1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

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

11. 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.

12. 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.

13. 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.

14. 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)
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Chapter 9:
CANADA AND INTERNATIONAL BUSINESS
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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
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Chapter 9:
CANADA AND INTERNATIONAL BUSINESS
Fundamentals of International Business
Copyright © 2010 Thompson Educational Publishing, Inc.