Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C.I., 2007 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? –Products in which other countries specialize 1.Must be Demand 2.Research 3.Contact foreign suppliers 4.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.Must be Demand for product 2.Find potential customers 3.Must meet customers’ needs 4.Agree on sales terms 5.Other challenges 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? (Image source: & October 17, 2007 & November 19, 2008) Peter Van Loan

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 –Eg. Canadian Western Agribition (livestock!) Promoted via –Internet –Trade publications –Advertisers –Suppliers My Friend Phil! (Image source: and DA-43914C6D96D2460B.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: 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: October 17, 2007)

Chapter 2 – The Importance of International Business Mr. M. Goldberg, Martingrove C.I., 2007 “…and we’re outta’ here!”