international business topics basic international business terminology benefits of international...

INTERNATIONAL BUSINESS TOPICS

• Basic International Business Terminology

• Benefits of International Business

• The Five P’s of International Business

• Costs of International Business

• Barriers to Conducting International Business

• Importing and Exporting

• Canada and International Trade Agreements

• The Future of International Trade

International Business DefinedInternational Business Defined

““All the business transactions (exchanges of All the business transactions (exchanges of money) necessary for creating, shipping, money) necessary for creating, shipping,

and selling goods and services across and selling goods and services across national borders. Also referred to national borders. Also referred to

international trade or foreign trade”international trade or foreign trade”

Wilson, Jack et al. Wilson, Jack et al. The World of Business (5The World of Business (5thth ed) ed) Canada, Canada, Nelson, 2007Nelson, 2007

International Business TerminologyInternational Business Terminology

Domestic TransactionDomestic Transaction Selling of goods produced in the Selling of goods produced in the

same country.same country.

For example:For example: You visit a store in your community You visit a store in your community

(local store) and purchase a bicycle (local store) and purchase a bicycle that has been manufactured in that has been manufactured in Canada.Canada.


International TransactionInternational Transaction Selling goods produced in another country.Selling goods produced in another country. Involves creating, shipping, and selling goods Involves creating, shipping, and selling goods

and services across national borders.and services across national borders. Also referred to as Also referred to as international tradeinternational trade or or

foreign trade.foreign trade.

For example:For example: You go to Canadian Tire and purchase a tool You go to Canadian Tire and purchase a tool

that was manufactured in China.that was manufactured in China.


EconomyEconomy The financial health of a placeThe financial health of a place

• Municipal – Ottawa’s economyMunicipal – Ottawa’s economy• Provincial – Ontario’s economyProvincial – Ontario’s economy• National – Canada’s economyNational – Canada’s economy• Continental – North American economyContinental – North American economy• Global – Global EconomyGlobal – Global Economy

The The health of an economyhealth of an economy is generally is generally determined/measured by looking at factors determined/measured by looking at factors such as such as employment ratesemployment rates, , interest ratesinterest rates, , gross domestic product datagross domestic product data, , trade deficits trade deficits vs. surplusvs. surplus…(Next Chapter)…(Next Chapter)


Imports Imports A good or service brought into Canada from another country. (madeA good or service brought into Canada from another country. (made

in China) in China)

ExportsExports A product or service produced in Canada and sold in another country.A product or service produced in Canada and sold in another country.

(made in Canada) (made in Canada)

Trade DeficitTrade Deficit When Canada imports more goods than it exports, we have what is called a When Canada imports more goods than it exports, we have what is called a

Trade Deficit. Trade Deficit. Imports > Exports = Trade DeficitImports > Exports = Trade Deficit

Trade SurplusTrade Surplus When Canada exports more goods than it imports, we have a Trade When Canada exports more goods than it imports, we have a Trade

Surplus. Surplus. Exports > Imports = Trade SurplusExports > Imports = Trade Surplus

Which do you think is better for the Canadian economy?Which do you think is better for the Canadian economy?

TOPIC #2

Benefits of International

Business

Benefits To Businesses Participating in International Business

1. Access to many more markets2. Access to cheaper labour3. Increased quality or quantity of

goods4. Access to resources that may not be

available at home.

1. Access To Markets1. Access To MarketsCanada’s Population: Roughly 33,600,000 33 million six hundred thousand

World Population:World Population: Roughly 6, 500,000,000Roughly 6, 500,000,000 6 billion 500 million6 billion 500 million

Conclusion:Conclusion: The Global market can reachThe Global market can reach

roughly roughly 200 times200 times more consumers more consumers than simply just Canadian than simply just Canadian consumers. consumers.

Access To MarketsAccess To Markets

Access to the global market does not guarantee bigger Access to the global market does not guarantee bigger sales. Why?sales. Why?

Companies must adapt their products and/or services Companies must adapt their products and/or services to:to:1. different needs, wants and preferences based on1. different needs, wants and preferences based on cultural differences and/or preferences cultural differences and/or preferences

2. conform to different laws of various countries 2. conform to different laws of various countries

Global ProductGlobal Product A standardized item that is offered in the same form in A standardized item that is offered in the same form in

all countries in which it is sold. (i.e. pencils, soccer all countries in which it is sold. (i.e. pencils, soccer balls, cameras)balls, cameras)

2. Cheaper Labour2. Cheaper Labour Businesses make Businesses make profitsprofits when their when their sales are greatersales are greater than their than their

costscosts of running the business. of running the business.

Thus Thus profits can increaseprofits can increase even more by maintaining their sales even more by maintaining their sales level and level and decreasing their costsdecreasing their costs of running the business. of running the business.

The The single largest expensesingle largest expense of any business/organization is of any business/organization is generally the generally the labour labour (employees and management wages and(employees and management wages and salaries) salaries)

If a company can produce its goods and/or services inIf a company can produce its goods and/or services in another country where the another country where the labour laws allow businesses tolabour laws allow businesses to pay employees lesspay employees less than they would be paid in Canada, they than they would be paid in Canada, they can can reduce their costsreduce their costs of doing business substantially. of doing business substantially.

In addition to helping increase profits, businesses can pass onIn addition to helping increase profits, businesses can pass on those savings to consumers by reducing the price of the those savings to consumers by reducing the price of the items. items.

The cheaper an item is, perhaps the more the business willThe cheaper an item is, perhaps the more the business will also sell. also sell.

Cheaper LabourCheaper Labour

Discuss the ethical considerations Discuss the ethical considerations of cheap labour?of cheap labour?

3. Increased 3. Increased QualityQuality of Goods of Goods

THE BMW X5

Increased Quality of GoodsIncreased Quality of Goods

The BMW X5 Its engine is assembled in Munich, Germany; Shipped to the production plan in South

Caroline, U.S.; Magna Corporation in ON, Canada,

manufacturers the rear-view mirror; Leather seats come from South Africa; Michelin tires are manufactured in France

BMW wanted to create the best possibleBMW wanted to create the best possible product for its consumers so it searched for product for its consumers so it searched for the manufacturers that produced the best the manufacturers that produced the best quality in its car components. quality in its car components.

Increased Quality of GoodsIncreased Quality of Goods

Is this always the case?Is this always the case?

Discuss.Discuss.

4. Increased 4. Increased QuantityQuantity

Access to international markets mayAccess to international markets may lead to an increase in demand of lead to an increase in demand of products thus increased quantities of products thus increased quantities of goods sold. goods sold.

Results:Results: Hours of operation may increaseHours of operation may increase New production facilities may open andNew production facilities may open and

perhaps in other countries perhaps in other countries Increase in job opportunitiesIncrease in job opportunities

5. Access to Resources5. Access to ResourcesNatural ResourceNatural Resource Since Bamboo is a scarce resource in Canada aSince Bamboo is a scarce resource in Canada a

furniture company making bamboo furniture will furniture company making bamboo furniture will import (bring into the country) bamboo from import (bring into the country) bamboo from another country. another country.

Human ResourcesHuman Resources A Canadian company which opens up a factoryA Canadian company which opens up a factory

in China to take advantage of its cheaper labour in China to take advantage of its cheaper labour costs costs

Capital ResourcesCapital Resources A company that purchases a specialized pieceA company that purchases a specialized piece

of machinery needed for their plant that is only of machinery needed for their plant that is only made in Japan. made in Japan.

TOPIC #3

The Five P’s of International

Business

The Five P’s of International BusinessThe Five P’s of International Business

1.1. ProductProduct

2.2. PricePrice

3.3. ProximityProximity

4.4. PreferencePreference

5.5. PromotionPromotion

P1: ProductP1: Product

A country’s resources determine what A country’s resources determine what goods and services it can produce.goods and services it can produce.

Examples:Examples: Canada buys citrus fruits fromCanada buys citrus fruits from

countries with warmer climates countries with warmer climates

Canada’s large forests and wheat fieldsCanada’s large forests and wheat fields provide lumber and grain for countries provide lumber and grain for countries that don’t have an abundance of these that don’t have an abundance of these resources resources

P2: PriceP2: Price

Cost of producing goods and servicesCost of producing goods and services varies from one country to another varies from one country to another

Costs usually include: wages, taxes andCosts usually include: wages, taxes and raw materials raw materials

If a company can reduce its costs, thenIf a company can reduce its costs, then it can offer products and services at| it can offer products and services at| lower prices and increase their profits. lower prices and increase their profits.

P3: ProximityP3: Proximity

Proximity to a fellow neighbouring country allows for aProximity to a fellow neighbouring country allows for a company and/or country to benefit from doing business company and/or country to benefit from doing business across the border across the border

80% of Canadian population lives with 170km of the80% of Canadian population lives with 170km of the American border. American border.

Example:Example: Windsor, ON has a population of about 350 000Windsor, ON has a population of about 350 000 Across the bridge from Windsor is Detroit, Michigan which Across the bridge from Windsor is Detroit, Michigan which

has a population of several million.has a population of several million. Many people and businesses provide Detroit’s car Many people and businesses provide Detroit’s car

manufacturing plants with parts and labour.manufacturing plants with parts and labour.

P4: PreferenceP4: Preference

Some countries specialize inSome countries specialize in certain goods or services that certain goods or services that

have a reputation for quality allhave a reputation for quality all over the world over the world

Examples:Examples:

Belgian chocolates, Swiss watches,Belgian chocolates, Swiss watches, German cars, Canadian wheat. German cars, Canadian wheat.

P5 - PromotionP5 - Promotion

The internet and satellite broadcastingThe internet and satellite broadcasting have made it easier to inform people have made it easier to inform people around the world about goods and around the world about goods and services available. services available.

Ease of electronic promotion and otherEase of electronic promotion and other communications technology provides communications technology provides incentive for businesses to reach incentive for businesses to reach beyond their domestic market. beyond their domestic market.

TOPIC #4

Benefits and Costs of International Business

Benefits and Costs of International TradeBenefits and Costs of International Trade

Benefits to Society and ConsumersBenefits to Society and Consumers::1.1. Availability of products and services unavailable Availability of products and services unavailable

in your own countryin your own country2.2. Broader range of prices offered (cheaper to Broader range of prices offered (cheaper to

purchase various goods)purchase various goods)3.3. Job creationJob creation4.4. Political Benefits – “countries that trade with Political Benefits – “countries that trade with

one another seldom go to war with each other.”one another seldom go to war with each other.”5.5. Opens up communication lines with people, Opens up communication lines with people,

improves mutual understanding, and increases improves mutual understanding, and increases the level of respect people from different the level of respect people from different countries have for one another.countries have for one another.

Costs of International TradeCosts of International Trade

The hidden or social costs of The hidden or social costs of international business engaging in international business engaging in offshore outsourcing:offshore outsourcing:

1.1. Human rights and labour abusesHuman rights and labour abuses

2.2. Environmental degradationEnvironmental degradation

Offshore OutsourcingOffshore Outsourcing

Also known as “contracting out.”Also known as “contracting out.”

The practice of hiring individuals from The practice of hiring individuals from countries where labour costs are lower to countries where labour costs are lower to complete some or all of the steps in the complete some or all of the steps in the production process.production process.

Example:Example: Many companies use call centres in India, Many companies use call centres in India,

China and Costa Rica for customer service China and Costa Rica for customer service and IT customer service.and IT customer service.

Offshore OutsourcingOffshore Outsourcing

AdvantagesAdvantages Lower costs to company which can focusLower costs to company which can focus

on tasks it does better on tasks it does better

Be closer to natural resources neededBe closer to natural resources needed

Proximity to more efficient technologiesProximity to more efficient technologies

Increase profits from lower labour costs,Increase profits from lower labour costs, another country’s innovations, and another country’s innovations, and different tax structure different tax structure

Human Rights Issues and Labour Human Rights Issues and Labour AbusesAbuses

Typical abuses in poor countries include:Typical abuses in poor countries include:

1.1. Physical abusePhysical abuse2.2. Sexual abuseSexual abuse3.3. Forced confinementForced confinement4.4. Non-payment of wagesNon-payment of wages5.5. Denial of food and health careDenial of food and health care6.6. Excessive working hours with no restExcessive working hours with no rest7.7. Child labourChild labour

Human Rights Issues and Labour AbusesHuman Rights Issues and Labour Abuses

Child Labour defined:Child Labour defined: Regular employment for boys and girls Regular employment for boys and girls

under the age of 16under the age of 16 Many countries ignore abuses that target Many countries ignore abuses that target

children and women.children and women.

What can be done to stop Child Labour and What can be done to stop Child Labour and Human Rights Abuses?Human Rights Abuses?

International Labour Organization (ILO)International Labour Organization (ILO)

United Nations (UN) specializedUnited Nations (UN) specialized agency that seeks the promotion of agency that seeks the promotion of social justice and human and labour social justice and human and labour rights that are accepted by all rights that are accepted by all countries. countries.

Other?Other?

Environmental DegradationEnvironmental Degradation

Occurs when nature’s own resources Occurs when nature’s own resources such as trees, habitat, earth, water, such as trees, habitat, earth, water, and air are being used up and air are being used up (consumed) faster than nature can (consumed) faster than nature can replenish them.replenish them.

Sustainable DevelopmentSustainable Development

The process of developing land,The process of developing land, cities, businesses, and communities cities, businesses, and communities that meet the needs of the present that meet the needs of the present without compromising the ability of without compromising the ability of future generations to meet their future generations to meet their own needs. own needs.

Businesses need to be looking toBusinesses need to be looking to provide sustainable business practices. provide sustainable business practices.

Examples of Sustainable Business PracticesExamples of Sustainable Business Practices

TOPIC #5

Barriers To International Trade

Barriers to International BusinessBarriers to International Business

Purpose of BarriersPurpose of Barriers

To help protect domestic businesses andTo help protect domestic businesses and consumers consumers

May be used to:May be used to:1. help assist a new business getting started1. help assist a new business getting started

2. protect an existing industry struggling in a2. protect an existing industry struggling in a competitive global environment. competitive global environment.

3. protect consumers from imports with problems or3. protect consumers from imports with problems or that do not conform to Canadian safety standards. that do not conform to Canadian safety standards.

Barriers to International BusinessBarriers to International Business

Barriers include:Barriers include:

1.1. Tariffs or Custom dutiesTariffs or Custom duties2.2. Non-Tariff barriersNon-Tariff barriers3.3. Increased costs of importing and Increased costs of importing and

ExportingExporting4.4. Excise taxesExcise taxes5.5. Currency FluctuationsCurrency Fluctuations

1. Tariffs1. Tariffs Also called Also called custom dutiescustom duties

One of the most important tools for any government One of the most important tools for any government in managing trade with other countries.in managing trade with other countries.

A form of tax on certain types of imports (goods A form of tax on certain types of imports (goods coming into Canada from other countries)coming into Canada from other countries)

Companies bringing in the goods from another Companies bringing in the goods from another country to sell in Canada must pay the tariffs.country to sell in Canada must pay the tariffs.

Tariffs are based on a percentage of the retail value, Tariffs are based on a percentage of the retail value, (i.e. 5% of retail selling price.) or;(i.e. 5% of retail selling price.) or;

On another basis (i.e. $6 per kilogram)On another basis (i.e. $6 per kilogram)

Money collected goes to the government.Money collected goes to the government.

TariffsTariffs

Whose job is it to:Whose job is it to:1. monitor Canadian tariff1. monitor Canadian tariff policies? policies?

2. monitor tariff policies of other2. monitor tariff policies of other countries? countries?3. change Canadian tariff policies3. change Canadian tariff policies to best serve the Canadian to best serve the Canadian economy? economy?

Answer:Answer: Finance CanadaFinance Canada

TariffsTariffs

Provide an example of when it may be:Provide an example of when it may be:

beneficial for Canada to reduce tariffsbeneficial for Canada to reduce tariffs on certain goods imported from outside on certain goods imported from outside countries? countries?

beneficial to increase or create tariffsbeneficial to increase or create tariffs on certain goods being imported from on certain goods being imported from outside countries? outside countries?

2. Non-tariff Barriers2. Non-tariff Barriers

Legal and policy standards for the quality ofLegal and policy standards for the quality of imported goods are set so high that foreign imported goods are set so high that foreign competitors can not enter the market. competitors can not enter the market.

Examples:Examples: A Canadian law forces an internationalA Canadian law forces an international

company to apply for a license to do business company to apply for a license to do business in Canada (it may be very time consuming in Canada (it may be very time consuming

and expensive)and expensive)

Government will allow some goods into theGovernment will allow some goods into the country only after being inspected and having country only after being inspected and having met certain health and safety standards set out met certain health and safety standards set out by the Canadian Food and Inspection Agency. by the Canadian Food and Inspection Agency.

Imported Goods That Require Permits, Inspection, or Imported Goods That Require Permits, Inspection, or Special PackagingSpecial Packaging

Imported GoodsImported Goods Government Department__________ Government Department__________1. Endangered animals and 1. Endangered animals and 1. Environment Canada 1. Environment Canada plants and products made plants and products made from themfrom them

2. Agricultural and food 2. Agricultural and food 2. Agriculture and Agri-food 2. Agriculture and Agri-food CanadaCanada

productsproducts

3. Non-food products and clothing3. Non-food products and clothing 3. Industry Canada 3. Industry Canada precious metals, and precious metals, and radio communications equip.radio communications equip.

4. Fish and fish products4. Fish and fish products 4. Fisheries and Oceans Canada 4. Fisheries and Oceans Canada

5. Food, drugs, medicines,5. Food, drugs, medicines, 5. Health Canada 5. Health Canada pharmaceuticals, medical pharmaceuticals, medical and radiation-emitting and radiation-emitting devicesdevices

6. Hazardous waste, goods that6. Hazardous waste, goods that 6. Environment Canada 6. Environment Canada may contain may contain chlorofluorocarbonschlorofluorocarbons or lead gasor lead gas 7. Motor vehicles7. Motor vehicles 7. Transport Canada 7. Transport Canada

3. Costs of Importing and Exporting3. Costs of Importing and Exporting

Landed CostLanded Cost The actual cost for an imported purchased item.The actual cost for an imported purchased item. It is composed of the vendor cost, transportation charges, It is composed of the vendor cost, transportation charges,

duties, taxes, broker fees, and any other charges duties, taxes, broker fees, and any other charges associated with getting the product ready to sell in a associated with getting the product ready to sell in a foreign market. (another country)foreign market. (another country)

QuestionQuestion If you owned Canadian Tire and had to chooseIf you owned Canadian Tire and had to choose

between selling a tool from a Canadian manufacturer or between selling a tool from a Canadian manufacturer or a foreign manufacturer, which one would you select if a foreign manufacturer, which one would you select if the quality of both products was equal? the quality of both products was equal?

a. the foreign tool whose landed cost was greatera. the foreign tool whose landed cost was greater than the domestic purchase cost or; than the domestic purchase cost or;

b. the domestic tool whose cost was cheaper than theb. the domestic tool whose cost was cheaper than the landed cost. landed cost.

Costs of Importing and ExportingCosts of Importing and Exporting

Price of a good sold is based on thePrice of a good sold is based on the following costs among others: following costs among others:

Manufacturing (includes wages);Manufacturing (includes wages); storage;storage; Marketing;Marketing; Shipping;Shipping; AdvertisingAdvertising Overhead (Equipment, Heating etc, Salaries)Overhead (Equipment, Heating etc, Salaries) % of profit the company wants to make on % of profit the company wants to make on

the salethe sale

Depending on the laws of another country andDepending on the laws of another country and cultural differences, additional costs may be cultural differences, additional costs may be incurred. incurred.

4. Excise Taxes4. Excise Taxes

Excise TaxExcise Tax A tax on the manufacture, sale, or consumption of a A tax on the manufacture, sale, or consumption of a

particular product produced in your countryparticular product produced in your country

Governments use excise taxes to:Governments use excise taxes to:1. Raise money (i.e tobacco related health care costs)1. Raise money (i.e tobacco related health care costs)2. Discourage people from engaging in certain activities2. Discourage people from engaging in certain activities3. Increase the costs of imported goods to encourage 3. Increase the costs of imported goods to encourage

consumers to buy Canadian products.consumers to buy Canadian products.

Examples of excise taxes:Examples of excise taxes: 10 cents per litre on gasoline for the federal government10 cents per litre on gasoline for the federal government 14.5 cents per litre on gasoline for the provincial 14.5 cents per litre on gasoline for the provincial

governmentgovernment Excise tax on tobacco products varies from province to Excise tax on tobacco products varies from province to

provinceprovince

5. Currency Fluctuations5. Currency Fluctuations

Converting the value of $1 Canadian dollar to Converting the value of $1 Canadian dollar to US currency and other national currencies.US currency and other national currencies.

ExamplesExamplesNov. 2000 - $100 US Nov. 2000 - $100 US $157 Canadian $157 CanadianNov. 2007 - $100 US Nov. 2007 - $100 US $98 Canadian $98 Canadian

Website to research a history of exchange ratesWebsite to research a history of exchange rateshttp://www.oanda.com/convert/fxhistoryhttp://www.oanda.com/convert/fxhistory

Factors Affecting Exchange RatesFactors Affecting Exchange Rates

11. The financial health of Canada’s economy versus the US . The financial health of Canada’s economy versus the US economyeconomy

2. Interest Rates2. Interest Rates

Example:Example: If the Canadian economy is performing better than the US, the If the Canadian economy is performing better than the US, the

value of the Canadian dollar will increase. The demand for the value of the Canadian dollar will increase. The demand for the Canadian dollar rises. Demand > Supply, the value rises.Canadian dollar rises. Demand > Supply, the value rises.

If interest rates are higher than those of other countries while If interest rates are higher than those of other countries while inflation remains fairly stable, the value of the Canadian dollar will inflation remains fairly stable, the value of the Canadian dollar will increase. Foreigners will be attracted to invest in Canadian funds increase. Foreigners will be attracted to invest in Canadian funds where banks are providing higher interest rates. Demand > where banks are providing higher interest rates. Demand > Supply, the value rises.Supply, the value rises.

Information on factors affecting exchange rates:Information on factors affecting exchange rates: http://www.bankofcanada.ca/en/backgrounders/bg-e1.htmlhttp://www.bankofcanada.ca/en/backgrounders/bg-e1.html

Impacts of Exchange RatesImpacts of Exchange Rates Canadian economy is largely dependent on the value of imports and Canadian economy is largely dependent on the value of imports and

exports which can be greatly impacted by the value of the Canadian dollar.exports which can be greatly impacted by the value of the Canadian dollar.

The US is Canada’s biggest trading partner.The US is Canada’s biggest trading partner.

When Canadian Exports to US > US Imports = Trade SurplusWhen Canadian Exports to US > US Imports = Trade Surplus When Canadian Exports to US < US Imports = Trade DeficitWhen Canadian Exports to US < US Imports = Trade Deficit

Exports decrease when:Exports decrease when:• the Canadian dollar increases in value to the US dollar, it makesthe Canadian dollar increases in value to the US dollar, it makes

exports more expensive. exports more expensive. • the US economy is weak and the CD dollar is increasing, the USthe US economy is weak and the CD dollar is increasing, the US

will be purchasing less from Canadian businesses will be purchasing less from Canadian businesses

Note: Canadian consumers also tend to purchase more productsNote: Canadian consumers also tend to purchase more products from the US because the value of the dollar is higher, and from the US because the value of the dollar is higher, and goods are often cheaper in the US, thus making imports goods are often cheaper in the US, thus making imports higher. higher.

Result:Result: Less sales revenue for Canadian businesses which in the long run, can end Less sales revenue for Canadian businesses which in the long run, can end

up hurting the Canadian economy. For example, when businesses are up hurting the Canadian economy. For example, when businesses are earning less revenue, profits decrease and if significant decreases occur, earning less revenue, profits decrease and if significant decreases occur, businesses may start laying off employees.businesses may start laying off employees.

TOPIC #6

Importing and Exporting Goods and Services

Flow of Goods And Services Flow of Goods And Services

ImportsImports Goods and services flowing/coming into CanadaGoods and services flowing/coming into Canada

ExportsExports Goods and services flowing/going out of CanadaGoods and services flowing/going out of Canada

Imports may include:Imports may include: Raw materialsRaw materials Processed materialsProcessed materials Simi-finished goods,Simi-finished goods, Manufactured goods ready for sale.Manufactured goods ready for sale.

The less finished the imported goods, the more jobs The less finished the imported goods, the more jobs they create for Canadians.they create for Canadians.

Canadian Imports 2008Canadian Imports 2008

Data Source:Data Source:

“ “Imports of goods on a balance-of-payments basis, by product” Statistics Canada, September 10, 2009, Imports of goods on a balance-of-payments basis, by product” Statistics Canada, September 10, 2009, [Online]. Available: [Online]. Available: http://www40.statcan.gc.ca/l01/cst01/gblec05-eng.htmhttp://www40.statcan.gc.ca/l01/cst01/gblec05-eng.htm

28%

21%

16%

14.50%

12%

6%

0.64%

0% 10% 20% 30%

ForestryProducts

Agricultureand Fishing

Energy

Other

Automotiveproducts

IndustrialGoods andMaterialsMachineryandEquipment

Canadian Exports 2008Canadian Exports 2008

Data Source:Data Source:““Export of Goods on a Balance-of-Payment Basis” Statistics Canada. September 10, 2009. [Online] Export of Goods on a Balance-of-Payment Basis” Statistics Canada. September 10, 2009. [Online]

Available:http://www40.statcan.gc.ca/l01/cst01/gblec04-eng.htmAvailable:http://www40.statcan.gc.ca/l01/cst01/gblec04-eng.htm

26%

23%

19%

12%

8%

6%

0% 10% 20% 30%

Foresty

Other

Agriculture and Fishing

Automotive Products

Machinery andEquipment

Industrial Goods andMaterials

Energy

Balance of TradeBalance of Trade

Balance of TradeBalance of Trade Relationship between a country’s total imports and total Relationship between a country’s total imports and total

exports.exports.

Trade Surplus = E > ITrade Surplus = E > I Export$ are greater than Import$.Export$ are greater than Import$. Canadians are selling more products to other countries than Canadians are selling more products to other countries than

they are importing.they are importing. If surplus is made up of primarily manufactured goods, then If surplus is made up of primarily manufactured goods, then

more jobs are created for Canadians.more jobs are created for Canadians.

Trade Deficit = E < ITrade Deficit = E < I Canadians are spending more money on importing goods Canadians are spending more money on importing goods

from other countries than selling/exporting goods to other from other countries than selling/exporting goods to other countries.countries.

Usually means that fewer Canadian jobs are being providedUsually means that fewer Canadian jobs are being provided

Increasing Your Chances of Success When Importing Increasing Your Chances of Success When Importing Goods for ResaleGoods for Resale

1.1. Before placing your international order, conduct your research to determine an Before placing your international order, conduct your research to determine an approximate interest and demand for your imported goods, otherwise, you may approximate interest and demand for your imported goods, otherwise, you may have a full warehouse, and big bill to pay with insufficient revenues coming in to have a full warehouse, and big bill to pay with insufficient revenues coming in to pay off your bill.pay off your bill.

2.2. Select your foreign supplier(s) with care. You want the one who can supply the Select your foreign supplier(s) with care. You want the one who can supply the right product(s) for the right price at the right time. Foreign Affairs and right product(s) for the right price at the right time. Foreign Affairs and International Trade Canada can help you find the best foreign suppliers.International Trade Canada can help you find the best foreign suppliers.

3.3. Make an effort to learn about the culture you will be dealing with. Cultural Make an effort to learn about the culture you will be dealing with. Cultural knowledge and sensitivity can help you establish positive working relationships knowledge and sensitivity can help you establish positive working relationships with your suppliers.with your suppliers.

4.4. Take time to go through a purchase agreement and ensure it covers all important Take time to go through a purchase agreement and ensure it covers all important and necesssary areas such as: Who pays the shipping costs? When do the goods and necesssary areas such as: Who pays the shipping costs? When do the goods have to be paid for? What happens if goods are damaged during shipping.have to be paid for? What happens if goods are damaged during shipping.

5.5. When the goods arrive, make sure everything you ordered is there and in good When the goods arrive, make sure everything you ordered is there and in good condition. Expect to pay import or custom duties based on either the value of condition. Expect to pay import or custom duties based on either the value of goods, quantity or weight.goods, quantity or weight.

Export BusinessExport Business

Two ways a business may export goods:Two ways a business may export goods:

1. Through 1. Through directdirect exporting exporting

2. Through 2. Through indirectindirect exporting exporting

Exporting BusinessExporting Business

Direct ExportingDirect Exporting The exporting company deals directly with the The exporting company deals directly with the

company that will wishes to import the goods into company that will wishes to import the goods into his/her country.his/her country.

Conducted usually by established companies who Conducted usually by established companies who have the experience and resources to set up have the experience and resources to set up offices and sales staff in foreign countries.offices and sales staff in foreign countries.

More risky as the exporting company assumes all More risky as the exporting company assumes all risk.risk.

Canadian Company

China Company


Indirect ExportingIndirect Exporting Goods move from the exporter to an Goods move from the exporter to an

intermediary, who is often from the foreign intermediary, who is often from the foreign country, and then on to the importing business.country, and then on to the importing business.

IntermediaryIntermediary Someone or another company who helps the Someone or another company who helps the

exporter find a company who wants to purchase exporter find a company who wants to purchase and import your goods)and import your goods)

Canadian Company

China Company

Intermediary Business or Individual


Indirect ExportingIndirect Exporting Usually conducted by new businesses which don’t Usually conducted by new businesses which don’t

have the resources, or global reputationhave the resources, or global reputation

Business share financial risks with the Business share financial risks with the intermediaryintermediary

Some countries prohibit direct exporting, likely to Some countries prohibit direct exporting, likely to create jobs for local intermediaries. (i.e. in the create jobs for local intermediaries. (i.e. in the Middle East, Central America and Asia)Middle East, Central America and Asia)

Increasing Your Chances of Success When Increasing Your Chances of Success When Exporting Goods and ServicesExporting Goods and Services

Conduct your research to determine if thereConduct your research to determine if there are potential consumers in foreign markets are potential consumers in foreign markets and to familiarize yourself with foreign and to familiarize yourself with foreign cultures, customs and laws. cultures, customs and laws.

Research Resources may include:Research Resources may include: Foreign Affairs and International Trade CanadaForeign Affairs and International Trade Canada Contact foreign agencies through the internet, such as the Contact foreign agencies through the internet, such as the

Asia Pacific Foundation of Canada, Canadian Manufacturers Asia Pacific Foundation of Canada, Canadian Manufacturers and Exporters, and the Canadian Association of Importers and Exporters, and the Canadian Association of Importers and Exporters.and Exporters.

Canadian embassies in foreign countriesCanadian embassies in foreign countries

Questions Asked By Potential Export BuyersQuestions Asked By Potential Export Buyers

1. What is unique or special about your company, product, or 1. What is unique or special about your company, product, or service.service.

2. How do you market or sell your product?2. How do you market or sell your product?

3. Who uses your product or service? To whom do you sell in 3. Who uses your product or service? To whom do you sell in Canada and abroad?Canada and abroad?

4. Which countries or regional markets are you targeting, and 4. Which countries or regional markets are you targeting, and why? What do you know about these markets?why? What do you know about these markets?

5. How do you plan to enter the market? Will you sell the products 5. How do you plan to enter the market? Will you sell the products directly? License people to sell your products? Set up a joint directly? License people to sell your products? Set up a joint venture with another business? Invest in a venture that already venture with another business? Invest in a venture that already serves the market?serves the market?

6. How would you describe the typical buyer, distributor, agent, or 6. How would you describe the typical buyer, distributor, agent, or partner you want to work with in this market?partner you want to work with in this market?

7. When do you plan to visit the market? How will you adapt your 7. When do you plan to visit the market? How will you adapt your product-related literature to suit the needs of this market?product-related literature to suit the needs of this market?

Canada’s Major Trading PartnersCanada’s Major Trading PartnersCanada’s Top 10 Export MarketsCanada’s Top 10 Export Markets

CountryCountry 20042004 20052005 20062006 20072007 20082008 U.SU.S 84.4%84.4% 83.8%83.8% 81.5%81.5% 78.9%78.9% 77.64%77.64%

U.KU.K 1.88%1.88% 1.89%1.89% 2.3%2.3% 2.84%2.84% 2.7%2.7%

JapanJapan 2.08%2.08% 2.10%2.10% 2.14%2.14% 2.05%2.05% 2.29%2.29%

ChinaChina 1.64%1.64% 1.65%1.65% 1.77%1.77% 2.11%2.11% 2.17%2.17%

MexicoMexico 0.75%0.75% 0.77%0.77% 0.99%0.99% 1.10%1.10% 1.21%1.21%

GermanyGermany 0.65%0.65% .074%.074% 0.90%0.90% 0.86%0.86% 0.93%0.93%

South South KoreaKorea

0.55%0.55% 0.65%0.65% 0.75%0.75% 0.67%0.67% 0.79%0.79%

NetherlandsNetherlands 0.47%0.47% 0.50%0.50% 0.70%0.70% 0.90%0.90% 0.77%0.77%

BelgiumBelgium 0.55%0.55% 0.52%0.52% 0.55%0.55% 0.66%0.66% 0.70%0.70%

FranceFrance 0.58%0.58% 0.58%0.58% 0.65%0.65% 0.69%0.69% 0.67%0.67%

Source: Statistics Canada: http://www.ic.gc.ca/sc_mrkti/tdst/tdo/tdo.php#tag

Canada’s Major Trading PartnersCanada’s Major Trading PartnersCanada’s Top 10 Import MarketsCanada’s Top 10 Import Markets

CountryCountry 20042004 20052005 20062006 20072007 20082008U.S.U.S. 58.7%58.7% 56.5%56.5% 54.8%54.8% 54.2%54.2% 52.4%52.4%

ChinaChina 6.77%6.77% 7.75%7.75% 8.70%8.70% 9.41%9.41% 9.83%9.83%

MexicoMexico 3.78%3.78% 3.83%3.83% 4.04%4.04% 4.22%4.22% 4.13%4.13%

JapanJapan 3.80%3.80% 3.89%3.89% 3.86%3.86% 3.80%3.80% 3.53%3.53%

GermanyGermany 2.65%2.65% 2.70%2.70% 2.82%2.82% 2.83%2.83% 2.93%2.93%

U.K.U.K. 2.71%2.71% 2.74%2.74% 2.74%2.74% 2.82%2.82% 2.91%2.91%

AlgeriaAlgeria 0.87%0.87% 1.10%1.10% 1.25%1.25% 1.25%1.25% 1.78%1.78%

NorwayNorway 1.39%1.39% 1.59%1.59% 1.38%1.38% 1.32%1.32% 1.43%1.43%

South South KoreaKorea

1.64%1.64% 1.41%1.41% 1.45%1.45% 1.32%1.32% 1.39%1.39%

FranceFrance 1.50%1.50% 1.31%1.31% 1.31%1.31% 1.25%1.25% 1.37%1.37%

Source: Statistics Canada: http://www.ic.gc.ca/sc_mrkti/tdst/tdo/tdo.php#tag

Canada and US Trade RelationshipCanada and US Trade Relationship

Why does it make sense to establish a solid trading Why does it make sense to establish a solid trading relationship with the US?relationship with the US?

1. Shipping costs are cheaper (proximity factor)1. Shipping costs are cheaper (proximity factor)2. Similar culture and interests so same types of 2. Similar culture and interests so same types of

products and services will appeal to citizensproducts and services will appeal to citizens3. Speak the same language, watch same TV 3. Speak the same language, watch same TV

programs, movies, sports and similar fashion programs, movies, sports and similar fashion stylesstyles

4. Population of the states is 10x that of Canada’s4. Population of the states is 10x that of Canada’s

TOPIC #7

Canada and International Trade Agreements

International Trade AgreementsInternational Trade Agreements

International Trade AgreementInternational Trade Agreement Legal contract between or amongst nations who voluntarily Legal contract between or amongst nations who voluntarily

agree to conduct business affairs in each other’s country agree to conduct business affairs in each other’s country based on the terms set out in the agreement.based on the terms set out in the agreement.

Common terms outlined in the agreements include:Common terms outlined in the agreements include: Reducing tariffs and custom duties on various products to Reducing tariffs and custom duties on various products to

reduce trade barriers;reduce trade barriers; When and why people will be able to work across When and why people will be able to work across

international borders;international borders; What qualifications one will need to work in another What qualifications one will need to work in another

country;country; How business trade secrets will be protected (intellectual How business trade secrets will be protected (intellectual

property);property); Process for resolving trade disputes amongst the Process for resolving trade disputes amongst the

participating countries in the agreement.participating countries in the agreement.

Advantages of Reducing Trade BarriersAdvantages of Reducing Trade Barriers

Two main advantages:Two main advantages:

Canadian businesses or other domesticCanadian businesses or other domestic businesses are able to sell their products and businesses are able to sell their products and services to international markets at lower services to international markets at lower prices because additional tariffs on exported prices because additional tariffs on exported products are reduced or eliminated. products are reduced or eliminated.

Increased competition motivates companiesIncreased competition motivates companies to improve their quality or reduce their prices to improve their quality or reduce their prices in order to compete with imported goods. in order to compete with imported goods. (Great for the consumer) (Great for the consumer)

History of the WTOHistory of the WTO

WTO developed out of an international trade agreement WTO developed out of an international trade agreement called the General Agreement on Tariffs and Trade called the General Agreement on Tariffs and Trade (GATT).(GATT).

GATT came into effect in 1948GATT came into effect in 1948 GATT was signed by Canada and 22 other nations who GATT was signed by Canada and 22 other nations who

were allies during World War II. were allies during World War II. An international organization was set up to help GATT An international organization was set up to help GATT

nations negotiate trade deals, resolve problems and nations negotiate trade deals, resolve problems and collect data about world trade.collect data about world trade.

In 1995, the WTO replaced the initial GATT organization.In 1995, the WTO replaced the initial GATT organization. The WTO currently has 139 member countries.The WTO currently has 139 member countries.

World Trade OrganizationWorld Trade OrganizationWTO TodayWTO Today Main international organization that deals with the rules of trade between Main international organization that deals with the rules of trade between

nations.nations.

The WTO provides a forum for negotiating agreements aimed at reducing The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all;obstacles to international trade and ensuring a level playing field for all;

Contributes to global economic growth and development. Contributes to global economic growth and development.

The WTO also provides a legal and institutional framework for the The WTO also provides a legal and institutional framework for the implementation and monitoring of these agreements, as well as for settling implementation and monitoring of these agreements, as well as for settling disputes arising from their interpretation and application. disputes arising from their interpretation and application.

The current body of trade agreements comprising the WTO consists of 16 The current body of trade agreements comprising the WTO consists of 16 different multilateral agreements (to which all WTO members are parties) and different multilateral agreements (to which all WTO members are parties) and two different plurilateral agreements (to which only some WTO members are two different plurilateral agreements (to which only some WTO members are parties).parties).

Governs approximately 97% of all world tradeGoverns approximately 97% of all world trade

Source: World Trade Organization http://www.wto.org/english/thewto_e/whatis_e/wto_dg_stat_e.htmSource: World Trade Organization http://www.wto.org/english/thewto_e/whatis_e/wto_dg_stat_e.htm


General Agreement on Trade in ServicesGeneral Agreement on Trade in Services GATS came into effect in 1995GATS came into effect in 1995 Sets guidelines for the trade of services Sets guidelines for the trade of services

such as banking across international such as banking across international borders.borders.

International Trade AgreementsInternational Trade AgreementsThe Canada-US Free Trade AgreementThe Canada-US Free Trade Agreement Commonly known as FTA came into effect in January 1989.Commonly known as FTA came into effect in January 1989. Intended to gradually phase out (get rid of) a number of tariff barriers between the two Intended to gradually phase out (get rid of) a number of tariff barriers between the two

countriescountries

Issues dealt with under the agreementIssues dealt with under the agreement

Canada’s wishes:Canada’s wishes: wanted stable access to U.S. Marketswanted stable access to U.S. Markets Wanted to bid on US government contractsWanted to bid on US government contracts wanted to create a dispute settlement tribunalwanted to create a dispute settlement tribunal To increase exports to the USTo increase exports to the US Exemptions included dairy and poultryExemptions included dairy and poultry

US Wishes:US Wishes: Wanted to increase their exports to CanadaWanted to increase their exports to Canada Wanted clarification regarding rules of intellectual propertyWanted clarification regarding rules of intellectual property To reduce restrictions on US investment in Canadian industriesTo reduce restrictions on US investment in Canadian industries Exemptions: sugar, diary, peanuts, and cottonExemptions: sugar, diary, peanuts, and cotton

All products other than exemptions are duty-free if produced within the free-All products other than exemptions are duty-free if produced within the free-trade zone.trade zone.


North American Free Trade AgreementNorth American Free Trade Agreement

Commonly known as NAFTACommonly known as NAFTA

Came into effect in 1994Came into effect in 1994

Trade between Canada, US and Mexico is Trade between Canada, US and Mexico is tariff free for all products produced in the tariff free for all products produced in the free-trade zone except for exemptions free-trade zone except for exemptions mentioned.mentioned.

Each day NAFTA countries conduct $1.7 Each day NAFTA countries conduct $1.7 billion in trilateral trade.billion in trilateral trade.

NAFTA NAFTA

CanadaCanada USUS MexicoMexicoEconomic Economic Growth Growth (E.G.) (E.G.) (1994-(1994-2003)2003)

E.G. is up 30.9% sinceE.G. is up 30.9% since 1994 1994 Export sales haveExport sales have increased by 104% increased by 104% Export sales to US haveExport sales to US have increased by 250% increased by 250%

E.G is up 38%E.G is up 38% since 1994 since 1994

E.G. is upE.G. is up 30% 30%

Concerns Concerns ExpressedExpressed

Depletion of Canada’sDepletion of Canada’s natural resources as US natural resources as US and Mexico have to much and Mexico have to much access access Canada’s cultural industriesCanada’s cultural industries (book, magazine, and TV) (book, magazine, and TV) are becoming are becoming Americanized. Americanized.

Canada andCanada and Mexico are Mexico are perceived to be perceived to be taking away jobs taking away jobs from Americans from Americans

WealthierWealthier northern northern countries countries are are perceived perceived as as exploiting exploiting Mexico for Mexico for its low its low wages. wages.

Trade agreements give businesses power over elected governments,Trade agreements give businesses power over elected governments, and in time, these agreements will erode democracy. and in time, these agreements will erode democracy.

Canada and Other Free Trade Canada and Other Free Trade Agreements Agreements

Regional Trade AgreementsRegional Trade Agreements Trade agreements involving groups of Trade agreements involving groups of

countriescountries

Bilateral Trade AgreementsBilateral Trade Agreements Trade agreements involving Canada and Trade agreements involving Canada and

one other country or groupone other country or group

Trading BlocTrading Bloc Group of countries that share the same Group of countries that share the same

trading intereststrading interests

Other International OrganizationsOther International Organizations

G8G8

G20G20

G8G8

Group of Eight (G8)Group of Eight (G8)

Eight of the world’s largest and most powerful Eight of the world’s largest and most powerful industrialized democracies meet annually and work industrialized democracies meet annually and work together to deal with major economic and political issues together to deal with major economic and political issues facing their individual and collective countries. facing their individual and collective countries.

Topics dealt with at major G8 summits include:Topics dealt with at major G8 summits include:

• Energy • Employment • EnvironmentEnergy • Employment • Environment

• Human rights • Arms ControlHuman rights • Arms Control

Seek to provide guidance and support to established Seek to provide guidance and support to established international organizationsinternational organizations

Countries include Britain, France, Germany, Italy, Canada, Countries include Britain, France, Germany, Italy, Canada, US, Japan, and RussiaUS, Japan, and Russia

G20G20

What is the G-20?What is the G-20? Established in 1999Established in 1999 The Group of Twenty (G-20) Finance Ministers and Central Bank The Group of Twenty (G-20) Finance Ministers and Central Bank

Governors of important industrialized and developing economies to Governors of important industrialized and developing economies to discuss key issues in the global economy. discuss key issues in the global economy.

MandateMandate The G-20 is an informal forum that promotes open and constructive The G-20 is an informal forum that promotes open and constructive

discussion between industrial and emerging-market countries on discussion between industrial and emerging-market countries on key issues related to global economic stability. key issues related to global economic stability.

To help support growth and development across the globe by To help support growth and development across the globe by contributing to the strengthening of the international financial contributing to the strengthening of the international financial architecture and providing opportunities for dialogue on national architecture and providing opportunities for dialogue on national policies, international co-operation, and international financial policies, international co-operation, and international financial institutionsinstitutions

Source: About G20. [Online] Available: http://www.g20.org/about_what_is_g20.aspxSource: About G20. [Online] Available: http://www.g20.org/about_what_is_g20.aspx

Other Free Trade AgreementsOther Free Trade Agreements

Free Trade Area of the AmericasFree Trade Area of the Americas

Central American Free TradeCentral American Free Trade Agreement (2004) Agreement (2004)

European Free Trade AssociationEuropean Free Trade Association (1960) (1960)

Asia-Pacific Economic CooperationAsia-Pacific Economic Cooperation (1989) (1989)

TOPIC #8

The Future of International Business

The Future of International BusinessThe Future of International Business

1.1. Reduction of ProtectionismReduction of Protectionism

2.2. European UnionEuropean Union

3.3. NAFTANAFTA

4.4. Impact of Cultural DifferencesImpact of Cultural Differences

5.5. Global DependencyGlobal Dependency

The Future of International TradeThe Future of International Trade

ProtectionismProtectionism a term to describe when countries seek to protect their a term to describe when countries seek to protect their

individual economic interests by imposing tariffs on other individual economic interests by imposing tariffs on other countries or restricting external trade.countries or restricting external trade.

Economic experts agree that such practices will hurt the Economic experts agree that such practices will hurt the global economy as it is all interconnected.global economy as it is all interconnected.

APEC is the fastest growing trading group and largest APEC is the fastest growing trading group and largest trading bloc in the world and engages in protectionism trading bloc in the world and engages in protectionism practices by imposing tariffs and other trade barriers on practices by imposing tariffs and other trade barriers on countries outside of APEC.countries outside of APEC.

European Union (EU)European Union (EU) 27 European countries represent a single market in 27 European countries represent a single market in

EuropeEurope

All but the UK and Denmark have adopted a the euro as All but the UK and Denmark have adopted a the euro as the single currency to be used in member statesthe single currency to be used in member states

It has its own elected governmentIt has its own elected government

EU court rulings over rule individual country court rulings EU court rulings over rule individual country court rulings and/or laws.and/or laws.

Citizens of member states may travel, move, and work Citizens of member states may travel, move, and work freely in each other’s countries.freely in each other’s countries.

Population is currently about 370 milion.Population is currently about 370 milion.

Evolution of NAFTAEvolution of NAFTA

Will NAFTA emerge into a union similar to Will NAFTA emerge into a union similar to the EU where citizens of Canada, Mexico, the EU where citizens of Canada, Mexico, and the US would be able to move freely and the US would be able to move freely into each other’s countries where one into each other’s countries where one currency would be used for all three currency would be used for all three countries?countries?

Impact of Cultural DifferencesImpact of Cultural Differences

CultureCulture the sum of a country’s way of life, beliefs, the sum of a country’s way of life, beliefs,

customscustoms Influences how things are purchased, sold, Influences how things are purchased, sold, Sets boundaries on what can or can not be doneSets boundaries on what can or can not be done Impacts preferences, style, values, and normsImpacts preferences, style, values, and norms May be represented by a specific languageMay be represented by a specific language

Cultural DifferencesCultural Differences In order to do business with differing cultures, much In order to do business with differing cultures, much

market research is needed to help companies market research is needed to help companies understand various similarities and differences even understand various similarities and differences even when dealing with everyday cultural norms dealing with when dealing with everyday cultural norms dealing with people such as:people such as:

1.1. PunctualityPunctuality2.2. GreetingsGreetings3.3. Nonverbal communication signalsNonverbal communication signals4.4. Good MannersGood Manners5.5. Decision makingDecision making

PunctualityPunctuality

Punctuality Norms in North America?Punctuality Norms in North America? People are expected to bePeople are expected to be on timeon time Rely on books, calendars and Rely on books, calendars and even pay a fee sometimes even pay a fee sometimes for missed appointmentsfor missed appointments

Punctuality Norms in Other CountriesPunctuality Norms in Other Countries Time is considered flowing, flexible,Time is considered flowing, flexible,

beyond’s people control beyond’s people control

GreetingsGreetings

Shaking hands – differs from oneShaking hands – differs from one country to the next country to the next

Eye contact made in someEye contact made in some countries, not in others countries, not in others

Bowing before an elderBowing before an elder acquaintance versus not bowing acquaintance versus not bowing at all at all

Nonverbal Communications SignalsNonverbal Communications Signals

Considered rude in Asian cultures to refuse someone’s Considered rude in Asian cultures to refuse someone’s request, so an Asian business person may not give a request, so an Asian business person may not give a direct “no” answer to a sales requestdirect “no” answer to a sales request

A “nod” means “yes” to North Americans but “no” to aA “nod” means “yes” to North Americans but “no” to a Bulgarian. Bulgarian.

Shaking the head “side to side” means “no” to NorthShaking the head “side to side” means “no” to North Americans but “yes” to Bulgarians. Americans but “yes” to Bulgarians.

The sign okay with ones hand is a symbol for moneyThe sign okay with ones hand is a symbol for money in Japan and is an offensive gesture in Brazil. in Japan and is an offensive gesture in Brazil.

Personal space interpretations also differs from placePersonal space interpretations also differs from place to place. to place.

Good MannersGood Manners

In North America, getting down to In North America, getting down to business is the norm when to business is the norm when to business people meet.business people meet.

In other Asian and Latin American In other Asian and Latin American countries it would be considered rude countries it would be considered rude not to discuss family, friends, and not to discuss family, friends, and favours first to establish a personal favours first to establish a personal relationship before business.relationship before business.

Decision MakingDecision Making

In some cultures, decisions are made In some cultures, decisions are made from the top down approach, in from the top down approach, in others, from the bottom up others, from the bottom up approach.approach.

Other DifferencesOther Differences

North Americans read from right to left. North Americans read from right to left.

Israel and Egyptians read left to right.Israel and Egyptians read left to right.

This difference may impact the order in This difference may impact the order in which a sequential advertisement is laid which a sequential advertisement is laid out from one country to another.out from one country to another.

Other SourcesOther Sources

Wilson Jack et al. Wilson Jack et al. The World of The World of Business, 5Business, 5thth Ed. Ed. Nelson Education Nelson Education Ltd., Canada, 2007Ltd., Canada, 2007

international business topics basic international business terminology benefits of international...

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