Fundamentals of International Business - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  CHAPTER 9: Canada and International Business Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Key Terms tax credit Smart Border Accord Human Development Index (HDI) productivity telecommuting Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Chapter Objectives By the time you finish this chapter, you should be able to: Describe Canadian companies that are leaders at the international level and those industries in which Canadian companies have had international success and analyze the reasons for their success Evaluate the factors currently affecting the international competitiveness of Canadian businesses Explain how Canada can attract foreign investment Explain how Canada’s cultural diversity contributes to its competitive success in international business Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Fundamentals of International Business Chapter Objectives Analyze the impact of international business activity on Canada’s economy Describe how the state of Canada’s economy affects international businesses operating in Canada Analyze the ways in which the workplace, occupations, nature of work, and working conditions in Canada have changed as a result of the growth of a global economy Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Canada’s Banking Industry Industry is dominated by the “Big Six”: Royal Bank of Canada, TD Bank, CIBC, National Bank, BMO, and Scotiabank Canadian banks are larger and have greater reserves than European and American competitors Canada’s banking system is tightly regulated by the federal government Designed to handle ups and downs of the business cycle Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Canada’s Banking Industry Canada has profitably exported its banking expertise around the world Four of the ten largest banks in North America, measured by assets, are Canadian Scotiabank has more than two thousand branches in fifty countries Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Canada’s Cultural Industry Includes publishing, theatre, visual art, music and film Provides employment for skilled workers Is a growth industry—Canada’s exports of cultural products doubled between 1997 and 2006 Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Tax credit A sum that can be deducted from the amount of tax owed by an individual or business. For example, to draw film and television production to British Columbia, the provincial government offers a 25 percent tax credit to companies that hire local workers. Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Canada’s Technology Industry To allow businesses and individuals to stay connected across Canada’s large geographical area, excellent communication technology is a necessity One of Canada’s great success stories is the BlackBerry, developed by Waterloo-based Research In Motion Canada also has a strong software industry Digital media industry—focused on gaming, special effects, animation, and simulation products for entertainment and health industries and the armed forces—employs over fifty thousand people Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Competitive Advantages Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment Countries seek foreign investment because it: Increases economic activity Brings new technology Improves productivity Forces domestic companies to become more competitive On the downside, foreign investment also: Detracts from a country’s identity The profits earned by foreign-owned companies do not stay in the host country Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment The federal and provincial (and in some cases, municipal) governments have programs to attract foreign investment. Canada is attractive to foreign investors because it offers: A supportive business environment A gateway to the world An infrastructure advantage Outstanding employees A great place to live Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment Gateway to the World Seventeen of Canada’s twenty largest cities are within ninety minutes of the U.S. border NAFTA has created opportunities for businesses located in North America Canada’s connections to Asia (through proximity, immigration links, and APEC) allow access to Asia’s growing economies (especially India and China) Used under license from Shutterstock, Inc Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment A Supportive Business Environment Canada is ranked highly as an easy place to conduct and set up a business Also offers excellent trade and investment opportunities Strong ties to Asia, Europe, and the rest of North America through imports and exports Stable economy with low interest, inflation, and unemployment rates Low corporate tax rates and offers tax incentives Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment Infrastructure Advantage Canada has more than 300 commercial ports. St. Lawrence Seaway is the world’s longest inland waterway, allowing goods to travel easily from the Atlantic Ocean to the middle of North America. CP and CN Railways have a combined rail system of 53,000km. The Trans-Canada is the world’s longest highway, spanning all 10 provinces and connecting to 18 border crossings. Smart Border Accord, an agreement between the Canadian and U.S. governments signed in 2001, facilitates the cross-border flow of travellers and goods, and co-ordinates enforcement efforts in the two countries. Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment Outstanding Employees Canada spends more (as a percentage of GDP) on education than any other country Has most highly educated workforce in the world Home to excellent business schools Cultural Diversity Attracts highly educated immigrants Liberal immigration policies One of the most multicultural countries in the world, with employees that speak many languages and have an in-depth understanding of other cultures Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Attracting Foreign Investment A Great Place to Live In 2009, the United Nations Human Development Index rated Canada as the fourth-best country in which to live. The Human Development Index (HDI) is a statistic produced by the United Nations and used to rank countries, which measures three elements: health (life expectancy at birth) education (literacy rate and school enrolment) standard of living (GDP per capita) Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Productivity The amount of output with respect to the amount of input. Input includes capital, raw materials, labour, and innovation. Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Productivity Canadian companies could improve their productivity by: Increasing investment in machinery and equipment, especially communication and information technology Attracting more foreign investment Expanding Canadian investment in foreign countries, especially in Asia Rationalization, which includes downsizing and moving production to lower-cost countries Fostering corporate innovation by increasing spending on science and technology Initiating government programs in science and technology Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Productivity Increasing the knowledge economy by graduating more Canadians in the fields of science, math, computer science, and engineering Encouraging employers to increase and improve their training programs Increasing post-secondary funding Creating mentorship programs to help immigrants become qualified in their fields of expertise Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.

Canada’s Productivity The Changing Canadian Workplace Dramatic changes because of globalization Workers will likely have many jobs, outside of the city they grew up in and perhaps outside of Canada More temporary employees Employees need strong technical and interpersonal skills Employers can hire people located anywhere in the world because of telecommuting—the use of computers and other technology to work from home Used under license from Shutterstock, Inc Chapter 9: CANADA AND INTERNATIONAL BUSINESS Fundamentals of International Business Copyright © 2010 Thompson Educational Publishing, Inc.