Download 3.4 Canada`s Global Challenge

March 9th, 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
2) Australia
3) Iceland
4) Canada
5) Ireland
6) Netherlands
7) Sweden
8) France
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, 20-40 % 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
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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
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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