Unit 2 Overview – BUSINESS FUNDAMENTALS Chapter 2 – International Business Practices Chapter 2 – Access to Markets Chapter 2 – Trade Barriers Culminating Activity for Unit 2 – Unit Test Tentative Date Oct 22, 2015 Chapter 2 – Currency Fluctuations

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations – A Barrier? Exchange rate The amount of one country’s currency in _________ to the currency of _________country. The Canadian dollar (CAD) is most often quoted against the ___________ because the two countries are the _________trading partners in the _________.

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations Winners of a High Canadian Dollar  _____________  _____________– costs are lower; consumer goods are lower and results in more spending  Canadian travelers e.g. to the U.S. © iStockphoto.com

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations Losers of a High Canadian Dollar  _____________  _____________– higher cost of goods sold to other countries; companies may relocate resulting in loss of jobs  Canadian ___________– e.g. high cost of travel  Canadian _______________– e.g. buyers will go to U.S. to shop

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Factors Affecting the Exchange Rate ______________ rate 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 _________________ according to _________ and _____________.

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations Currency _____________ The increase in value of a currency because the demand for that particular currency is greater than the supply. Currency ________________ The decrease in value of a currency because the supply of that particular currency is greater than the demand for it.

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations Factors Affecting the Exchange Rate  ____________ conditions in Canada—inflation rate, unemployment rate, GDP, interest rates  Trading between countries—the more favourable the terms of trade (comparison of exports to imports), the higher the currency exchange  _____________ - tension and instability or the threat of terrorism decreases the demand for a currency  _____________ factors—historical significance and stability change the way currencies are viewed

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations ___________ currencies Stable currencies, such as the euro, and the U.S. and Canadian dollars, which are easily converted to other currencies on the world exchange markets. __________ currencies A currency belonging to a country with an economy that is small, weak, or that fluctuates often, and is difficult to convert into other currencies, such as the Russian ruble or the Chinese yuan.

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Currency Fluctuations Currency speculating Currency Fluctuations - Currency speculating. Used under license from Shutterstock, Inc. Buying, holding, or selling foreign currency in anticipation of its value changing in order to profit from fluctuations in the price of currency

CURRENCY ACTIVITY Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Currency Challenge  Ms. Dale still has 3,000MYR in her bank in Malaysia.  Looking at the exchange rate between Malaysia and Canada, how many Canadian dollars will she get?  Watch the exchange rate from today til Friday. What do you think is the best rate? Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Time Zones – A Barrier? Time Zones  Communication technology allows the world of international business to operate ___________ hours a day  Certain methods of communication can be used at any time (_________); other methods (________) require knowledge of time zones  Some methods offer immediate feedback and interaction; others do not

Chapter 2: TRADE IN THE MODERN WORLD Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Time Zones  Application p. 61 #25 Used under license from Shutterstock, Inc.