Textbook Notes (368,848)
Canada (162,204)
MGTA01H3 (583)
Chapter 5

Chapter 5 International Business.docx

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
International Business – Business activities that involve exchanges across national boundaries Ex. Canadian business selling to US customer, Swiss business selling to Cdn. Customers Globalization – The integration (mixing, combination) of markets globally Imports – Products that are made or grown abroad and sold in Canada Exports – Products made or grown In Canada that are sold abroad The World Bank uses per capita income (The average income per person of a country) to measure and divide them into one of four groups High Income Country – the per captia income is above U.S. $10,065 Upper-Middle –income – between U.S. $3,255 and U.S. $10,065 Low middle-income – between $825 and U.S. $3,255 per capita income Low income countries – Less that U.S. $825 per capita income Competitive Advantage No country can make everything quickly, cheaply and well. Some countries better equipped than others to make particular products. (China with T-Shirts) In countries some things you can make others you can’t (Maple syrup) Absolute Advantage A nation's can produce some goods or services more cheaply or better than in any other country. Ex. Saudi Arabian oil, Brazilian Coffee beans (Condition and low labour wages) Comparative Advantage A nation chooses to specialize. It makes some products more cheaply or better than other products. EX. China produces cars for $2000 and cheese for $500, UK produces cars for $3600 and cheese for $600 China’s one car = 4 cheeses which in the UK, while one car in UK produces a car = 6 cheeses UK has a comparative advantage in Cheese therefore people in china should trade for cheese with the UK instead of trying to produce it themselves. (China is better off trading for cheese) National Competitive advantage A country will be inclined to engage in international trade when the following factors are in favor of the country: Factors Condition (Factors of production) hard to produce in the nation Strategy (Good use of the products in the nation) Demands are high Supporting industries Import – Export Balances Canada is an “Open Economy” Canada is: “open” to trade, “open” to flow of goods, and services across border Because we can get it from the best stuff from the people who make the best, it raises living standards 393 Billion dollars of exports 1500 Billion GDP annually (26% of the stuff made are exported) 330 Billion Of the exports go to USA (84%) We export goods to get more money in the country and create more jobs Too much importing can cause unemployment because of Mexico and China makes stuff much cheaper. But it improves our standard of living… Therefore we use something called Balance of trade Balance of Trade = Exports – Imports The difference in value between a country’s total exports and its total imports Trade Surplus – Occurs when a country exports more than it imports Trade Deficit – Occurs when a country imports more than it exports Historically: Canada’s Balance of Trade was positive we exported more than we imported In 2008, that changed… (Because Canada’s currency went up. Look at Exchange rate section) Balance of Payment = Total money flowing in – Total amount of money flowing out Like balance of trade, but includes more items: Tourist spending (more $$ out than $$in) Foreign aid ($$ out) Profit of Cdn business overseas (in) Profit of foreign business in Canada (out) Money for Canadian Military (Out) Balance of payments is historically: Negative i.e. Money flows out of Canada Why….? Bad weather Cuba - weather, Paris – sights Therefore wethose a lot of money from tourism Canad
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