BBB4MI
Ms. Schnarr
What businesses can you identify
that only operate in Canada
(domestic)?
 ____________
Business is defined as the
manufacturing and/or sale of goods and/or
services to satisfy the wants and needs of
consumers to make a profit
• Read the lemonade example on page 3 paragraph 1
 To conduct business, a company completes
various ________________
Transactions
• A transaction is an exchange of things of value
• Read the lemonade example on page 3 paragraph 2
 A ____________________
Domestic Business is a business that
makes most of its transactions within the
borders of the country in which it is based
• A domestic business in Canada is owned by
Canadians, relies primarily on products and
services made in Canada, and sell the
products it makes and services it provides to
people who live in Canada
• Today it is difficult to be a totally domestic
business
• Read the logging example on page 3 in
paragraph 4
 ____________________________
is the
International Business
economic system of transactions conducted
between businesses located in different
countries
• Any business that conducts financial transactions
outside of its native country is an international
business
• The type of transaction depends on the businesses
involved, not the product
• An international transaction involves a Canadian
business and a non-Canadian one
• Read the sugar example on page 4 paragraph 2
 Who your customers are determines
what market you operate in
 A ______________________
means that all
Domestic Market
of your customers live in the country
where your business operates
Foreign Market
 A ______________________
consists of all
the customers in a country other than
your own
 International businesses can be
companies, government organizations, or
even non-profits that mix both domestic
and international transactions
There are 5 main ways for a business to be
considered an international business;
1. Own a retail or distribution outlet in
another country.
•
E.g., Tim Hortons
Own a manufacturing plant in
another country.
2.
•
E.g., Bombardier – has plants all over the world
Export to businesses in another country.
3.
•
E.g., Lee Valley Tools – exports to retail outlets all
over the world
Import from businesses in another
country.
4.
•
E.g., Canadian sporting goods stores sell running
shoes made by companies in other countries such
as Nike, Puma, Reebok, etc.
Invest in businesses in another country.
5.
•
E.g., Etruscan Resources of Nova Scotia invested in
Haber Mining Inc. in the US
 The term trade is often used
interchangeably with the term business
Foreign Trade
 ______________________
(or international
trade) means the same thing international
business
 When a business in Canada develops a
relationship with a business in another
country, that country is then considered a
Trading Partner
_____________________
with Canada
• International trade occurs between businesses NOT
countries
Students, please complete the following.
 Knowledge Question #6 found on page 32
in Chapter 1 of your Electronic Textbook
 Read the article ‘A Year without Made in
China’ and then write a brief reflection
based on the instructions given at the
bottom of the article
• Posted on D2L under Content/Unit 1/Chapter 1
***Once complete Save As Ch 1 Day 1 in your Unit 1
Folder***
What do you think Canada would
look like today if we were NOT a
nation of trade?
Self-Sufficiency is the ability to
 ___________________
provide for all of your basic needs, such
as food, clothing, shelter and water
without relying on anyone else
 A country is self-sufficient when it
provides everything its population needs
to survive without having to trade with
other countries
 Canada’s _______________
Aboriginal people were
largely self-sufficient in that they hunted
or gathered their own food, made their
own clothes, shelters, etc.
 However, they also developed
sophisticated trade networks in the
1600’s
 As long as people were unaware of goods
available in other, more developed part
of the world, they used what was
available to them
 As _________________
Transportation developed,
different cultures began to come into
contact with each other, where each
culture had something different to share
with one another
 There are some groups within countries
that have refused to give up their selfsufficiency
• E.g., Amish and Old Order Mennonites have
refused to give up their self-sufficiency because
Religious Principals
of their ________________________
• E.g., Commune communities which are based
on the principles of ______________________
Communal Property and
________________________
Shared Responsibility for food production,
education, childcare, etc. are also self-sufficient
 Over 3000 years ago, camel caravans
transported figs, oils and wood across the
deserts of North Africa
 China was also trading silk and tea for
spices with India and clothing from
Northern Europe
 During the time of the Roman Empire, goods
flowed into and out of Rome
 The Romans were the first to make trade
easier by creating roads, bridges and canals
that were used as ________________
Trade Routes
 During the Roman Empire, trade was
Free as governments did not
_________
impose any restrictions
 But with the decline of Rome, Europe was
taken over by groups from Mongolia, who
decided to take what they wanted instead
of trading for it
 Communities were then forced to
become self-sufficient again
 Between 1000 CE and 1500 CE economic
activity began to concentrate in large
towns
 Merchant and craftspeople associations,
called __________
Guilds became as powerful or
more powerful then the town government
 These guilds controlled the
manufacturing and sale of products made
in the town
 Guilds then made foreign merchants or
Fee if they wanted to
traders pay a ______
trade in town and some were shut out
completely
 Guilds became powerful enough to
Trade Policies of the
influence the __________________
entire country
 And therefore, an ______________
Import Tax was
placed on foreign goods that were brought
in and would compete with guild-made
products

Settlers from France first settled in the region of
North America that is now known as Canada
• They gained control over the fur trade
• This became very profitable

Later, settlers from England came and set up the
many trading outposts, the most notable of which
became known as the _________________________
Hudson Bay Company
Trade began to have an immediate effect on
the Aboriginal people
 The principle of self-sufficiency was soon
replaced by the principle of trade

• Create a surplus, trade the surplus for goods you
can’t make yourself, sell some of those goods to
others for their surplus, and so on

Interdependence
This was the beginning of __________________
• The reliance of two or more groups on the actions
of one another to fulfill certain wants and needs
 Settlements were established to support the fur
trade, and settlement attracted more
immigration
 To this point, Canada had not developed strong
____________________
industries
Manufacturing
• But Canada did have a large surplus of natural
resources
• Which were sent to Europe for further processing
(manufacturing)
 Many European companies relied on Canadian
Raw Materials
___________________
What was Traded?
From Europe to Canada From Canada to Europe
• Stylish clothing
• Fish
• Household furniture
• Beaver Pelts
• Manufactured food
• Metals
• Precision tools
• Wheat
• Wood
 The region of North America (that later
became the US) was being explored and
settled at the same time as Canada
 In Canada, the French and English were the
major competitors
 In the US, it was the Dutch and English that
were competing
 By 1720, American trade looked very
different from Canadian trade
 Canadian traders focused on
______________
European connections
 Whereas the US developed a more
__________
Diverse network
• This was largely due to its decrease in trade
with Britain as the result of the American
Revolution
 The US at this time, also became more self-
reliant
• Which contributed to the development of the
Industrial Revolution and the rise of the US
_______________________
manufacturing sector
1867
Canada became a nation in ________,
partially as a response to the fear of
unification with, or domination by the
US
Canadian Pacific Railway
 The ___________________________(CPR)
track was later completed in 1885

• This provided a means to ship goods and
people from coast to coast

Eventually, the US would become
Canada’s largest and most important
trading partner
Japan entered North American
 ________
markets in the early 1950s with
inexpensive toys and electronic
equipment
• Japan’s reputation for cameras, electronics and
automobiles grew steadily throughout the 20th
century
China has also become a major
 ________
economic force in the last 30 years
• 2/3 of China’s exports are from factories that
foreign investors own
 On January 1, 1994, Canada signed the
North American Free Trade Agreement
________________________________________
(NAFTA)
• Meaning that most goods made in Mexico and the US can
enter Canada duty-free
 Trade between Mexico and Canada increased
significantly after the agreement was signed
 This agreement contributed significantly to
economic growth and rising standards of living
for people in all three countries
The Middle East
 Trade is mainly focused on ______
Oil
• Obtained from countries including Saudi Arabia,
Kuwait and Iraq
 Trade however is limited due to unrest
and instability in the area
 More recently, Canada has established
other trading relationships (non-oil) with
the United Arab Emirates, Egypt and
Israel
India
 Has the world’s second largest population at over
1 billion people
 It has become a major centre for
Outsourcing Services and _________________
Manufacturing
_______________________
 However, lack of major highways,
telecommunication services and reliable
electrical power make growth difficult for
businesses
• High taxes and corruption are also persistent problem for
companies
 The overall outlook is positive as the government
is very focused on improving trade
Africa
 A continent of more than 50 nations
 Many nations have unstable or corrupt
governments, and there is enormous social, health
and economics problem throughout
 However, Africa does produce an abundance of
raw materials
 Many African nations have struggled with
independence after European colonist have left or
been driven out
 Yet Morocco and South Africa have emerged as
significant trading partners and the hope is that
more African nations will follow in time
Students, please complete the following.
 D2 Canada’s Trading Partners Activity
• Posted on D2L under Content/Unit 1/Chapter 1
***Once complete save in your Unit 1
Folder***
Is this the end of Globalization?
After reading the above article, do you
think the end of globalization is near?
What are the pros and cons of living in a
“globalized” world?
 International business has grown to
involve almost every country on the
planet due to ________________
Globalization
• A process where national or regional economies
and cultures have become _______________
Integrated
through new global communication
technologies, foreign direct investment,
international trade, migration, new forms of
transportation, and the flow of money
 Modern globalization began shortly after World War II,
with the establishment of the United Nations and the
fostering of trade relations between countries
 The pace of globalization has increased dramatically
over the last few decades because of the following
changes;
• New Technology and Communications
 Business activities can now occur in real time
• Socio-Political Issues
 Rich companies create jobs in poor nations, raise the standard of
living there, and create new consumers
 These new consumers (workers with incomes) then demand a voice
in the political system
 And political boundaries between nations start to blur
 All nations in today’s world must depend
upon each other for products and
services that their industries either
cannot make or grow, or that industries in
other nations make or grow better
 The reliance of two or more nations on
each other for products or services is
called ____________________
Interdependence
There are three main areas of
interdependence in trade;
1. Primary
2. Secondary
3. Tertiary
 This is Canada’s export strength
 Consists of extraction and initial processing
of raw materials; raw materials are taken
from nature and then processed
The 6 major primary industries are;
• Agriculture
• Oil and Gas Extraction
• Fishing & Trapping
• Forestry & Logging
• Energy & Mining
• Water (added to the list for Canada)
 Canada’s primary industries are situated
mainly in western and eastern Canada
Consist of;
A. Primary Manufacturing
•
Known as processing
B. Secondary Manufacturing
• Produces both capital goods (products used by businesses
such as machinery, trucks, etc.) and consumer goods
(products used by consumers such as clothing, packaged
foods, TVs, etc.)
 The secondary manufacturing sector is NOT an
area of strength for Canada
 Canada relies on foreign companies to invest in
businesses in Canada, provide jobs for Canadians,
and make the products we use
•
Over 50 % of all processing and manufacturing businesses in
Canada are owned by foreign companies; such as Kellogg’s, Kraft
Foods, etc.
 Industries that do not make a product or extract
anything, but provide ______________
to
Services
businesses and consumers
•
•
Services provide ____________
Intangible items that people need or
want
E.g. banking, construction, communications, transportation,
etc.
 One of the largest services industries is retail
sales
•
•
•
Canadian retailers are major importers of foreign products
Foreign retailers dominate the Canadian retail service
sector (e.g. Walmart, Costco, H&M, Foot Locker, etc.)
However, only a few Canadian-based retailers have had
success in other markets (e.g. Roots and Aritzia)
 Historically, Canada has traded its
________________________
Primary Resources to countries that
convert them into manufactured goods and
then resell them
 Industries based on primary resources, like
Canada was, are _____________________
Capital Intensive
• Meaning they require a large investment of money in
machinery
 They are not ___________________
Labour Intensive
• Meaning they do not require a large number of
skilled workers
 Canada still exports large amounts of
raw materials
• A primary industry
 However, Canada’s trade in services has
also grown rapidly in recent years
• A tertiary industry
 Business activity on the web is increasing
rapidly, which has further contributed to
the interdependence of nations
 The Internet has become one of the
primary tools that businesses use to buy
and sell
 The global connection that the Internet
provides has transformed the world into
an open marketplace
Students, please complete the following.
 Knowledge Questions #2 & 7 found on
page 32 in Chapter 1 of your
Electronic Textbook
 Thinking Questions #16 & 17 found on
page 33 in Chapter 1 of your
Electronic Textbook
***Once complete Save As Ch 1 Day 3 in
your Unit 1 Folder***
What do you believe are the
advantages of international business
for Canadians?
What do you believe the
disadvantages are?
 Trade is beneficial because we can sell things we
don’t need or things we have specifically made for
trade, and in return we can buy things that we do
need
Trade has the following main advantages:




Creates jobs
Attracting investment
New technology and materials
Offers Canadians a wider choice in products and
services
 Trade leads to more competition, encourages
competitive pricing, technological advances and
improved education and training of employees
 Foreign businesses buy Canadian
products and services which leads to
more jobs for Canadians
Exports are critical to the Canadian
 ____________
economy
• 1 out of every 4 Canadian jobs depend on
exports
40% of everything that is produced
• More than ______
in Canada is exported
• More than ______
50% of everything that Ontarians
produce is exported
 For every billion dollars in exports,
11,000 jobs for
approximately __________
Canadians are created
• Canadian employees then use their wages and
salaries to buy goods and services, both imports
and Canadian made
 When trade is ___________,
Balanced businesses in
both importing and exporting countries
remain profitable and may even grow
_______________
Investment follows ________
Trade
 When demand for a foreign product/service is proven
through trade, many foreign companies will invest in
Easier
an office, factory, etc. in Canada to make trade _______
Costs
and to reduce ______

•
•

Called Foreign Direct Investment
Foreign direct investment creates jobs in other sectors such as
construction, sales and office management
Foreign investors also trade Canadian securities, buy
government bonds or invest money in other Canadian
financial products
•
Called Portfolio Investment
 New technology promotes
___________________
Competitiveness and ______________
Profitability
 If a business can create a machine that
works faster, better and/or cheaper, then
that business will produce a competitive
product for both the local and global
markets
 Many companies in Canada’s technology
triangle (Waterloo Region), export their
products and services all over the world
 Foreign trade provides Canadians with a wide
variety of products and services to choose
from
Because of international business, a wide variety of
foods, fashion and new inventions are introduced to the
Canadian market
• Canadians also get to enjoy foreign travel, banking,
consultation and other international services
•
The benefits received by Canadians because of
foreign trade include;
•
•
•
Lower prices
Better quality
Improved functional design
 The benefits of international business
come at a cost to Canadians
 No other nation has as large a foreign
economic presence in its country as
Canada has with the influence of the US
 American dominance of Canada’s
economy affects us economically and
culturally
Culture
 _____________
is a major export of the US,
since many products also carry cultural
messages
• E.g., music, television, movies, books, etc.
 Local products must compete with
American products for a share of the market
and a share of the local consumer’s mind
 The Canadian Government recognizes the
cultural importance of Canadian
broadcasting, and helps to protect the
Canadian radio and television industries
• E.g., 35% of all music aired on Canadian radio
stations must have Canadian content
 Even through foreign direct investment in
Canada is at its highest level, it still only
accounts for approx. 1% of the corporations
that exist in Canada
 This 1% however accounts for over 30% of
Canada’s business revenue
• This means that there may not be a ton of foreign-
owned businesses in Canada, but the ones that are
here are very large and very profitable
 E.g., IKEA and McDonald’s
Foreign Companies have Foreign Loyalties
_______________________________________
 Managers of foreign companies
operating a branch in Canada want to
please the executives and investors at
home
 Their first priority is their native country
• E.g., if the Canadian branch shows less profit
than the head office wants, it will be closed
 E.g., GM – Windsor, ON manufacturing plant
Lack of Research and Development
_____________________________________
 R&D is essential to growth, efficiency and
profitability
 Foreign-owned businesses typically staff
their R&D departments with employees
from their native country, and the ideas
they produce typically lead to more jobs
and greater profits for that country, not
Canada
Reduced Exports
___________________
 One of the main purposes of a foreign
branch in Canada is to serve the Canadian
marketplace, and therefore exports to other
markets are usually not part of the business
plan
 As a result, Canadian foreign-owned
businesses do not enjoy the benefits
associated with exporting
• Greater employment opportunities, bigger markets
for Canadian goods, etc.
_________________________
Revenues leave Canada
 The money earned by the branch plant in
Canada helps pay the salaries of the head
office staff
 A portion of the revenue also pays part of
the cost of advertising, accounting and
marketing expenses the head office incurs
 This reduces the profit that the Canadian
division realizes, and therefore the taxes
they need to pay to the Canadian
government
Economic Destabilization
_____________________________
 Canadians rely so heavily on foreign
business that any major alteration in the
global marketplace can adversely affect
the Canadian economy
• E.g., a major recession in the US, such as the one
that began in late 2008, also created a recession
in Canada
 Review the D4 Writing an Opinion
Paragraph document (will be done as a class)
 Then, based on what you have learned to date
in this course, write an opinion paragraph
stating your view on the given question;
“Has international trade been beneficial for
Canada?”
***Once complete Save As Ch 1 Day 4 in your
Unit 1 Folder and submit to the Assignments
drop box in D2L***
What do you believe are some of the
barriers to trade that Canadian
businesses might encounter when
wanting to export their goods?
 A barrier to trade is a government-imposed
restraint on the flow of international goods
or services
The most common barriers to trade include
the following;
1. Tariffs.
2. Currency fluctuations.
3. Investment regulations.
4. Environmental restrictions.
5. Trade quotas.
6. Trade embargos.
7. Safety regulations.
 Tariffs are taxes or duties imposed on
imported products or services
 Tariffs increase the price of the imported
product/service in the local market, and
therefore may make the imported good
less appealing to consumers than the
local goods
 Governments use tariffs to protect
businesses from lower priced
competition
• This strategy is called protectionism
Winners
Losers
Domestic Governments Foreign Producers

Collect more tax
Local Producers

Products are more
competitively priced which
means they may sell more
Local Employees

If there is demand for
locally-made products,
local employees will keep
their jobs

Their products are now
more expensive which
means they may sell less
Consumers

Price of foreign-made
goods will rise
Foreign Employees

Job losses in overseas
companies as demand for
foreign products decreases
 Canada can encourage trade with
Lowering its
specific countries by _____________
normal tariff rate on their exports and we
will receive the same treatment on
Canadian exports
 Canada has free trade agreements with
the US, Mexico, Chile, Israel and the
Ukraine to name a few
Currency Exchange Rate is the
 The ____________________________
rate given by one country for another
country’s currency (money)
• The different exchange rates are determined by
international banks
 This fluctuating value of currency can be
a barrier to trade, as costs in the foreign
country may not stay consistent and can
vary greatly with little notice
When the Canadian dollar is below par:
 Exporters are happy
• Increases demand for Canadian products
 Importers are unhappy
• Canadians will have to pay more for the
products get from other countries
 Shoppers are unhappy
• Canadians must pay more for products that
are made abroad
***Note: The reverse is true when the
Canadian dollar is above par***
 Canada’s federal __________________________
Investment Canada Act
(ICA) provides for the review of any significant
foreign investments in Canada by the
Canadian government
• If the business being acquired is over $5 million and
if the investment falls under one of the categories
below, the federal government reviews the purchase
regardless of who the buyer is and must approve
before the deal can be finalized/legal
• Categories; uranium, financial services,
transportation services, culture (e.g. magazines, TV,
radio, etc.)
Other Canadian investment regulations
include:
 The Bank Act
 Broadcasting Act
 Transportation Act
 Limits foreign investment in
Canadian airlines
• 25% foreign, 75% Canadian
 Canadian law requires that all foods,
plants, fish, animals and products
brought into Canada must comply with
Canadian standards
 Canada is also part of an agreement that
prohibits the trade of certain wild
animals and plant species
• Restricted products include certain toxins,
chemicals, waste products, and vehicles without
proper emission controls
 A trade quota is a
Government Imposed Limit on the
_____________________________
amount of product that can be imported
in a certain period of time
• This is form of _________________
Protectionism as it
protects domestic producers due to
decreases foreign competition
• Trade quotas are common in Canada in the
meat, dairy, lumber and textile industries
 A trade embargo is the ____________
Banning of
trade on a specific product or with a
specific country
• Usually used to put pressure on foreign
governments to change policies and/or protest
human rights violations
• Examples have included economic sanctions
placed against Syria, North Korea, and South
Africa by the UN and the trade embargo that use
to exist between Cuba and the US
 The federal government creates certain
laws (acts) to help ___________
Protect the
Canadian consumer from harm
• E.g., Canadian pajama makers must make a
product that is flame-retardant and therefore
all pajamas imported into Canada must also
meet this same standard
• If foreign companies want to sell their
products in Canada all laws (acts) must be
met
 Should Canada be bringing down the
barriers to trade, or should we be
creating more barriers? Is freer trade
good or bad for Canada?
 Opinions vary, but statistics show that the
Benefited
Canadian economy has _____________
from freer trade
 And because of this Canadian foreign
policy is definitely ____________
Pro-Trade
 There are many forms in which an
international business can operate
Some of the more common forms are outlined
below;
1. Import/Export
 Companies that bring goods into the
country and/or ship goods to other
countries
2. Global Sourcing
 The process of identifying, developing, and
utilizing the best source of supply for the
enterprise, regardless of location
3. Joint Venture (JV)
 An entity formed between two or more parties to
undertake economic activity together
 The parties agree to create a new entity by both
contributing equity, and they then share in the
revenues, expenses, and control of the enterprise
 The venture can be for one specific project only,
or a continuing business relationship
4. Wholly-Owned Subsidiary
 Is a distinct legal entity that is owned by a parent
company
5. Strategic Alliance
 A mutually beneficial long-term formal relationship
formed between two or more parties to pursue a set
of agreed upon goals or to meet a critical business
need while remaining independent organizations
 An arrangement whereby two or more organizations
agree to cooperate in the carrying out of a business
activity where each brings different strengths and
capabilities to the arrangement
 Unlike a joint venture, there is no equity stake by the
participants and is a much less rigid arrangement
Students, please complete the following.
 D5 Currency Exchange Activity
• Posted on D2L under Content/Unit
1/Chapter 1
***Once complete save in your Unit 1
Folder***