Interdependence (primary, secondary, tertiary industries), IB hurts/helps Canadians, types of businesses Flashcards

1
Q

Canada’s export strength is still in the ________ industry sector.

A

primary

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2
Q

What does the primary sector consist of? aka the definition

A

The extraction and initial processing of all raw materials.

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3
Q

What are the five major primary industries?

A

agriculture, fishing, hunting/trapping, forestry/logging, energy, and mining

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4
Q

Where are primary industries situated in Canada?

A

West and East (near oceans, good for exporting)

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5
Q

Canada is the largest exporter of ______ and _______________ to the US

A

oil, petroleum

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6
Q

What are secondary industries made up of?

A

Primary manufacturing (aka processing) and secondary manufacturing (producing capital goods and consumer goods)

Canada has a weak manufacturing sector.

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7
Q

Give examples of capital goods.

A

They are products used by businesses, like machinery, trucks, and heavy equipement

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8
Q

Give examples of consumer goods.

A

clothing, packaged foods, television sets

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9
Q

What are tertiary industries?

A

Aka service sector
Industries that do not make product or extract resources from the earth, but provide necessary services to consumers and other businesses. Ex. Banking, construction, communications, transportation, and retail sales.

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10
Q

How does International business help Canadians?

A
  1. Variety of products - clothing, shoes, movies
  2. New Markets, More Jobs - example is Tim Hortons increasing in demand, needs more suppliers, more opportunities to hire people from around the world.
  3. Foreign Investment - foreign direct investment (control some or all of a business’s operations) or foreign portfolio investment (purchasing stocks/bonds/other financial instruments). Can help save or grow Canadian businesses
  4. New Processes and Technologies - able to reach other businesses that can help Canadian businesses become more modern/efficient
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11
Q

How does International business hurt Canadians? (page 30-31)

A
  1. Loss of Culture/Identity - we are basically like Americans
  2. Increased Foreign Ownership of Companies in Canada - foreign investment leads to foreign loyalties, lack of research and development, reduced exports, revenues leaving Canada, and economic stabilization
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12
Q

What are licensing agreements?

A

gives companies permission to use a product, service, brand name, or patent in exchange for a fee or a royalty

ex. Bell using Virgin Mobile brand in Canada

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13
Q

What are exclusive distribution rights?

A

Allows companies to be the only distributor of a product in a geographical area or a specific country. It is a form of licensing agreements.

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14
Q

What is a franchise?

A

A franchise is an agreement to use a company’s name, services, products, and marketing.
ex. mcdonalds, menchies, subway, tim hortons

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15
Q

What are joint ventures?

A

two businesses, one of which is usually located in a foreign country, form a new company with shared ownership. Successful joint venture: Sun Life Financial

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16
Q

___ - ___% of all foreign investment is in the form of joint ventures.

A

25-40

17
Q

___% of all joint ventures fail.

A

50

18
Q

Pros and cons - franchises

A

Pros
Lays ground work, “formula to success”
Recognition, yet low advertising costs for you

Cons
Little room to grow business on your own terms (restrictive)
Hinder creativity
Can be expensive

19
Q

Pros and cons - joint ventures

A

Pros
Companies can be allowed into another country, and has a company there that understands the market
Gaining access to new markets, products, customers
Sharing financing, managerial expertise, technology, cultural information, economies of scale, and reducing risks

Cons
Take longer to negotiate and establish due to needs and wants of the two companies
High risk of failing if attention to detail is ignored

20
Q

What is a foreign subsidiary?

A

Most comprehensive type of international business. Also referred as a wholly owned subsidiary. Foreign Subsidiary exist when a parent company allows a branch of its company, in another country, to be run as an independent entity.

21
Q

Pros and cons - foreign subsidiary

A
Pros
Saves on distribution costs
Access to well-educated workforce
Above factors lead to increased profitability
Frees management times

Cons
taxation on companies
Possible loss of control over a company’s business processes
Problems related to quality and turnaround time
Sluggish response times coupled with slow issue resolutions
Issues pertaining to lingual accent variation

22
Q

Pros and cons - licensing agreements

A

The advantages of a licensing arrangement include:

quick, easy entry into foreign markets, allowing a company to “jump” border and tariff barriers
lower capital requirements
potential for large return on investment (ROI), which can be realised fairly quickly
low risk, since you enter with an established product and you take fewer financial and legal risks.

On the downside:

You will have only a low level of control.
Your licensee may become a competitor.
You may lose intellectual property.
The licence period is usually limited.
Poor quality management can damage your brand’s reputation in other licence territories.

source: http://www.tcii.co.uk/2012/10/26/licensing-arrangements-the-pros-and-cons/