Bussines Flashcards
Value Added
*The amount of worth that is added to a product at each stage of processing. It is the difference between the cost of the raw materials and the finished goods
Companies that focus on the extraction of primary goods do not make as much money as those that process these goods.
Top 10 Import Countries
United States, China, Mexico, Germany, Japan, South Korea, Italy, United Kingdom, France, and Vietnam
Top 10 Export Countries
United States, China, United Kingdom, Japan, Mexico, Germany, South Korea, Netherlands, India, and Honk Kong
Exchange rates
The exchange rate is the amount of currency in relation to the currency of another country. The Canadian dollar is often quoted with respect to the U.S. dollar, the euro, or the
British pound.
Currency speculation
Involves buying, holding, or selling foreign currency in
anticipation of its value changing. It is done to profit from the fluctuations in its price
Currency valuation
Floating rates
An exchange rate that is not fixed in relation to other
currencies.
The price at which currency with a floating rate is bought
and sold fluctuates according to supply and demand. If
demand is greater than supply, the value of the Canadian
dollar increases.
Joint venture
A common type of international business, in which a new
company with shared ownership is formed by two
businesses, one of which is usually located in the country
where the new company is established.
Foreign subsidiary
Often referred to as a wholly owned subsidiary, a branch
of a company that is run as an independent entity in a country outside of the one in which the parent company
is located.
The parent company often sets financial targets, and
allows the subsidiary to manage its own day-to-day
operations as long as those targets are met.
Outsourcing
Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure.
Licensing agreement
An agreement that grants permission to a company to use a product, service, brand name, or patent in exchange for a fee or royalty. Often only applicable to a specific region.
Trade quotas
A government-imposed limit on the amount of product that
can be imported in a certain period of time. Canadian products subject to US quotas include beef, cotton, wool and man-made fibres.
The imposition of a tariff or quota causes prices to rise, however the difference is a tariff generates revenue for the
government, while with a quota the increase in revenue is kept by the producers
Embargoes
A government-imposed ban on the trade of a specific product
or with a specific country is often declared to pressure
foreign governments to change their policies. When trade between countries is banned completely.
Eg – Canadian beef in 2003 due to BSE – 30 countries, $ billion of
lost sales
Protectionism
The theory or practice of shielding domestic industries
from foreign competition, often through trade barriers
such as tariffs.
Soft Currencies
A currency belonging to a country with an economy that is small, weak, or fluctuates often, and is difficult to convert into other currencies, such as the Russian ruble or the
Chinese yuan.
Sanctions
Trade sanctions are often referred to as partial embargoes and may involve limiting the trade of specific products or with specific companies or individuals.
Franchise
An agreement granted to an individual or group by a
company to use that company’s name, services, products, and marketing.
For a fee, the franchisor provides support to the franchisee in the areas of financing, operations, human resources, marketing, advertising, quality control, etc.
Trade barriers
Governments set up rules and regulations to protect local
businesses, generate revenue and protect citizens from
harmful products; however, many of these regulations
discourage international trade. This shielding against foreign
competition is called protectionism.
Standards
Standards (in areas such as environmental protection,
voltage in electronic devices, and health and safety) can
become trade barriers when countries have different criteria
for what is acceptable.
Currency Fluctuations
Currency fluctuations are a barrier to international trade
because of the uncertainty, they create in trying to price
goods and services accurately.
Exclusive distribution rights
A form of licensing agreement that grants a company the
right to be the only distributor of a product in a specific
geographic area or country.
Often used as an initial entry into a foreign market.
Tariffs
Taxes or duties charged on imported products or services. A tariff raises the cost of imported goods so that consumers will purchase locally manufactured products instead of imports. Tariffs, the most common type of trade barrier, are taxes or duties put on imported products or services.
Winners of the high Canadian dollar
-Importers
-Canadian travellers
-Major league sports teams in Canada
Loser of high Canadian dollar
-Exporters
-Canadian tourism
-Canadian retailers
