Chapter 2 – The Importance of International Business 2 -1 – Aspects of International Business Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
International Trade – Definitions • Importing – Bringing in products & services to satisfy needs & wants of a country’s consumers • Exporting – Fulfilling a country’s needs & wants by selling products to companies, organizations or governments in that country • Products – Goods or Services Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Importing • Why? – 1. 2. 3. 4. Products in which other countries specialize Must be Demand Research Contact foreign suppliers Finalize the purchase – – Shipping? Delivery? Payment? Check that goods arrived OK Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Exporting 1. 2. 3. 4. 5. Must be Demand for product Find potential customers Must meet customers’ needs Agree on sales terms Other challenges 1. 2. 3. Production capacity Coping with potentially high cost of doing business internationally Understanding the differences of doing business in other country 6. Pack goods for shipping • • Faster Shipping = Higher Costs Ontario = >50% of Canadian Export Revenue Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Starting an Import/Export Business • • When are we ready to trade internationally? This depends on… 1. Management commitment 2. Competitive advantage 3. Cash flow 4. Capacity to produce A plan is needed Markets must be chosen carefully The more aggressive the expansion plan, the more cash flow you’ll need. Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Trade Missions • • Outgoing or incoming Mission organized, participants can focus on doing business Canada Trade Missions are led by the Minister of International Trade Team Canada Missions • • – – Led by the Prime Minister Usually focused on one particular country Set up face-to-face meetings with counterparts in other nation Where have recent trade missions been? Peter Van Loan (Image source: http: //www. tcm-mec. gc. ca/ctm-en. asp & http: //pm. gc. ca/eng/cabinet. asp? feature. Id=8, October 17, 2007 & November 19, 2008) Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Trade Shows • • Matches potential buyers and sellers Usually focused on one industry – • Promoted via – – • Eg. Canadian Western Agribition (livestock!) Internet Trade publications Advertisers Suppliers My Friend Phil! (Image source: http: //money. howstuffworks. com/trade-show. htm and http: //esask. uregina. ca/management/app/assets/img/enc 2/selectedbig/51 B 69 C 991560 -95 DA-43914 C 6 D 96 D 2460 B. jpg, October 17, 2007) Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Exporting (Goods &) Services • Buying services: pay for the knowledge, creativity or manual work of the provider Many Canadian companies can do this without leaving Canada • – – • Eg. Call centres Online courses Cirque du Soleil – exporting a combination of goods and services (Image source: http: //www. nytimes. com/2006/07/10/arts/10 cirq. html? _r=1&oref=slogin, October 17, 2007) Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
Foreign Investments • Public-Sector Investments – • Putting money in state-owned assets Private Sector Investments – • Putting money in private or public companies Foreign Direct Investments (FDI) – – • Establishing a subsidiary Setting up a joint venture Portfolio Investments – Buy a share of a foreign company with no controlling interest (Image source: http: //academicaffairs. ucsd. edu/images/clipart/Kathy%20 F. jpg, October 17, 2007) Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
“…and we’re outta’ here!” Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C. I. , 2007
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