• PART 1 – 20 multiple choice (total 20 marks)
• PART 2 – 3 SHORTANSWER questions (total 20 marks)
• PART 3 - 1 case followed by 3 questions (total 60 marks)
Session 7& 8 GLOBALIZATION (ch.6&8)
1. Define globalization
- 3 part definition
Expansion of degree and forms of cross-border transactions among people, assets, goods
Growth in direct foreign investment across the world
Increase in economic interdependence – including the integration of world markets &
2. Reasons for going global
Push factors – Competition, more democracy, reduced trade barriers, improved
Pull factors – growth potential, need for resources – materials/people
3. Types/forms of global business
Outsourcing, Joint Ventures, Subsidiaries, Foreign Direct Investment, Licensing and
Franchising, Export & Imports, Mergers &Acquisitions
4. The mnc/borderless/transnational
- It is an enterprise that operates manufacturing and marketing facilities in two or more
foreign countries controlling its operations from the firm’s home country - It is on the rise due to the gradual reduction in trade barriers among many nations of the
- Multinational corporations capitalize on national differences in the cost and quality of
MNC’s/MNE’s are global businesses
They are usually very large e.g. accounting for much of the world economy
Therefore their business activity can have serious positive or negative consequences for
HQ (headquarters) is usually located in the home country – usually in a developed
country, e.g. USA, France, Germany, UK & Japan.
Subsidiaries located in the host country – usually in the developing world.
Referring to MNC’s transnational corporations or borderless corporations (per our text)
simply underscores the increasing pervasive presence of MNC’s and the fact that they
easily cross many different borders.
Pros for the host country
- Economic development – e.g. employment
- Brings management expertise
- Introduces new technology and relevant training
- Develops trade
- Unites cultures & nations
- Supports global co-operation
- No allegiance to host country - Mobile profits
- Power held in host country e.g. R & D
- Difficult to control
5. Trade agreement – NAFTA
N orthA merican Free T radeA ct
- To Reduce/eliminate tariff barriers on
- Almost all goods and services traded
- To facilitate cross-country investment
- To establish rules for government subsidies
- To establish universal rules for health,
- Safety & the environment
- To provide a common market among members
N - Business
F - Employment
T - Trade
Free TradeAreas – all barriers to trade among members are removed. Retain autonomy in
selecting trade agreements with non-members, e.g. NAFTA,APEC
Pros and cons
IMPACT ON TRADE
Pro • Increased trade (from 25% to 43% of GDP in years following NAFTAagreement -
• Canada still over-reliant on exporting low valued-added natural resources versus very
little high-tech exports
• Too dependent on trade with the US compared to other international trading partners.
• IMPACT ON CANADIAN CONSUMERS
• Pro - Canadian consumers are given more choice and exposed to competitive products
with free trade.
• Con – if big U.S. firms come to dominate retail, then we could end up with monopolies
(reduced competition) which might harm the consumer in terms of prices and quality of
IMPACT ON CANADIAN EMPLOYMENT & BUSINESS
Canadian companies that require inputs/resources from US business can obtain them
more cheaply & pass these savings on to the consumers.
Canadian gets more access to United States markets and can generate more sales.
More employment as a result of increase growth in sales.
Con - Competition may be too strong – forcing bankruptcy, job losses through closures.
Job losses could also arise from United States companies deciding to shut down their Canadian
subsidiaries and exporting their tariff-free goods to Canada.
IMPACT ON CANADIAN CULTURE
Pro – Doesn’t impact Canadian culture, cultural exports $4.5 bn and big market in royalties Con – Increasing foreign domination of the Canadian economy will transform Canada into a
pure economic subsidiary of the United States – so May destroy Canadian culture, Canada may
become a ‘subsidiary of USA
IMPACT ON CANADIAN COMPETITIVENESS
One of the central objectives was to encourage Canadian
businesses to become more competitive through exposing
Canadian businesses to greater competition from US
business. Foreign competition forces domestic businesses to improve their operations and their
products or services.
Con – NAFTA did not result in increase in productivity of Canadian business – U.S. productivity
rates have increased at about twice the rate of Canadian productivity increases.
(The success that Canada has experienced in international trade has been achieved largely
through Canada’s relatively weak dollar e.g., Hollywood film industry coming to Canada.)
Session 9 Government & Business (ch.7)
1. Government as guardian of society
- (Tax collector)
Collection of revenue taxes (individual, corporation, sales, property)
- Collection of restrictive/ regulatory taxes (excise & customs duties/tariffs) e.g. on
- Crown corporation or public enterprise is an organization accountable, through a
minister, to parliament for its operations. Crown corporations may be federal (e.g.,
Canada Post, the Canadian Broadcasting Corporation [CBC], the Canadian Wheat Board) or provincial (e.g., the Liquor Control Board of Ontario [LCBO]. Number of CC’s has
been decreasing along with the number of employees.
– Reasons for crown corps:
CCs ‘natural monopolies’, e.g. electricity
CCs protect & provide services that private enterprise might not wish to pursue.
CCs allow for more government control
CC’s implement public policy & safeguard national interests, e.g.Air Canada and Petro.
CC’s protect vital industries, e.g. CNR (Canadian National Railway)
Imposes constraint to modify economic behaviour in the private sector, e.g. Energy,
Health & Safety, Labour, Food, Consumers etc
Imperfect Competition –intervention ensures appropriate provision of goods & services.
Public Interest – protects consumers through regulation, limitations imposed on business
(e.g. foreign ownership, management, pricing etc)
Government Legislation that regulates Business: Charter of Rights and Freedom, Canadian
Human RightsAct, Canadian Labour Code, Bankruptcy and InsolvencyAct, Consumer
Protection and Taxes: Income, property, payroll, sales and excise.
– Purpose is maintaining domestic labour forces, protecting against unfair trade, subsidizing
global business activity, encouraging FDI, nurturing young industries and keeping a trade
Federal & Provincial regulation ensures a fair, efficient & competitive marketplace e.g.
product safety, labelling, guarantees
Competition Bureau, Health Canada & Environment Canada are key players What is the upside with gov