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Chapter 5

MGTA01H3 Chapter Notes - Chapter 5: Protective Tariff, North American Free Trade Agreement, Canadian Dollar

Management (MGT)
Course Code
Chris Bovaird

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Chapter 5 management
International Business/Trade
Selling products to another country
For example: selling swiss chocolate to Canadian customers
International trade/business has been going on for thousands and thousands of years
-> due to technological innovations that help communication + transportation for cheaper amounts
-> makes it easier to communicate around the world
-> developments allowed for international trade
international business why?
- Canada is an “open” economy
Doors are wide open to people selling us their stuff
Open to stuff made in different countries being available in our stores
Open for business
International business/trade is important to Canada
North Korea
Closed economy
You can’t buy anything made some place else
Kim family doesn’t want the north Koreans to know how bad the goods are
No imports/exports
Accused of not being fully open
Doesn’t welcome Japanese electronics
Doesn’t welcome American cars
Makes it expensive to sell other country stuff in their country due to their huge population
If we make stuff at home everyone has a job (indian theory)
Americans (partly open but think of ways to make it less open) grasped the indian theory as well due to
the increase in employment
Looking for a scapegoat
Chinese make a lot of good stuff cheap

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Law-> has to be same American content
Stimulus money to give jobs to construct stuff but rule was wood had to be purchased from
an American company
Canada is an open economy because it makes us better off raises living standards
If you buy the best stuff from countries who have made it for the longest amount of time and the
cheapest allows for Canadians to have the best and end up better off
China and Germany + us and japan have the most exports
Canada is 11
1.3 trillion = 30% Canadian GDP = exports
- Canadians sell to americans
- too dependent on one customer = bad
- should sell more to Chinese, Japanese, brazillians and germans
North America free trade agreement
USA, Canada and mexico
450 million people
No barriers, no protection
Promotes trade between the three
Canada is dependent on selling most goods to US because they’re next door, speak the
same language and share a world view
About 20 years ago, Canadian government and US government believed that since they
share the continent they devised an agreement to distinguish barriers and fees between
them two
Allows for an “open” border
Increased exports -> imports between the US
Involved mexico as well
Basically get rid of artificial barriers
Competitive advantage -> two sources -> absolute and comparative
What we decide to sell vs what we decide to buy
No country is capable of producing everything cheaply and efficiently
Not everything can be better than everyone else
Some countries have advantage over others in different areas
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