Download Chapter 3 International business

ENTREPRENEURS AND
THEIR ROLE IN THE
ECONOMY
An entrepreneur is a managed risktaker who sees opportunities and
allocates resources to implement ideas
for the benefit of self and/or others
Intrapreneur is an enterprising person
but who works for others
Three basic questions
asked:
What resources are to be used?
What/How resources is to be produced/processed?
For Whom?
THE ENTREPRENEUR BELIEVES HE/SHE
KNOWS WHAT THE CONSUMER WANTS
OR NEEDS.
ENTREPRENEURIAL
ACTIVITY MAY
RESULT IN INEFFICIENT
USE OF A COUNTRY’S
RESOURCES!
As a result…
Up to 80% of Start-up businesses fail within the
first five years
Entrepreneurial activity results in a wide variety
of similar goods and services (Toasters,
chocolate bars, cars, cereal, insurance, etc)
Useless products are produced
Entrepreneurs are:
Sensitive to the wants and needs of the
consumer
Will respond quickly to these wants and needs
Benefits from
Entrepreneurship
Increased competition
Job provider (large organizations downsizing, it
is the smaller businesses that continue to hire)
Are a major source of new innovations (small
businesses do not invent, they innovate
modify/change something that already exists)
Opportunities Vs. Ideas
An opportunity is an area of general interest to
an entrepreneur (Usually someone else’s
problem or concern) eg. Household safety for
children
Idea is a specific means of addressing the
opportunity area eg. Gates at the top of stairs,
plastic plugs for sockets
Establishing a Global
Presence
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?
Global Presence and
Canada
Global/International presence plan should
answer these questions
 Which product will lead the way as the company
launches or “rolls out” an international business
initiative?
 Which markets should be entered first?
 What is the best way to enter these markets?
 How rapidly should the company expand
internationally?
Global Presence and
Canada
Globalization of world’s economy
It is recognized internationally for its reliability,
its fairness and integrity standards
May have a negative connotation (nondemocratic, unsafe working conditions, lack of
environmental protection, political upheaval)
Global Presence and
Canada
Canada’s global presence gives us access to
capital and markets World Wide
Capital: the money or other assets that are
available for investment purposes
If expanding internationally a company needs to
develop a strong global presence
Global Presence and
Canada
International = a few countries
Global = many countries
Going global can either make or break an
organization
Global Presence and
Canada
International = a few countries
Global = many countries
Going global can either make or break an
organization
Global Presence and
Canada
Need to establish: distribution offices, manufacturing
facilities, hiring local staff, toll-free telephone number,
website, e-commerce, marketing over the Internet
To minimize risks and maximize profits, develop a plan that
answers:
1) Which product lead way?
2) Which market to lead way?
3) What is the best way to enter the market?
4) How fast to expand internationally?
Global Presence and
Canada
Pursue opportunities and meet challenges adapt
to local markets
Competitive Advantage
Is achieved when companies and countries
outperform their competitors around the world
by improved/superior products, better pricing,
higher quality, better service, uniqueness, and
profit
Access to markets and distribution channels is
important
Competitive Advantage
Can be measured by market share and
performance with suppliers, customer demand
and loyalty, distribution, service, resources, and
financial indices
Canada ranks ___
Gross Domestic Product
GDP – The total value of all goods and services
produced in a country during a specific period.
GDP per capita – Total GDP divided by the number of
people n the country.
Means Canada is not as productive, not as
internationally competitive; reasons due to
manufacturing, R&D, technology
Competitiveness is often linked to R&D spending
Achieving competitive
advantage?
How do we achieve competitive advantage?
Through greater economic utility, or usefulness
Economic utility: is a producer’s ability to satisfy
the needs and wants of the customer; form and
place utility
Factors affecting Canada’s
competitiveness
Quality and quantity of natural resources
Strength of the country’s currency and it’s exchange rate
Infrastructure in the country
Research and Development
Workforce Characteristics
Societal Characteristics
Entrepreneurship
Government Involvement
Competitive Advantage
Opportunity Cost – The forgone alternative
Calculates in financial terms, the benefits of the next
best opportunity that was forgone or not taken.
When one country has a lower cost in producing at a
lower opportunity cost than another country, it is
said to have COMPARATIVE ADVANTAGE.
ABSOLUTE ADVANTAGE – If a country can produce
the good at a lower cost or with a higher rate of
productivity
Assignment
In a group of four choose a product/service that you can
invent or innovate and sell it to the class.
You can do it in a form of a skit, commercial, poster.
After your presentation I will be asking you the following
questions:
How are you gaining competitive advantage over your
competitors?
Which resources will you be using?
How will create presence in Canada? How will you create global
presence?