Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

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CHAPTER 1:What Is Trade?

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

Key Terms• business• transactions• domestic business• international business• domestic market• foreign market• trade• foreign or international

trade• trading partner• duty or tariff

• globalization• interdependence• primary industries• secondary industries• branch plant• tertiary industries• service sector• foreign direct investment• portfolio investment• culture industry

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

History of Canadian Trade

European Trade• Trade grew quickly after permanent settlements were

established in Canada in the 1700s• Demand for raw materials (beaver pelts, fish, lumber)

grew in Europe, where manufacturing took place• England defeated France in Seven Years’ War, which led to

Canada’s reliance on England for finished goods• Many major cities were established near ports to facilitate

export of raw materials and import of finished goods

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

History of Canadian Trade

Major fur trade routes used to travel between Canada and Europe

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

GlobalizationHistory of Globalization• Began after World War II with establishment of the United

Nations and fostering of trade relations between countries• Economic ties between countries strengthened—tax

treaties were negotiated, tariffs abolished, global corporations developed

• New technology allows international business to occur in real time, transforming the globe into one market

• Has increased interdependence of all nations, blurring political boundaries

Chapter 1 – Day 1

• Classwork:Read pg. 3-11- Answer Knowledge Questions #1-3 on page 32

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

InterdependenceBranch plant

A factory owned by a company based in another country.• Canada has a branch-plant economy, based on

businesses owned by foreign interests• National Policy of 1879, which stated that

businesses wanting to reach Canadian consumers needed to build factories in Canada, led to this situation

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

Interdependence

Example of a company with branch plants in Canada

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

Interdependence

Tertiary industries (service sector)Industries that do not make a product or extract resources from the earth, but provide necessary services to consumers and other businesses.

Examples include banking, construction, communications, transportation, and retail sales.

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

How International Business Helps Canadians

International business helps Canadians:– Variety of products– New markets, more jobs– Foreign investments– New processes and technologies

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

How International Business Hurts Canadians

International business hurts Canadians: • Loss of culture/identity• Increased foreign ownership of companies in Canada

• Foreign companies are loyal to investors and executives 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 costs• Economic destabilization

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

How International Business Hurts Canadians

Products commonly used in Canada are imported from countries around the world.

• Chapter 1 – Day 2

• Read pg.21-32• Answer Knowledge Questions # 4,5,6 pg.32

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

• Chapter 1 – Day 3

• Read Pgs. 12 – 21

• Answer Questions 1.18, 1.19, 1.20, 1.21, and 1.23 on pg 21

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.

• Chapter 1 – Day 4

• Read pg.21-32• Answer Knowledge Questions # 4,5,6 pg.32

Chapter 1: WHAT IS TRADE?

Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.