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3.1 Establishing a Global Presence BBB4M Key Terms Absolute Advantage Capital Comparative advantage Competitive advantage Developed nations Developing nations Economies of scale GDP Intellectual Capital International Organization for Standardization (ISO) Knowledge economy Less-developed nations Market-driven organizations Opportunity cost Productivity Rationalization Standard of living Total quality management Utility Prior Knowledge Why do companies compete to try to get international businesses to locate in their countries? What kinds of economic and social factors would attract international business to Canada? How can an unprofitable international business improve its chances of becoming profitable? What does Global Presence even mean? Thoughts? How do we grow this Presence? Globalization For reasons already known to you, international business growth has increased a lot since the 1950s and 1960s. Globalization Because of this growth, certain companies and therefore COUNTRIES have established themselves as well-known, for a lot of reasons: -Good products -Huge market share -Global impact Canada’s Case Canada is a country with global presence, even though not a lot of Canadian companies have it. Name two companies that are based in Canada that have global presence? Canada’s Case Country is seen as stable, safe, and attractive to investment of capital. Capital: Money or other assets that are available for investment purposes. Most of our companies are domestic, or only have the US beyond our borders, with slow expansion internationally. A lot of companies are successful internationally, but not visible. Still viewed as a resource exporter. Global Presence What about a company that has a global presence from your countries? Competitive Advantage Competitive Advantage: the ultimate goal for companies in the international marketplace is to increase sales and profits. This is how companies can have a Competitive Advantage: Making something better Cheaper Selling more Better price More profit Uniqueness How do you measure Competitive Advantage? Market share and performance (compared to key competitors) Partnerships with suppliers Customer demand Customer loyalty Distribution Service Skilled workers/more resources Gross Domestic Product (GDP) GDP: The total value ($) of all goods and services produced in a country during a specific time period. GDP per capita (per person) is the total GDP divided by the number of people in the country. The higher the GDP, the more productive a country is. The lower the GDP, the more OTHER COUNTRIES are productive relative to your country. Gross Domestic Product (GDP) What is the GDP per capita of Canada if the population is 31.3 million people. (Assume GDP is $722.3 million USD). What is the GDP per capita of the USA if the population is 275.6 million people. (Assume GDP is $9,255 million USD). Which country is more productive? 3.2 Achieving Competitive Advantage – An Introduction BBB4M Competitive Advantage REVIEW Competitive Advantage is achieved when companies and countries outperform their competitors around the world by: Better pricing, higher quality, better service, uniqueness (hard to replicate) or profit. Access to markets and distribution is also important. Factors Affecting Canada’s Competitiveness Quality and quantity of natural resources Strength of the Canadian dollar and its exchange rate Infrastructure Research and Development (PATENTS) Factors Affecting Canada’s Competitiveness Workforce Characteristics Societal Characteristics Entrepreneurship Government Involvement Homework Canada’s Competitive Advantage – SWOT Analysis Activity ICE 3.1 (P.82 #2, 3)