulates trade between nations. Exchange rate: The value of one currency in relation to another. Floating rate: An exchange rate that is allowed to fluctuate based on supply and demand in the foreign exchange market. Currency devaluation: A deliberate downward adjustment to a country's official exchange rate. Inflation: A general increase in prices and fall in the purchasing value of money. Gross domestic product (GDP): The total value of goods and services produced by a country in a year. Terms of trade: The ratio between the price of a country's exports and imports. Hard currencies: Currencies that are widely accepted for international transactions and considered stable. Soft currencies: Currencies that are not widely accepted for international transactions and may be unstable. Currency speculating: Buying or selling currencies with the aim of profiting from exchange rate fluctuations. Short answer questions: 1. Two reasons Canadians invest outside Canada: To access larger markets To diversify investment portfolios To take advantage of lower production costs To gain access to natural resources Disadvantage: Increased exposure to foreign economic risks, political instability, and currency fluctuations 1. Value added: the additional features or economic value that a company adds to its products and services before offering them to customers. Adding value to a product or service helps companies attract more customers, which can boost revenue and profits. For example, turning raw coffee beans into packaged, roasted coffee adds value. 2. Licensing agreement: A contract allowing a party to use intellectual property owned by another. Example: Tim Hortons licensing its brand to franchisees in other countries. 3. Franchise: A business model where a company grants others the right to use its brand and business system. Examples include McDonald's, Subway, and Canadian examples like Tim Hortons and Second Cup. 4. Joint venture: A business arrangement where two or more parties agree to pool resources for a specific project. Canadian example: The partnership between Bombardier and Airbus for the A220 aircraft program. 5. Foreign subsidiary: A company controlled by a parent company located in another country. Examples of Canadian-owned foreign subsidiaries: a. TD Bank's operations in the United States b. Scotiabank's presence in various Latin American countries 6. Protectionism: Government policies that restrict international trade to help domestic industries. This can include tariffs, quotas, and subsidies for local businesses. 7. Difference between tariff and trade quota: a. Tariff: A tax on imported goods, which increases the price of foreign products b. Trade quota: A limit on the quantity of goods that can be imported, restricting supply 8. Embargo: A ban on trade with a particular country. For example, the long-standing U.S. embargo on Cuba. 9. Standards as trade barriers: Countries can set product standards that are difficult for foreign producers to meet, effectively limiting imports. For instance, differing safety standards for automobiles between countries. 10. Exchange rate: The value of one currency in relation to another. For example, 1 Canadian dollar might equal 0.75 US dollars. 11. Factors influencing exchange rates: a. Interest rates set by central banks b. Inflation rates in different countries c. Political stability and economic performance d. Government debt levels e. Trade balances between countries f. Speculation in currency markets