BBI2O – Introduction to Business | Mr. Ruston International Business BBI2O – Introduction to Business | Mr. Ruston

International Business Benefits of International Business Access to markets Much bigger than domestic market Access to resources More resources in other countries

International Business Cheaper Labour Reduces cost of production and maximizes profit Increased quality of goods Can take advantage of what countries have to offer Increased quantity Increase sales and increase production to meet demand

“5Ps” of Int’l Business Promotion Product Ease/difficulty of promotion E.g. internet usage Product Availability of resources to make products/services E.g. Canada cannot produce many citrus fruits so we  buy them from warmer places such as US and Mexico, however we have lots of lumber so we sell that to Japan and England

“5Ps” of Int’l Business Preference Price Proximity Some countries specialize in certain products Eg. Italian fashion, French cooking, Japanese electronics Price Cost of wages, taxes and raw materials may be lower in other countries Proximity E.g. Windsor is near Detroit so Detroit influences economic activity in Windsor (ie “Motor City” Automotive Industry)

Social Costs, Offshore Outsourcing, Sustainable Development Offshore outsourcing – practice of hiring service providers from countries where labour costs are lower to complete some or all of the steps in the production process Sustainable development – process of developing that meets the needs of the present without compromising the ability of future generations to meet their own needs Environmental degradation – occurs when nature’s resources are being used up faster than nature can replenish them

Tariffs, Non-Tariffs, Landed Cost, Excise Tax Tariffs (customs duties) – form of tax on certain types of imports Gives price advantage to Canadian producers Non-tariff barriers – standards of the quality of imported goods that are set so high that foreign competitors cannot enter the market E.g. European ban on hormone-treated beef

Tariffs, Non-Tariffs, Landed Cost, Excise Tax Landed cost- actual cost of an imported item including all charges (transport costs, vendor costs, tax) Excise tax – tax on the manufacture, sale or consumption of a particular product within a country To encourage to buy Canadian goods To discourage people from doing a certain activity (example: smoking) Raises money for the government

Definitions Trading bloc – group of countries that share same trading interests GATT – General Agreement on Tariffs and Trade, international organization where members negotiate, resolve trade and collect data Trade surplus –  more earnings from exports than imports

Definitions Trade deficit – pays more for imports than earnings from exports Balance of Trade – relationship between a country’s total imports and total exports Culture – sum of  a country’s way of life, beliefs and customs