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Business Notes

By: Dessi Dobrolevska

Five Functions of a Business
o Finance
 Investing in other markets
 Engaging innovators (work for us and you’ll be paid)
o Management
 Plans and organizes business activities
 Seek opportunities in other countries to expand business
o Human Resources
 Hiring, firing, wages, benefits, record keeping, health and safety
 Outsourcing HR to more inexpensive countries is becoming more common
o Production
 Factors: Land, capital, labour, technology, entrepreneurship
 Accessibility and expenses vary in different countries
 Obsolescence
 When a product no longer functions as well as the newer models on the
o Newer models of technology often just change the shape of data
chips or product size before releasing a new product
 Perceived Obsolescence
 A person with an Iphone surrounded by people with Iphone10s will want
an Iphone 10 because they will feel lets out, or out of date
o Marketing
 The Four P’s may vary in different countries despite being offered and
manufactured by the same business
 Price
 Place
 Product
 Promotion
International Business Includes (FOIL)
o Foreign Investment
o Outsourcing
o Imports/Exports
o Licensing
o The movement of goods, services, labour, technology and capital (money) around the
o For Globalization:
 Economic Growth
 Prosperity (Peace)
 Jobs
 Common Culture
 Everyone Succeeds
o Against Globalization:

Wealth Disparity
 (The rich continue to get richer while the poor are still poor)
 Environmental Threat
 Hurts Human Rights
 Anti-Democratic
 Homogenized Culture
Multinational (Transnational) Companies
o A enterprise (company) that conducts business in several countries
 Account for 66% of world trade
 Account for 33% of world output
 About 25% of trade takes place between multinationals
 Success:
o Global mindset
o Ability to work with diverse groups of people
o Can think ahead
o Can manage change
o Employee learning system
o Currency Fluctuates
 Creates a trade barrier due to the uncertainty of how to price goods and services
o Currency Exchange
 One countries currency as compared to another
 Economic conditions, trade, politics and psychological factors can effect
exchange rate
o Soft Currency
 Currency that fluctuates often and is not stable or accepted during trade
 Difficult to convert into other currencies
o Hard Currency
 Widely accepted as trade currency due to its stability
 Easily converted on world exchange markets
 Many countries have hard currency reserves
 The US dollar is used most often during trade
o CAD vs. USD
 The CAD is not in high demand (currently) which means it’s not worth as much
compared to the USD
 US economy is doing better than the Canadian economy
 Historically, the USD has always been higher than the CAD
o Winners of a low CAD
 Exporters
 Canadian Retailers
 Canadian Tourism
o Losers of a low CAD
 Importers
 Canadian Sports Teams
 Canadian Travelers

o Floating/ Flexible Rate
 Exchange rate that is not fixed when compared to other currencies
 Depends on supply and demand
o Currency Revaluation
 Government of a country adjusts the value of a currency
 Increased value
o Currency Devaluation
 Government of a country adjusts the value of a currency
 Decreased Value
o Currency Appreciation
 Affected by economic factors
 Increase in value due to high demand of the currency, but the limited
o Currency Depreciation
 Affected by economic factors
 Decreased in value due to the high supply of the currency and low
demand of it
Top Canadian Imports
Fruits and Vegetables
Machinery Equipment
Crude Oil

Top Canadian Import Partners
United States of America (54.5%)
China (11.5%)
Mexico (5.6%)

Top Canadian Exports
Top Canadian Export Partners
Motor Vehicles and Parts
United States of America (76.8%)
China (3.7%)
United Kingdom (2.9%)
Note: The Exports do not correspond with the countries to the side (separate statistics)
Business (General)
o The manufacturing and/or selling or good and services to meet the needs and wants of
 In turn they make a profit
o An exchange of value
 A car in exchange for 20, 000 dollars
 Value given to commodities (car) and social constructs (money)
Domestic Business (Transactions)
o Most transactions are made within a single countries boarders
International Business (Transactions)
o Transactions are conducted between business located in different country boarders
 Considered to be IB
 Owning retail or distribution in another country
 Owning a manufacturing plant in another country
 Exporting to another country
 Importing from another country
 Investing in a business from another country

Trading Partner
o When one business creates a relationship with another business (often in another
o NOTE: International trade takes place between BUSINESSES NOT COUNTRIES
Trading with the USA
o Canada’s largest trading partner
o Declared independence from Britain in 1700’s
 Needed to become self-reliant
 Canada supplies all materials needed for the states to achieve their goal
Trading with Mexico
o Since NAFTA – 1993
o Goods enter under duty free (tax free)
o Been one of Canada’s top 5 trading partners since 2000
Trading with Asia
o Began trading with Japan after World War Two
 Japan: Known for high quality products
 China: Known for inexpensive well made products
The Emerging Nations
o BRICS – slowly becoming global economic powers
 Brazil
 Russia
 India
 China
 South Africa
o Reliance of two or more nations for products or services
 Primary Industry
 Example: Orange Plantation or Growers
 Secondary Industry
 Example: Product Manufacturing (Orange Juice)
 Tertiary Industry
 Example: Warehouses, Retail Stores, Consumers
Branch Plants
o Factories in other countries owned by companies located in other countries
 Example: Kellogg – has factories in Africa, Asia, The Middle East, South
America, Central America and more
International Business Helps
o Creates jobs
o Attracts investors
o Attracts technological advancements
o Consumer goods become more available
o Can improve the economy
International Business Hurts
o Creates wealth disparity
o Can hinder cultures
o Jeopardizes the environment

o Can reduce government sovereignty (business may have more power than the
o Potential job loss due to outsourcing
Foreign Portfolio Investment
o Investing in a business outside of Canada (if located in Canada) through bonds, the
stock market and other financial instruments
 Allows for investments to be diverse, which decreases the risk of losing a lot of
 Provides greater choice of investment markets
o Bringing good or services into a country for use, or business resale
o Sending goods or services to another country for use or resale
Global Sourcing
o When companies buy equipment, raw materials, capital goods or services from around
the world
Value Added
o Worth added to a product at each stage of processing
o The difference in cost between the raw material and the finished product
Licensing Agreement
o Grants permission to a company to use a product, service, brand, name or patent in
exchange for a fee referred to as a royalty
Executive Distribution Rights
o A form of licensing agreement
 Grants a company only the rights to distribute a specific product to a specific
geographic area or country
 Example: Disney
o An agreement granted allowing an individual or group to use the companies name,
services, products and marketing
o For a certain free, the franchisor (owns the company) allows the franchisee (the one who
is buying rights to it) help with:
 Financing and operations
 Human resources
 Marketing – advertising
 Quality control
Joint Venture
o A new company with shared ownership is formed by two separate businesses
 One of the joint venture business starters is often located in the country where
the new company is based
Foreign Subsidiaries
o Wholly owned subsidiaries are branches of companies that run as independent entities
outside of where the parent company is located (different country)
 Parent companies will set financial targets to be met by the subsidiaries
 The subsidiaries run their own day-to-day operations in ways they can
incorporate the culture and customs of the country they are located in

o Protecting domestic businesses from foreign competition often through trade barriers
such as tariffs
o Trade Barriers - taxes or duties implemented on goods and services
o Raise the cost of imports so that locally manufactured goods are less expensive, can
compete and appeal more to customers
 Trade Quotas
 A limit to the amount of product that can be imported over a certain time
span implemented by the government
 Trade Embargos
 A ban on a specific product or on a specific country implemented by
governments to pressure foreign governments to change their policies
 Trade Sanctions
 Economic action taken by a country meant to force another to conform to
an international agreement or norm of conduct
Foreign Investment Restrictions
o Investments Canada Act
 Ensures all foreign investments are reviewed to determine how they will benefit
o ISO (International Organization for Standardization)
o Network of 170 countries
 Establish set quality regulations
o When a business moves to another country as a way to save money
 The same work gets done for only a fraction of the cost
 This is often done with the call centers and production aspects of