1. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - CHAPTER 1: What Is Trade?

2. Unit 1 Overview – BUSINESS FUNDAMENTALS Chapter 1 – International Business Chapter 1 – History of Trade Chapter 1 – Globalization & Interdepen- dance Culminating Activity for Unit 1 – Unit Test Chapter 1 – Helps and Hurts

3. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 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

4. Vocabulary – Chapter 1 Business The manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit. Transaction An exchange of things of value. Domestic Business

5. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. Chapter Objectives By the time you finish this chapter, you should be able to:  Describe key concepts related to international business  Explain how and why Canada’s major international business relationships have evolved over time  Demonstrate an understanding of how globalization has affected international business  Describe ways in which international business activity develops interdependence among nations  Evaluate the benefits and drawbacks of international trade for Canada  Explain how the global market has affected consumer demand

6. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Business The ______________and/or _____of goods and/or services to satisfy the wants and needs of consumers to make a profit.

7. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Transaction An __________of things of value. $

8. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Domestic business A business that makes most of its transactions _____ __________________________in which it is based. A domestic business in Canada is: 

9. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined International business The economic system of transactions conducted between businesses located in different countries.

10. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Domestic transactions are made between two (Canadian) companies. International transactions involve a (Canadian) company and a non-(Canadian) company.

11. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Domestic market__________________________________________ Foreign market The customers of a business who live _________ ______________ than the one where the business operates.

12. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Five ways for a business to be considered international business an international business: 1. 2. 3.Export to businesses in another country 4.Import from businesses in another country 5.

13. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc. International Business Defined Trading partner When a business (in Canada) develops a ____________ with a business in another country, that country becomes a trading partner (with Canada). international trade takes place between ____________ It is important to note that international trade takes place between ____________, not countries.

14. Why Trade? Countries sell what is no longer needed or made for trade to buy products / services that are needed! This:  Creates jobs  Attracts investment  Attracts new technology and materials  Offers people new products and services

15. Advantages of Trade 1. ___________________________  Allows us to purchase goods we cannot grow/manufacture (e.g. pineapples)  Allows us to sell (export) what we grow/manufacture in large numbers (e.g. wheat) trade surplus  A trade surplus exists if a country exports more than it imports (a deficit exists with a negative balance, or when a country consumes more than it produces) 2. ___________________  1 in 3 Canadian jobs depends on exports

16. Advantages of Trade …. continued 3. ________________________  Foreign investment in office towers, factories and manufacturing facilities helps our communities grow (e.g. Oshawa and the GM plant) 4. ______________________________  Promotes competitiveness by forcing our government and industry to keep pace with other countries 5. ________________________________  Offers consumers a wide range of choices that would otherwise not be available

17. Disadvantages 1. ______________________________  Western nations often trade with nations that do not support democratic initiatives for their citizens 2. ______________________________  American cultural influences (lifestyles) are worldwide – does this influence take away from the identity of a nation? What values are symbolized by American cultural “products?

18. Disadvantages….continued 3. _______________________________  Countries with lower standards (e.g. safety) of living can produce goods much cheaply than Canadians, thus taking away employment from Canadian industries 4. ________________________________  Companies will often relocate to countries with low environmental standards → it is far more cost-effective to manufacturer goods there 5. __________________________  Governments are largely influenced by corporations and will create laws that are of more benefit to business than to its citizens e.g. trading of commodities

19. Homework 1.Read pages 3 – 7 2.Answer “Think About It” questions page 7 3.Fairtrade assignment sheet  Read and complete the questions  Define Fairtrade and it’s benefits.  Research websites for fair trade information on products and prepare a 1 minute presentation on why consumers should buy products that follow a fairtrade system.  Share with the class tomorrow. Chapter 1: WHAT IS TRADE? Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.