Chapter 2 Questions
Think About it – On your own
2.1. What is importing? Give an example of an import item.
2.2. State five of Canada’s major imports.
2.3. What is exporting? State an example of an export product.
2.4. State five of Canada’s major exports.
2.5. Explain the concept of value added.
2.6. Define licensing agreement. Give an example.
2.7. Define franchise.
2.8. What is included in a franchising agreement?
2.9. Name five Canadian-owned franchises.
2.10. Give an example of a Canadian joint venture.
2.11. What is a foreign subsidiary? Give two examples of Canadian-owned foreign subsidiaries.
2.12. What is a tariff?
2.13. Define protectionism.
2.14. What is a quota?
2.15. Compare and contrast tariffs and quotas.
2.16. Define embargo.
2.17. Explain how standards can be a trade barrier.
2.18. What is an exchange rate?
2.19. If CAD$1.00 = USD$0.89, how much would CAD$1,000 be worth in U.S. dollars?
2.20. Who are the winners and the losers of a high Canadian dollar?
2.21. What factors influence the exchange rate?
2.22. What is speculating?
2.23. Why are time zones considered a barrier to international business?
Group Questions
1. Explain why Canada imports and exports oil.
2. Should Canada build a pipeline that runs from east to west?
3. Have the students research the Alberta tar sands. Have them make a graphic organizer o
the pros and cons of the tar sands.
1. Why is e-waste exported?
2. To which countries is it exported?
3. How does e-waste provide employment?
4. How can consumers help prevent the export of e-waste?
Chapter review
Knowledge
1. Why do countries import and export products?
2. Explain why a company would use a licensing agreement.
3. What are the advantages and disadvantagesof a franchise?
4. Explain why a company would choosea licensing agreement over a franchise.
5. What are the advantages and disadvantagesof a joint venture?
6. Why would a company set up a foreign subsidiary?
7. Why is the Canadian government againstprotectionism?
8. Why is the Canadian dollar trading well againstthe U.S. dollar?
9. How has communication technology expanded international business?
Thinking
10. Which of Canada’s major imports provide value added?
11. Which of Canada’s major exports provide value added?
Why is this important information?
12. One of the imports Canadians enjoy the most is fresh fruit. Explain how a Canadian’s
life would be altered if fruit was not imported.
13. A Canadian manufacturer of hearing aids is planning to expand into China. It is deciding
between a licensing agreement, a joint venture, or a foreign subsidiary.
a) What are the advantages and disadvantages of each of these types of international
business? Create a chart to show your findings.
TYPE
ADVANTAGES DISADVANTAGES
b) Which form of international business do you recommend? Why?
14. State three Canadian businesses that lose because of a high Canadian dollar. Explain.
15. State three Canadian businesses that win because of a high Canadian dollar. Explain.
16. Why do companies speculate?
Communication
18. At one time, Canada considered raising tariffs on imports from Myanmar in an effort to
influence the government of Myanmar to release pro-democracy leader Aung San Suu
Kyi. Suu Kyi, a Nobel Peace Prize winner,was a political prisoner in Myanmar military
custody at the time.
a)
Where is Myanmar?
b)
What do you think of the Canadian government using a tariff as a political weapon? Provide
a well-reasoned argument.
c)
Using the Internet, find out why Suu Kyi was awarded the Nobel Peace Prize.
d)
Using the Internet, find out what is currently happening to Suu Kyi. She is currently in
prison after being arrested in 2003. She was arrested after the Depayin Massacre in which
one hundred of her supporters were killed.
19. You are doing business with a supplier in Shanghai.At 9:00 a.m. you discover that you
need to find out information about a costing quotation. Should you phone or email? Explain.
Application
20. A Canadian company can produce a mattress using $160 worth of raw materials and
$120 worth of labour, and shipping costs will be $27.
A Chinese company can produce the mattress using $160 of raw materials and $40 for
labour, with $50 for shipping.
Assume that the Canadian tariff for mattresses is 50 percent. The Canadian retailer has a
profit margin of 150 percent.
a) Calculate the price of the Canadian-produced mattress.
b) Calculate the price of the Chinese-produced mattress before the tariff.
c) Calculate the price for the Chinese-produced mattress after the tariff.
21. The United States issued a 300 percent tariff on all Roquefort cheese imported into the
United States from France. The tariff was $ imposed as a penalty against France
because it refused to import hormone-fed beef from the United States. Roquefort is
considered the king of cheeses in France and this tariff is seen as a symbolic move.
a) Suppose a specialty cheese store in Washington imports USD$30,000 worth of Roquefort
cheese. Calculate the tariff on the cheese.
b) Who wins and who loses with the tariff? Be specific.
c) What do you think of the tactics used by the United States?
22. As a Canadian manufacturer, you have a choice to purchase raw sell the goods for
USD$1.2 million, the United Kingdom for GBP $ materials from three countries. The
United States is offering to 650,000 and South Korea for KRW1.7 billion.
a) Which is the better deal?
b) Why would you want the supplier to be ISO certified?
c) What other considerations would you take into account when making your decision?
23. Use the following chart to complete the currencyconversions below. The chart shows
the currency exchange rates for CAD$1.00.
a) Convert the following Canadian amounts. Multiply by the CAD.
CAD AMOUNT COUNTRY CONVERSION CURRENCY NAME
b) Convert the following amounts to CAD. Divide the amount by the rate.
COUNTRY AMOUNT CAD AMOUNT
c) Find a currency converter online and complete the above calculations using current currency
rates. Redo one calculation ten minutes later. Why is the amount different?
24. Vivek owns a business in Ontario, but 90 percent of his business is exported to the
United States. Hehas a contract with an American company to sell USD$500,000 worth of
product. Delivery is in sixty days. Vivek knows the CAD is at $0.92 today, but is
expected to drop to $0.89 in sixty days.
a) Calculate the price of the shipment in CAD if the American company paid today when it
ordered.
b) Calculate the price of the shipment in CAD if the American company pays on delivery in sixty
days.
c) What is it called when the value of a currency goes down?
d) When should Vivek ask for the payment? How much more does he make if he receives the
highest possible payment?
f) What are the risks of quoting in USD?
g) If Vivek had asked for payment in CAD, what could the American company do to save
money?
25. Using the time zone map, complete the following questions:
a) If it is 9:00 a.m. in Toronto, what time is it in Frankfurt, Germany?
b) If it is 12:00 p.m. in Ottawa, what time is it in Cape Town, South Africa?
c) Is it is 2:00 p.m. in Windsor, what time is it in Auckland, New Zealand?
d) If it is 4:00 p.m. in Sudbury, what time is it in Hong Kong, China?
e) If it is 10:00 a.m. in Edmonton, what time is it in Seoul, Korea?
f) If it is 11:00 a.m. in Vancouver, what time is it in Tokyo, Japan?
g) If it is 3:00 p.m. in Victoria, what time is it in New Delhi, India?
h) If it is 8:30 a.m. in Halifax, what time is it in Cairo, Egypt?
i) If it is 5:00 p.m. in Toronto, what time is it in Vancouver?
j) If it is 2:00 p.m. in St. John’s, what time is it in Santiago, Chile?
k) Check all of your answers using the Internet or your iPod.