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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