Chapter 2 – The Importance of International BusinessMr. 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 BusinessMr. 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 BusinessMr. M. Goldberg, Martingrove C.I., 2007

Importing• Why?

– Products in which other countries specialize

1. Must be Demand2. Research3. Contact foreign suppliers4. Finalize the purchase

– Shipping?– Delivery?– Payment?– Check that goods arrived OK

Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007

Exporting1. Must be Demand for product 2. Find potential customers3. Must meet customers’ needs4. Agree on sales terms5. 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 BusinessMr. M. Goldberg, Martingrove C.I., 2007

Starting an Import/Export Business

• When are we ready to trade internationally? This depends on…

1. Management commitment2. Competitive advantage3. Cash flow4. 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 BusinessMr. 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: http://www.tcm-mec.gc.ca/ctm-en.asp & http://pm.gc.ca/eng/cabinet.asp?featureId=8, October 17, 2007 & November 19, 2008)

Peter Van Loan

Chapter 2 – The Importance of International BusinessMr. 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: http://money.howstuffworks.com/trade-show.htm and http://esask.uregina.ca/management/app/assets/img/enc2/selectedbig/51B69C99-1560-95DA-43914C6D96D2460B.jpg, October 17, 2007)

Chapter 2 – The Importance of International BusinessMr. 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: http://www.nytimes.com/2006/07/10/arts/10cirq.html?_r=1&oref=slogin, October 17, 2007)

Chapter 2 – The Importance of International BusinessMr. 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: http://academicaffairs.ucsd.edu/images/clipart/Kathy%20F.jpg, October 17, 2007)

Chapter 2 – The Importance of International BusinessMr. M. Goldberg, Martingrove C.I., 2007

“…and we’re outta’ here!”