Chapter Four

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Chapter Four

• Business in aBorderless World

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International Business

• Refers to the buying, selling, and trading of
  goods and services across national boundaries

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Absolute Advantage

• Absolute advantage exists when a country is the
  only source of an item, the only producer of an
  item, or the most efficient producer of an item.
• Example DeBeers Consolidated Mines, Ltd.
  (virtually controls the worlds diamond trade).

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Comparative Advantage

• Comparative advantage occurs when a country
  specializes in products that it can supply more
  efficiently or at a lower cost than it can
  produce other items.
• Example the U.S. agricultural commodities, such
  as corn and wheat, Canadian automotive products

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Where Canadian ExportsWent in 2000
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Source Statistics Canada and US Census
Bureau, http//strategis.ic.gc.ca, June 4, 2001
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Top 5 Countries Canada Traded with in 2000
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Source Statistics Canada and US Census Bureau,
http//strategis.ic.gc.ca/sc_mrkti/tdst/tdo/tdo.ph
p
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International Trade Barriers

• Economic
• Legal/political
• Social/cultural
• Technological

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A Comparative Economic Analysis of Canada,
Switzerland, andthe United States
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Country Corruption Perception Index
Top 10 Least Corrupt Countries

• 1. Denmark
• 2. Finland
• 3. Sweden
• 4. New Zealand
• 5. Iceland
• 6. Canada
• 7. Singapore
• 8. Netherlands (tie)
• 8. Norway (tie)
• 10. Switzerland

Top 10 Most Corrupt Countries
1. Cameroon 2. Paraguay 3. Honduras 4. Tanzania
(tie) 4. Nigeria (tie) 6. Indonesia 7. Colombia 8.
Venezuela (tie) 8. Ecuador (tie) 10. Russia
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Source Transparency International, The
Transparency International 1998Corruption
Perceptions Index. www.transparency.de
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Cross-Cultural Similaritiesin Eating Trends
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Sources Tullio Caputo and Neil, What Canadians
are Eating, Canadian Social Trends, Statistics
Canada, Winter 1990 KathleenDeveney, Americas
Heartland Acquires Global Taste, Wall Street
Journal, Oct. 11, 1995, pp. B1, B6 Hot Stuff!
Canadian Grocer, June 1996, pp. 9-13 Out of
the Deep Freeze, Canadian Grocer, Oct. 1996, pp.
22-23 Norihiko Shirouzu, Home-Cooked Fish,
RiceLoose Importance in Japan, Wall Street
Journal, Oct. 11, 1995, p. B1 Snack Solutions
for Guiltless Grazing, Canadian Grocer,Sept,
1996, pp. 9-19 and Gabriella Stern, French Add
Convenience to Customary Cuisine, Wall Street
Journal, Oct. 11, 1995, pp. B1, B6.
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GATT and NAFTA

• General Agreement on Tariffs and Trade (GATT)
• Trade agreement that provides a forum for tariff
  negotiations and a place where international
  trade problems can be discussed/solved. The World
  Trade Organization (WTO) is responsible for
  administering GATT.
• North American Free Trade Agreement (NAFTA)
• Eliminates most tariffs and trade restrictions on
  agricultural and manufactured products between
  Canada, Mexico, and U.S. (1994-2009).

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Hot Spots in Europe
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Source The Atlantic Century? Business
Week,February 8, 1998
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Capital Into andOut of Europe
Billions of Dollars (U.S.)
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U.S. CompaniesAcquiring in Europe
European CompaniesAcquiring in U.S.
Source Europe Rising, Business Week,February
8, 1999, p. 16.
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Increasing GlobalInvolvement
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Multinational Corporation Direct Investment Joint
Ventures Contract Manufacturing Licensing Trading
Companies Exporting
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The Fifteen Largest Global Public Corporations
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Source The World Super Fifty,
Forbes,www.forbes.com/forbes/2001/0723/134tab1_pr
int.html
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Solve the Dilemma

• a. What are the key issues that need to be
  considered in determining global expansion?
• b. What are some of the unique problems that a
  small business might face in global expansion
  that larger firms would not?
• c. Should Audiotech consider a joint venture?
  Should it hire a sales force of people native to
  the countries it enters?

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Explore Your Career Options

• What are some of the skills required to be a
  successful businessperson in the borderless world
  of the 21st century?

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Additional Discussion Questions and Exercises

• 1. Look at the Foreign Exchange section of the
  business section of a newspaper. What nations
  currency or exchange rate is listed? If you
  were traveling to Germany, how many euros would
  equal one dollar? How many Swiss francs would you
  need to equal one dollar?
• 2. Assume your firm wishes to do business by
  selling manufactured products in other countries
  but does not wish to do actual manufacturing in
  Canada or the other country. What options are
  available?

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