1. Barriers and Obstacles

2. Introduction to Barriers  While doing business internationally may result in higher profits, there are often difficulties or barriers to successful trading  Some barriers include: Tariffs Non-tariff barriers Importing and exporting costs Excise taxes Currency fluctuations

3. Tariffs  A tax charged on certain imports  Are used by a government to manage trade e.g. charging a tax on an imported item may make it more expensive than its domestic competitor Therefore, people will buy more of the Canadian product because it’s cheaper

4. NAFTA  North American Free Trade Agreement  Effective January 1, 1994  Removed tariffs on many goods flowing between Canada, the US and Mexico

5. Non-Tariff Barriers  Standards for the quality of imported goods that are set so high that foreign competition cannot enter the market  Could also be imposed at the border as all goods are inspected e.g. all beef imported into the EU (European Union) must be hormone free

6. Importing and Exporting Costs Import  A good or service brought into a country for sale Export  A good or service produced in one country and sold in another

7. Importing and Exporting Price of an item = manufacturing costs + storage + marketing + shipping + advertising + overhead + profit margin of the business

8. Importing and Exporting Costs  A product shipped overseas to be sold or imported into Canada for sale would be more expensive than a product manufactured and sold here

9. Importing and Exporting Costs  Shipping is one of the most expensive pieces of total cost Landed Cost  The actual cost of an imported purchased item that includes: Vendor cost Transportation charges Duties Taxes Broker fees

10. Excise Taxes  A tax on the manufacture, sale or consumption of a product within a country e.g. taxes charged on gas by federal and provincial governments

11. Currency Fluctuation  A change in the value of one currency in relation to another e.g. the Canadian dollar has been worth more than and less than the US dollar in the last 2 years  Currency fluctuates daily based on a number of factors including the strength of the economy of a country

12. Obstacles  Two main obstacles: Culture Language

13. Obstacles – Culture Differences Culture  The sum of a country’s way of life, beliefs and customs  It influences how and what products are bought and sold  Differs from country to country Products that are popular here may not sell in the Middle East

14. Obstacles – Language Barriers  Different language requirements means that labelling of products must be changed e.g. labelling in Canada must be in both in English and French (bilingual)  Could be expensive for a company to implement