March 9 th, 2010

Canada’s Global Challenge Canada has a small domestic market Population of approximately 34,000,000 (#36 in World) Result? Few customers in our own market, must be export driven, innovative and entrepreneurial Respond to challenges of an international market by focussing on producing high-quality products and investing in training and education

Canada’s Global Challenge 40% of our GDP and 33% of our jobs depend on international trade Will likely increase, if Canada can create a positive presence internationally

Article: “Loonie Rises Again...” Why is the Canadian dollar rising? What does this mean for Canada as an export country? What does this mean for companies doing business in Canada?

Standard of Living The way people live as measured by the kinds and quality of goods and services they can afford Indicators included: average family income and expenses household ownership of durable goods number of physicians per 1000 people and literacy rate We all have cars at home, cell phones in our pocket, and a home to live in. Do other countries have as high a standard of living?

Canada’s Standard of Living Human Development Index (2009) Uses life expectancy at birth, standard of living, and knowledge and education to rank world countries. Canada placed 4th on the list. Complete list: 1) Norway 4) Canada 7) Sweden 2) Australia5) Ireland 8) France 3) Iceland 6) Netherlands 9) Switzerland 10) Japan

The Knowledge Economy Refers to the increased reliance of business, labour, and government on knowledge, information, and ideas - and information technology to put them to practical use 40% in high knowledge industries, % moderate knowledge industries, less than 20% low knowledge workers “Brain over brawn” Eg. Pittsburgh, Hamilton “The local economy has been led by the steel and heavy manufacturing industries... there has been a shift towards the service sector, particularly health sciences.” “While the city is historically known for its steel industry, today its economy is largely based on health care, education, technology, robotics, and financial services.”

Brain vs. Brawn

Visual Proof of Transformation

McMaster Innovation Park “The McMaster Innovation Park houses laboratory, office, teaching, training, and conference facilities, in support of research and development in a number of key industrial areas: advanced manufacturing and materials, nanotechnology, bio-technology, and other areas in which McMaster University has recognized research strengths. These facilities will accelerate the commercialization of research into new and marketable products and services, and create new companies that will provide high-paying, highly skilled jobs in Hamilton.”

Intellectual Capital The sum of knowledge, information, intellectual property, talent, and experience within a country or an organization Includes: ideas, human capital, competitiveness, ability to create wealth Some argue that intellectual capital is more important than natural resources World economy requires companies to be innovative and creative, with unique and superior products

Intellectual Capital Intellectual capital makes companies powerful/important world wide Eg. Netscape 1995, $17 million in sales, 50 employees, $3 billion IPO Competitive advantage of a company today is defined by the brains, know-how, intellectual property, trade secrets, and collective knowledge of employees Brainpower will continue to be the most valuable asset of a company; but cannot always protect a company from a volatile economy

Thriving in the Knowledge Economy Knowledge is the prime source of competitive advantage in the world economy - this is reality Develop, share, use, and measure knowledge to create more value for customers, employees, and shareholders Knowledge is developed when people work with one another Share information openly; known as transparency; avoids duplication Organizational knowledge is all the knowledge stored within the boundaries of a company; development of a world wide network is imperative

Innovation and Quality Innovation: refers not only to technology and scientific breakthroughs but also includes constant improvements in the way businesses adopt new processes and adapt to new markets To ensure international competitiveness: a. Price b. unique products; with quality and innovation Capability to change often Force competitors to struggle to catch up

Taxation and Innovation Taxation: a method used to generate the finances required to run a country Taxation provides the infrastructure of a country Canada’s corporate tax rate is higher than many of its global competitors; difficult to attract businesses/investment Labour costs, not only taxes, are also taken into consideration; Canada has the lowest labour costs of the G7 countries

Taxation and Innovation Lower taxes may stimulate the economy, encourage spending, investment, and employment; thus the total amount of taxes received may increase, even though the taxation rate has decreased

Rationalization The processed used by an organization or company to change its organizational structure, its product line, or its production process to become more efficient, productive, competitive Due to changes in consumer demand Economies of scale: the tendency of the cost per item to go down when items are bought or produced in large quantities Closing or downsizing operations Layoff workers

Causes and Effects of Rationalization The demand for the industry’s products The trade balance between two countries Organizational change Business activities Privatization

Developed Nations and Economies Developed nations: tend to have a high standard of living and produce a sophisticated range of products Developing nations (newly industrialized economies - NIEs): transition to more sophisticated manufacturing More developed nations = more international competition, potential markets, consumers More developing nations = more countries to manufacture products due to low cost labour Less-developed nations: largely agricultural-based countries having a tendency to experience political and military instability; potential sites for expanding investment, business, trade

Developed Nations and Economies As technology spreads globally, developing countries may be able to benefit by avoiding some of the negative aspects of industrialization; the advantage of learning from developed countries that have made past mistakes