International U2

Foreign Portfolio investment: investment in businesses located outside Canada through stocks, bonds & financial instruments. It allows Canadians to spread out their investments which is less risky than investing in just one area. It also provides greater choice and Opportunity.

Importing: To bring prods/services into a country, for use by another business or for resale. The majority comes from the US

Global sourcing: The process of a company buying equipment, capital goods, raw materials, or services from around the world.

Exporting: To send goods/services to another country, for use by a business for resale. The majority goes to the US

Value added: The amount of worth added to a product at each stage of processing. diff between raw materials and finished goods.

Licensing Agreement: It grants permission to a company to use a prod, service, brand name or patent in exchange for a fee/royalty to achieve faster growth gain flex, markets and increase proftis

Exclusive Distribution Rights: A form of LA that grants a company the right to be the only distributor of a prod in a specific geographic area or country

Franchise:An agreement granted to an indiv or group by a company to use that company’s name, services, products and marketing. For a fee the franchisee in the areas of financing, operations, human resources, marketing, advertising, quality control etc

Joint venture: a new company w/ shared ownership is formed by 2 businesses, one of which is usually located in country where the new comp is established

Tariffs: The most common type of trade barrier, are taxes/duties put on imported products/services. They raise cost of imports, so that locally manufactured products are less expensive + more appealing to consumer

Protectionism: The theory/practice of shielding domestic industries from foreign competition, often through trade barriers such as tariffs.

Trade quotas: A govt imposed limit on the amount of product that can be imported in a certain period of time; govt doesnt put a tax but limit how much enters country.

Trade Embargo: A govt imposed ban on trade of a specific product or w/ a specific country, often declarred to pressure foreign govts to change polices.

Trade sanctions: Ecomomic action taken by a country to coerce another to conform to an international agreement or norms of conduct

Foreign investment restrictions: Canadian law w/ greatest impact is the investments Canada Act. Ensures that all foreign investments are reviewed to find how they will benefit canada.

Standards: countries have different standards for products in areas such as enviormental protection, voltage, and health and safety. The international organization for standardization is a network of standardization groups from over 1700. Countries established to set quality regulations.

Exchange Rate: amount of one country’s in relation to curremcy of another country. The canadian dollar is most often quoted agaisnt the US dollar bc the 2 countries are the largest trading partners WOH$: importers, canadian travellers, major league sports teams LOH$: exporters, canadian tourism, canadian retailers

Floating Rate: exchange rate that is not fixed in relation to other currencies. The price at which currency w/ a floating rate is bought adn sold fluctuates according to supple and demand

Currency revalutaion: the increase in value of a currecny bc the demand for the currency is > than the supply. Currency deval: decrease in value of a currecny bc the supply of that currecnt is > than the demand.

Hard currencies: stable currencies such as the euro and US and CAD which are easily converted to other currencies on the world exchange markets. Soft currencies: a currency that belongs to a country w/ small weak ecoomy, difficult to convert Yuan, Russian ruble

Currency speculating: buying holding or selling foreign currency in anticipation of its value changing in order to profit from fluctuations in the price of currency.

Time Zones: Communication tech allows the world of international business to operate 24 hrs a day. Certain methods of communication can be used at any time(email, tele) Some methods offer immediate feedback and interaction; others do not.

Factors affecting the exchange rate: Ecomic conditions in canada-inflation rate, unemployment rate, GDP, interest rates. Trading betweem countries the more flavourable the terms of trade(comparison of exports to imports), the higher the currency exchange. Politics- political tension and instability or the threat of terrorism decreases the demand for a currency. Psychological factors- historical significance and stability chage the way way currencies are viewed.

Foreign subsidiaries: often referred to as a wholly owned subsidary, a branch of a company that is run as an independent entity in a country outside of the one in which the parent company is located. The parent company sets financial targets and allows the subsidary to manage its own day to day operations as long as those targets are being met.