International Business

Posted: August 25th, 2021

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International Business – Assignment 1

Question One

Impacts of International Trade

International trade has affected me positively, as well as negatively.

1. First, it has led to the production of a variety of goods and services that we can access with ease. We can acquire what our country is unable to produce from other countries. For instance, we import agricultural produce, such as coffee and tea, from Africa to sustain our country’s demand.
2. Second, by trading with other nations, we have managed to open new markets for our manufactured goods, thus, creating more jobs for Canadians.
3. Conversely, thishas encouraged the exploitation of the locals by foreign investors through direct and indirect competition.
4. Finally, entry of other people into our country has affected our cultural values and norms. As Canadians interact with visitors, they tend to emulate some of the foreign customs, whichhas an influence onthe local norms and social structure. One example of this is the change in dressing code brought about by globalization.

Canada’s Imports and Exports

Like other countries, Canada participates in international trade to sell its surplus goods and services, while acquiring what it cannot produce in sustainable amounts. In the recent past, Canada has exported crude petroleum to other nations. In return, it has been able to import cars and delivery trucks from Japan and Germany to sustain its local deficits. Of the commodities that Canada exports, crude oil undergoes extensive value addition before its release to other foreign markets; these products are engine oil, cooking gas, and fuel for propelling various locomotives. Value addition is essential in increasing quality and competitiveness of the commodity in question to raise its preference in the global markets.

Question Two

1. In case the countries do not trade, 8500kg of wheat and 5300kg of pineapples will be produced.
2. If the countries trade, 17,000kg of wheat and 10,600kg of pineapples will be produced.
3. The values of wheat and pineapples represent a comparative advantage, in the sense that it compares the production capacity when a country does not trade with another one,as opposed to when it participates in foreign trade.

Question Three

1. Without trading with one another, the total numberof sheep and pigs produced by the two countries will be 12,000 and 12,000, respectively.
2. This trend of production is a sign of competitive advantage as one country maximizes its resources to produce what can sustain its population. The one with the most favorable condition has the highest number of animals at farms.
3. Australia is five times more efficient in producing sheep and two times more efficient in producing pigs than New Zealand.
4. If the two countries decide to trade with one another, Australia will have higher comparative advantage than New Zealand for both the animals.

Question Four

1. Tariff will be 0.11*2,500,000= $275,000, and the selling price will be $2,500,000+275,000= $2,775,000.
2. The Canadian government wins as it earns $275,000 extra in tariffs. However, the local buyers will lose as they will have to bear the import cost along with the tariffs.
3. i. Canada’s manufacturing industries need help from the government to reduce the high cost of production.

ii. Removal of tariffs will help minimize production costs while enabling the industries to maximize their return on investment.

iii. The idea of reducing import tariff is a better way of protecting local industries that depend on imported raw materials to produce finished goods.

Question Five

1. 1 Canadian dollar = 520 CLP; therefore, 520 million CLP will be $ 1,000,000.

1 Canadian dollar = 5.2 CNY; thus, 5.3 million CNY will be $1,019,230.7.

1 Canadian dollar = 0.66600 EUR; hence, 700,000 EUR will be $1,051,051.

From the calculations above, I would transact with a Chilean company because it offers raw materials at the cheapest price.

• However, the other factors to consider include the diplomatic state of the two countries, the global preference of raw materials from the selected source, and the quality of the raw materials.

Question Six

1. The address and telephone of the Canadian Embassy in Brasilia, Brazil:

SES Avenida das Nações quadra 803 lote 16 
70.410-900 – Brasília – DF Brazil

TELEPHONE(+55) 61 3424 5400. This information is important,especially for clearing logistics and diplomatic affairs.

• The trading relationship between Canada and Brazil has been perfect. Canada imports agricultural products and other raw materials from Brazil, while exporting petroleum productsand cars to Brazil.
• Even though Brazil has been a significant destination for foreign direct investment for Canada, there is no serious commercial agreement between the two countries. A direct foreign investment refers to the process of controlling business in another country.
• A flight from Canada to Brazil is C$1682pp. Information obtained from: https://www.cheapflights.ca/flights-to-Brazil/Canada/

Question Eight

1. Exporting and Importing Countries: United States, United Kingdoms, Japan, China, Mexico, Germany, and France.
2. Export Markets: Netherlands and Belgium
3. Import Markets: Norway and Algeria
4. Legend: United States