Chapter 4 International Business What Is International Business

Chapter 4: International Business What Is International Business? Barriers to International Business The Canadian government uses barriers, often referred to a roadblocks, to help protect domestic businesses and consumers. Tariffs, also called customs duties, are Finished imported goods include tariffs, which increase their prices. Canadian products do not carry such tariffs, and, therefore, may be sold at lower prices. In an effort to protect their domestic industries, countries put up tariff barriers by increasing the cost of imported goods.

Chapter 4: International Business What Is International Business? Non-tariff Barriers Non-tariff barriers are Costs of Importing and Exporting The price of a product or service must take the landed cost into consideration. The landed cost is the actual cost of an imported purchased item, composed of:

Chapter 4: International Business What Is International Business? Excise Taxes An excise tax is a tax on the manufacture, sale, or consumption of a particular product within a country. Currency Fluctuations Since currency rates fluctuate on a daily basis, an international purchase made on one day may cost less or more than another purchase on the following day. Shifting currency exchange rates vary as the economic strength of the two countries change on a daily or weekly basis.

Chapter 4: International Business Flow of Goods and Services Imports, such as raw materials, processed material, semi-finished goods, and manufactured products, flow into Canada. Goods and materials also leave Canada as exports. Balance of Trade To maintain a healthy balance of trade, countries try to import the same total value of products that they export. An imbalance of the two results in the following: • a trade deficit • a trade surplus

Chapter 4: International Business Flow of Goods and Services Exports Direct exporting Indirect exporting Larger established companies usually use direct exporting while newer ones utilize indirect exporting.

Chapter 4: International Business Flow of Goods and Services Canada’s Major Trading Partners Canada’s number one trade partner is the United States. Three major reasons for trading with the United States include 1. ? 2. ? 3. ?

Chapter 4: International Business Canada and International Trade Agreements Two Main Advantages to Reducing Trade Barriers 1. Domestic business can sell their products abroad at lower prices since duties are not added. 2. Consumers have access to new foreign products that may result in lower costs and quality improvement of domestic products. Trade agreements between countries allow goods and service to flow more freely across boarders. World Trade Organization (WTO) North American Free Trade Agreement (NAFTA) The Group of Eight (G 8) European Union (EU) Research and be ready to share: advantages / disadvantage of, the characteristics of the trade that are outlined in the trade agreement, countries involved, purpose of the organization.

Chapter 4: International Business The Future of International Trade Impact of Cultural Differences Dealing with People Punctuality Greetings

Chapter 4: International Business The Future of International Trade Nonverbal Communication Signals Good Manners Decision Making Global Dependency Global dependency