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BBB4M. CHAPTER 9. 9.1 . Canada’s government seeks to promote Canadian business in other countries and to lessen the risk for foreign companies. They Establish import and export policies Develop trade policies and regulations Assist C anadian exporters succeed

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  • Canada’s government seeks to promote Canadian business in other countries and to lessen the risk for foreign companies. They

    • Establish import and export policies

    • Develop trade policies and regulations

    • Assist Canadian exporters succeed

    • Match potential Canadian exports with international clients

    • Maintain and improve relations with other nations

    • Assist Canadian companies adjust the changing international market

    • Foster innovation and human resource development

  • Political Risk

  • Types of Political Systems

    • Democratic Model – The general population has the right to vote in free elections. (market or capitalist economy)

    • Totalitarian Systems – they centralize power and often use military control. Citizens have little say (command economy)

    • Mixed system of government



  • Types of political risk

    • Risk of general political instability

    • Ownership risk

    • Operations risk

    • Transfer risk

  • There are a number of questions a company should ask itself to predict the possibility of risk, provide for it, and still project a profit:

    • Is terrorism part of the political landscape?

    • Could extremist groups pose a danger to the general stability of society?

    • Has there been a withdrawal of freedoms?

    • What, if any is the military’s role in government?

    • Could religious or ethnic pressures lead to civil strife and endanger employees or property?

  • Evaluating Political Risk:

    • What are the chances of political and economic instability in the host country over the next five years?

    • What agreements are in place between the Canadian government and the host government regarding Canadian investments?

    • How committed is the current government to rules of ownership rights?

    • If a new government were to emerge, how would its platform and ideology change the current state of business affairs?

    • Would a new government be likely to propose changes in policies that would affect the country’s way of doing international business?

    • How would changes in government affect the profitability and safety of a n international project?

  • Consequences of Terrorism

    • Terrorism tends to occur when least expected and becomes a greater concern when open borders make it easier for terrorists to carry out their plans. A terrorist attack has many negative consequences on a countries economy and its businesses. It also affects transportation, security and travel

  • Evaluating legal concerns

    • Laws and regulations differ from one country to the next, when doing business in a foreign country, you must obey the laws from that country.


  • Economic Systems

  • An economic system is what allows a country to decide what to produce, how to produce, and for whom to produce. These systems include natural resources, labor, capital, management and standards for creating products.

    • Market economies

    • Centrally planned economies

    • Mixed economies

  • Global economic systems

    • Interdependence, clustering

  • Business cycles

    • Depression, Recovery, Prosperity and Recession

  • The world economic freedom index

    • Economic freedom rating

  • Canada’s global entrepreneurs

  • Around the clock world markets

  • Common currency


  • Strategies to manage financial risk

    • Foreign exchange management

    • Credit control

    • Open accounts

    • Insurance

  • Analyzing foreign investment climates

    • General political instability

    • Government policies towards foreign investment

    • Policies and legal factors

    • Economic environment

    • International payments

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