Common Trade Barriers (tariffs, quotas, gov’t subsidies, restrictions, embargoes etc) Landed Cost of Imports > Calculations (tariffs, customs duties, insurance) Big RTAs studied…NAFTA and size of the 3 members (population) Mexico: 112.3 million
Canada: 34.5 million US: 313.9 million what is APEC and who gets to be a member? Asia pacific economic cooperation – made of 21 pacific rimmed countries to promote free trade and economic cooperation.
* WHO GETS TO BE A MEMBER EU market size / members / EU countries in most economic trouble with debt & unemployment are Greece, Spain, Portugal, Ireland etc. 27 countries with over 480 million consumers, made of 27 countries located in Europe such as Austria, Belgium, Denmark, France, Germany…etc. 12.2% unemployment in the Eurozone
Greece needed a bailout of around $163 billion at first, then the second time was $157 billion Began as slow growth in financial crisis of 08-09 Greece is particularly high
Global Entry Strategies Used by IBs; compare and contrast entry methods
Outsourcing – helps profits but why so controversial? (NIKE case study) Ethical dilemmas- bad working conditions, expropriation of the workplace – low wages, long hours…etc. Also unethical towards home country as you’re taking away their jobs, choosing profit. Exporting & Importing - how is direct different than indirect exporting? Direct – from producer to whatever country
Indirect – passes through another country before exporting Comparative Advantage & how it relates to Canada (Specialization creates Surpluses) Ability to produce a certain good/service at a lower opportunity cost/better than someone else, then trading it Canada can trade it’s surplus for imports from other countries. (oil, lumber…commodities usually) Rationalization – why? how is this done? Maple Leaf Foods & GM analyses In order to become more efficient & Effective
Changing one’s organizational structure Small changes: reprioritizing, refocusing, downsizing…etc. Big changes: closing factories, building new ones, outsourcing…etc.
Maple Leaf Foods decided to close down certain factories, and build new ones after a listeria breakout. GM decided to reprioritize and restructure. and focus on R&D more than profits. They also chose to downsize, eliminating four brands, a few dealers, and 20000+ workers.
Canada’s Top 5 Trade (I & E) Partners – know the top 5 export markets and most frequent products we export (Moodle) Top Export Markets: U.S., China, U.K., Japan, Mexico Crude oil is number 1, cars Impact of globalization on Canada – Good or Bad outcomes here? High quality of life Increasing standard of living Good political relationships Continuous economic growth Loss of culture
Why Canada? (Reasons IBs bring so much FDI into Canada) We have an abundance of commodities available Also have knowledge workers Concerns about FDI and foreign takeovers of our resource sectors (oil/gas, mining, farms) i.e. nexen – controlling our resources and will be exploiting us Service Sectors in Canada / approx. % Canadians working providing services now is? 69%
The ‘Knowledge Economy’ shift (from written assessment) Only way to increase productivity, and strive for economic growth. -Creative, productive, innovative. Must breed “gazelles”, and not mice (small companies that haven’t grown much), nor elephants (corporations) What is intellectual property? How can a business license its own IP for profit? You allow others to use your logo/brand
Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.
Success & Failure in Foreign Markets – TIPS / 5 Things to Remember Study economic trends –growth, gdp, PCI…etc. Raise enough capital – avoid running over costs blahblah. Study your competition – be 1st or find a niche market Avoid political hotspots and cultural clashes (i.e. lingerie in Muslim countries)
What is culture and what are the main factors that determine it? / Subcultures (eg. do subcultures exist in Canada, in USA, or in China? explain) Hipsters, emos…etc. Main factors: religion, language (strongest), geography, history Cultural & regional diversity > What are the 5 Hofstede Variables? Attitude towards time (LTO) – low = no long term orientation Masculinity – traditional values – male traits such as aggression, achievement, power…etc. Individualism – low = more collective
Power distance – high – high class and low class Seeking Certainty – high = don’t like to take risks
Ethnocentrism, geocentrism & Disney’s expansion in the 1990s (mistakes made) Ethnocentrism: the belief that your culture/country is better than others Geocentrism: acknowledging the fact that all cultures are different, and accepting that fact. They were too ethnocentric believing that Disney was so popular, everyone would forget their customs for it. RISK ANALYSIS: Political, Competitive & Economic Forces & examples of each
Demographic Forces: Population Info – world’s 10 most populated countries & their populations 1 China 1,354,040,00019.09% 2 India 1,210,569,57317.07% 3 United States 316,057,0004.46% 4 Indonesia 237,641,3263.35% 5 Brazil 193,946,8862.73% 6 Pakistan 183,410,0002.59% 7 Nigeria 173,615,0002.45% 8 Bangladesh 152,518,0152.15% 9 Russia 143,400,0002.02% 10 Japan 127,300,0001.79%
Expropriation risks: high risk environments (eg. Venezuelan recent policies on nationalizing oil and cement industries) Extortion, vandalism, kidnapping, terrorism Other political risks studied New Balances’ problems with contractor in Asia IP LEAK AND THIRD SHIFT
Ethics in Business / 5 Principles for Decision Making. Can you apply them to real life examples if asked to? Is it: Loyal Health & Safety Honest Fair Utilitarian – best for most
Ethical Dilemma – what does this mean? How do you deal with an E Dilemma? Debate between two+ separate sets of morals Codes of ethics in business CSR (PADO model) &…. Stakeholders. Who are the big stakeholders for an IB like GM or Apple? Proactive businesses – consistently does the right thing voluntarily Accommodative – changes behavior under pressure Destructive – only doing what they have to do legally Obstructive -- profits are KING Apple: Consumers, employees, stockholders
4 COMMON CSR RESPONSES BY BIG BUSINESS…examples from lesson of real businesses Exxon oil spill Johnson & Johnson – tamper proof seal after a death even though it wasn’t their fault Ben & Jerry NHL Wal-Mart
Why is marketing so important for success in all markets? It gets the message out to consumers Tarket Markets & how to profile a target market (what are the 3 main categories used?) Psychographics, Demographics, Behavioural, Geographic
Int’l Marketing Mix Elements Market Research – Primary / Secondary and various methods of doing research Is a focus group popular method for marketers? What is it and how does it work? Yes it is – get a group of people and ask them on their opinions about the products Effective Survey Qs
Not open ended “PRODUCT” = Product Design & Total Product elements Common Pricing Strategies & Packaging Purposes “the silent marketer” = the product design Penetration pricing, skimming pricing, competitive pricing, loss leader pricing, “PLACE” = Sales & Distribution Methods (Logistics, Shipping Methods, Intermodal Transportation, Wholesaler/Retailer Roles, E-Commerce) …….Wal Mart’s global expansion & competitive advantage (from articles & case Qs) PROMOTION (Advertising & Publicity strategies/methods)
How is publicity different than advertising? Publicity is FREE – public exposure Advertising = paid for McDonalds Marketing history & approach to foreign markets (eg. India) Decentralized marketing strategy – geocentric business – understands that everyone has different needs
Push vs. Pull Marketing Strategies, what is the difference (handout) Push = pushes through supply chain Pull = directly from producer to consumer , gets consumer to come into the stores and ASKS for the product
Popular Media…. Variables & Advantages of Various Media Reach – number of possible consumers Frequency – how often its seen or heard Durability – how long the ad lasts Cost Selectivity – how likely the consumer seeing it/hearing it will be in your target market
Social Media – the rising star for cheaper, selective product promotion Branding (elements of a brand) & how is branding done? Building a reputation and a relationship with your customers through consistent displaying and advertising of your product Marketing strategy: centralized and decentralized approaches. Examples (Avon – mixed, Apple - centralized, McDonald’s - decentralized)
IB career preparation / process for career planning Characteristics of successful expats Myths vs Realities of being an expat