barriers and obstacles. introduction to barriers while doing business internationally may result in...
TRANSCRIPT
Introduction to Barriers
While doing business internationally may result in higher profits, there are often difficulties or barriers to successful trading
Some barriers include: Tariffs Non-tariff barriers Importing and exporting costs Excise taxes Currency fluctuations
Tariffs
A tax charged on certain imports Are used by a government to
manage trade e.g. charging a tax on an imported item
may make it more expensive than its domestic competitor
Therefore, people will buy more of the Canadian product because it’s cheaper
NAFTA
North American Free Trade Agreement
Effective January 1, 1994 Removed tariffs on many goods
flowing between Canada, the US and Mexico
Non-Tariff Barriers
Standards for the quality of imported goods that are set so high that foreign competition cannot enter the market
Could also be imposed at the border as all goods are inspected e.g. all beef imported into the EU
(European Union) must be hormone free
Importing and Exporting Costs
Import A good or service brought into a
country for sale
Export A good or service produced in one
country and sold in another
Importing and Exporting
Price of an item = manufacturing costs+ storage + marketing + shipping + advertising + overhead + profit margin of the business
Importing and Exporting Costs
A product shipped overseas to be sold or imported into Canada for sale would be more expensive than a product manufactured and sold here
Importing and Exporting Costs
Shipping is one of the most expensive pieces of total cost
Landed Cost The actual cost of an imported purchased
item that includes: Vendor cost Transportation charges Duties Taxes Broker fees
Excise Taxes
A tax on the manufacture, sale or consumption of a product within a country e.g. taxes charged on gas by
federal and provincial governments
Currency Fluctuation
A change in the value of one currency in relation to another e.g. the Canadian dollar has been worth
more than and less than the US dollar in the last 2 years
Currency fluctuates daily based on a number of factors including the strength of the economy of a country
Obstacles – Culture Differences
Culture The sum of a country’s way of life,
beliefs and customs It influences how and what products
are bought and sold Differs from country to country
Products that are popular here may not sell in the Middle East