Chapter 1

Trade with Europe

-Explorer from france and england landed in what is now Canada in the 1600s
-Trade grew quickly after permanent settlements were established in 1700s
-Demand for raw materials (beaver pelts, fish, lumber) brought from Canada to Europe to be
manufactured
-England defeats France in the 7 year was which led to Canadas reliance on England for finished
goods
-Many major cities were established near ports
Trade with USA
-US declared independence from Britain in the late 1700s
-Decrease in trade, because no trade between the Americans and British
-Need for self-reliance
-Invention of steam engine, cotton gin helped rapid grown of American industry
-Industrial revolution + Independence = american prosperity
-Americans had slave labour
Canada built a trading relationship by supplying raw materials to the US
-US is Canadas largest trading partner
Trade with Asia
-Canada began trade with Japan after WW2
-At that point, Japan was becoming known for high quality electronics and automobiles
-Chinese-made products are relatively less expensive and more popular
Trade with Mexico
-developed since signing NAFTA in 1993
-Goods made in mexico and US enter in Canada duty free
-Duty/Tariff: a tax that is placed on imports in order to make the price of domestic good
competitive
Emerging Markets
Africa
-African imports to canada are very low
-Businesses opportunities limited by unstable government lack of infrastructure, rural economic
-Rich in primary resources
-Sone countries (Morocco, South Africa) are beginning to emerge as major trading partners
Middle East
-Has traditionally centered on oil, but this commodity is not sustainable
-Political instability, lack of industrialization in much of the region has limited trade
-UAE (Dubai), Israel, and Egypt have established trading relationship with Canadian businesses
that do not depend on oil

India
-Population of over one billion people
-Workforce generally young and well educated
-Has become major centre of outsourcing and manufacturing
-Lack of infrastructure and widespread corruption are persistent problems
-Indian companies are aggressively expanding into international market
Globalization and Interdependence
globalization :The process whereby national or regional economies and cultures have become
integrated through
1.
2.

New Global communication technologies

Foreign direct investment (FDI)
Investment in a company that is located in a different country than the investor to control
some or all of the business operations
3.
International trade
4.
Migration
5.
New forms of transportation
6.
Flow of money
The world is becoming more connected as sales, finances, monetary markets, manufacturing,
transportation and communication are becoming integrated
Current challenges to globalization
1.
Succeeding in rapid-growth markets is harder than it used to be
B(razil)R(ussia)I(ndia)C(hina)
2.
One size does not fit all markets
3.
Policy has become more important and less predictable
4.
Good people are hard to fine
Response
1.
Think like a start up
2.
Adapt your approach to new operational complexities
3.
build new strategies with the government
4.
embrace bold approaches to talent management
The Main Areas of Independence
The reliance of two or more nations on each other for products or services

1.
Primary Industries
-The sector of the economy characterized by the extraction of natural resouces from earth or sea
Five major primary industries
-Agriculture
-Fishing, hunting, and trapping
-Forestry and logging
-Energy
-Mining
*water* <- considered a major (6th) primary industry in Canada
2.
Secondary Industries
-Industries that create finished, usable products
Two Types of Manufactures
-Primary Manufacturing takes raw materials and PROCESSES them into industrial materials.
-Secondary Manufacturing produces: capital goods (products used by business) and consumer
goods (products purchased by individuals
Branch Plant
-Canada is known to have a branch plant economy
-Branch Plant: a factory owned by
Branch Plant Disadvantage
1.
Reduce Business Functions (R&D, Upper MGMT)
2.
Innovation
3.
Use of Non- Canadian Material
4.
Exports
3.
Tertiary Industries
-Industries that do not make a product or extract resources from the earth, but provide necessary
services to consumers and other businesses.
The service sector
Examples: banking, construction, communication
How International Business Helps and Hurts
Helps
Variety of products
-styles, models, price ranges
-lower wages in developing nations = lower prices for consumer
-lower overhead = higher profits
New Market, more jobs
-Demand for your product affects entire supply chain
-increased profits =increased R&D (research and deveolpemt)
-More jobs for (Canadian) scientist and engineers
-More innovation -Canadian competition

Foreign Direct Investment (FDI)

-It is the difference from exporting or licensing a product to another firm
-Therefore we separate it from the concept of trade
-Full of substantial stake and interest in company
-buildup of factories, purchasing stocks,taking parts in strategic decisions.
Flow of FDI
(amount
per year)

vs

Stock of FDI
(total value of foreign owned
assets at any one time)

Investing in China
-communist government, market economy
-largest market in the world
Negative
-very complex business operations
|-you need capital and you need to know people
-still a very poor country
-Canadas average salary ($28,500/year) + Chinas average salary ($750/year)
-poor infrastructure
-highly regulated, inconsistent
-less experience corporate work force
Portfolio Investment
-Purchasing stocks, bonds, or other financial assets
-passive investment
New processes and Technology
Hurts
What defines the Canadian Identity?
-Loss of Culture/Identity
-Film, radio, literature INDUSTRIES
Increased foreign ownership of companies in Canada
-Foreign companies are loyal to investors and execs in home country
-Research and development is usually carried out in the home country
-Exports are reduced, as products manufactured in branch plants stay in Canada
-Revenues leave Canada to pay head office cost
-Economic Destabilization