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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
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CHAPTER 10:International Business Trends
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Key Terms
subprime mortgage foreclose collateral feed-in tariff sustainability passport visa duty-free
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Chapter Objectives
By the time you finish this chapter, you should be able to:
Explain how Canadian and international companies, industries, and markets are affected by increased global business activity
Identify and analyze international business trends and their influences on companies, industries, and career opportunities in the global economy
Assess, taking into consideration factors such as markets, financing, and labour, how trends in the global marketplace have changed the ways in which an individual might run a business
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Chapter Objectives
Analyze, drawing on information from a variety of sources, including the Internet, the impact of recent global events on Canadian international business
Identify, drawing on information from a variety of sources, including the Internet, the requirements for study, travel, and employment in different countries
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
Example: The Decline of General Motors GM known for producing large cars As price of oil rose, consumers wanted to avoid
driving cars that used a lot of gasoline Japanese automakers Toyota, Nissan, and Honda
produced small, efficient vehicles Set up plants in the United States; employees were
not unionized, therefore labour was cheaper During financial crisis that began in 2008, consumers
cut spending on gas-guzzling vehicles GM filed for bankruptcy
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Markets—China China has emerged as a significant trading partner Chinese market is huge—important for Canadian
importers, exporters, businesses developing joint ventures in China, and those outsourcing production there
Middle class is emerging in China, creating new market for goods
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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Markets—Mexico Since signing NAFTA, Canadian exports to Mexico
have increased to a level seven times higher than pre-NAFTA levels
Mexico is ranked third in the value of its imports to Canada
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Markets—India Population of over one billion people Top nation for outsourcing Bangalore is known as the Silicon Valley of India
because of the number of high-tech companies there More of the population are entering middle class,
creating opportunities for Canadian products and services
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Finance When people have jobs, they earn and spend money
on products—houses, food, cars, etc. These expenditures lead to growth in the businesses
that supply them, creating more jobs This puts more money in workers’ wallets,
encouraging them to buy more The opposite happens during a recession
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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Finance
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
The Downward Spiral of the U.S. Financial Crisis Price of houses began to drop in 2007. Thousands of homeowners who had qualified for subprime
mortgages could not keep up with payments and defaulted on their mortgages.
Banks foreclosed on these homes, but because there was no market for them, these assets were worthless.
Banks stopped lending and many went out of business. Without credit from banks, consumers stopped spending. Manufacturers and retailers began to lose money and lay off
workers. The market fell and many people lost savings as pension plans
and retirement savings plans decreased.
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
Subprime mortgageA type of mortgage granted to borrowers with lower credit ratings who would not normally be able to qualify for conventional mortgages. As these borrowers are seen as having a higher-than average risk of defaulting on their loans, banks often charge higher interest rates on subprime mortgages.
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
ForecloseThe legal process through which an owner’s right to their property is terminated, usually because they have failed to pay back their mortgage. In this case, the bank usually takes the house back and sells it, using the proceeds to pay off the debt.
CollateralAn asset used to guarantee a loan.
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
The Effect of the Financial Crisis on Canada Did not affect Canada as deeply as other countries Canadian banks did not invest in subprime
mortgages in Canada Home prices here did not decrease as much as those
in the United States Canadian banks that had invested in U.S. banks
were affected Demand for Canadian goods, especially raw
materials like oil and lumber, dropped
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Marketplace
International Labour Organized labour has declined as a result of
globalization and the financial crisis Higher unemployment rates mean unions have less
influence—workers will make salary and benefit concessions to keep their jobs
Many companies buildingfactories in other countries where they can use cheaper, non-union labour
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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Green Revolution—New Energy Sources Global effort required to reduce carbon emissions,
and find new energy sources as alternative to oil, gas, and coal
Energy-rich nations, like Canada, are reluctant to enter into an agreement to reduce carbon emissions that would jeopardize their oil industries
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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Green Revolution—New Energy Sources Canada is not a recognized leader in renewable
energy field. Canadian renewable energy producers are being
lured to countries with feed-in tariffs, which are a guarantee that any company that produces renewable electricity has a guaranteed distribution network, and can price the electricity at higher than normal rates.
As environmental concerns outweigh national economic interests, investment in Canadian renewable energy options will become a priority.
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Green Revolution—New Car Technology Electric, hydrogen-fueled, and hybrid cars Hybrid technology is best alternative at this point As soon as more efficient and economical hydrogen
fuel cells or lightweight batteries enter the market, hybrid vehicles will be replaced
Opportunities for a Canadian manufacturer to introduce a small, inexpensive, fuel-efficient car
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Green Revolution—Reducing the Carbon Footprint
Carbon footprint is the total set of GHG (greenhouse gas) emissions caused directly and indirectly by an individual, organization, event or product.
Any attempt to reduce the carbon footprint has a direct effect on international business It necessitates buying locally, buying less, and buying wisely
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
Protectionism 2008 economic crisis made protectionist movement a very real
danger to Canadian businesses Unemployment was high in the United States, and anything that
threatened American jobs was very unpopular President Barack Obama included the “Buy American” policy in his
stimulus package Only American steel, iron, and other manufactured goods could be
used in buildings constructed using stimulus money and for state and federal infrastructures projects
Canadian businesses were shut out
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
Border Security Since the terrorist attacks of September 11, travel
across international borders has become slower and more complicated
Foreign goods are more expensive because of increased costs of securityin shipping
International business travellers have had to adapt to the higher costs of air travel, as well as the additional time required to clear security at airports Used under license from Shutterstock, Inc
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
Pandemic Protection Increased global travel has brought about epidemics
of disease that spread around the world, such as H1N1 flu in 2009.
Awareness of national health organizations and the World Health Organization has prevented some diseases from spreading across the globe.
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
Contaminated Products Growing number of tainted, contaminated, and unsafe
products Many from China, where the economy has developed very
quickly and the government has not yet developed a uniform set of safety standards
Many retailers asking for product traceability codes on all imported products, which would lead directly to the manufacturer of any contaminated products
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Fluctuating Price of Oil Canadian economy rests on the price of oil The higher the price of oil on the world markets, the higher
the price of the Canadian dollar Canada imports and exports huge quantities of oil Countries with oil self-sufficiency are often much richer
than than countries that do have their own oil reserves, leading to a power imbalance
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Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
The Fluctuating Price of Oil High price of oil was a major contributor to the global
recession of 2008 Price of oil increased almost 300 percent Transportation costs, heating costs were much more
expensive, and many homeowners did not have enough money to cover these costs and pay their mortgages
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Global Trends
SustainabilityThe collective effort, both locally and globally, to meet the needs of the present generation without destroying the ability of future generations to meet their needs. Oil supplies are in decline Other resources, such as fish and fresh water,
may also run out Shift in business activity is necessary, especially
by emerging economic power like India and China
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Traveller
PassportAn official document issued by a government certifying the holder’s identity and citizenship, and entitling the holder to travel under its protection to and from foreign countries.
Used under license from Shutterstock, Inc
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Traveller
VisaA certificate issued by a country an individual wishes to visit that indicates that the department of immigration in that country has checked the individual’s credentials and given him or her permission to visit their country temporarily for a specified purpose.
Types of visas Tourist visa Residence visa Work visa
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Traveller
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
The Global Traveller
Restricted Goods Firearms, tobacco, and alcohol are the most
commonly restricted items Travellers are often not permitted to enter a country
with large amounts of cash, fresh fruits and vegetables, and live animals
Returning Canadians must declare what they have purchased while away
Duty-free items are non-restricted items made within the borders of a country that has signed a free trade agreement with Canada
Chapter 10: INTERNATIONAL BUSINESS TRENDS
Fundamentals of International BusinessCopyright © 2010 Thompson Educational Publishing, Inc.
Working Abroad
Advantages of Working Abroad
Disadvantages of Working Abroad
Learn a new language Miss family and friends
Expand cultural awareness Experience isolation as a result of not understanding culture/language
Earn a Canadian salary that is higher than typical salaries in that country; enjoy a more affluent lifestyle or save money
Deal with living conditions that are not comparable to Canada’s—poor health care, transportation, etc.
Have valuable experience to add to a resumé
Exposure to dangers—terrorist activity, war, unstable government, etc.