Chapter 3

International Competitiveness, Productivity, and Quality

BRAINSTORM

1. Why do countries compete for international businesses to locate in their country?

2. What kinds of economic and social factors would attract international businesses?

3. How does the state of Canadian economy/ Canadian businesses affect international businesses operating in Canada?

Establishing a Global Presence• Global Presence -

when a country is recognized internationally for its reliability, the fairness and integrity of its business dealings, and the standards of its companies goods and services.

• Capital - The money or other assets that are available for investment purposes.

Establishing a Global Presence• Four questions when developing a

Global Presence:1. Which product will lead the way as the

company launches an international business initiative?

2. Which market should be entered first?

3. What is the best way to enter these markets?

4. How rapidly should the company expand internationally?

Competitive Advantage

• Is achieved when companies and countries outperform their competitors around the world by:

1. Improved or superior products

2. Better pricing

3. Higher quality

4. Better service

5. Uniqueness or profit

Gross Domestic Product (GDP)

• The total value of all goods and services produced in a country during a specific period

• Includes items produced by foreign-owned companies

• GDP per capita = GDP / total population

Canada and the GDP

Canada is lower than US/ Europe, because:• Manufacturing sector is behind• Lack investment in R&D• Slower to adopt new tech• Depend on service rather than goods

Achieving Competitive Advantage

• Economic Utility - a product’s ability to satisfy the needs and wants of the customer.

• Utility can be found in variety of ways– Form Utility (when raw materials are

converted into finished products)– Place Utility (product has most value at

home rather than far away (e.g ice rinks)

Achieving Competitive Advantage• Opportunity Cost - calculates the

benefits of the value of the next best opportunity.

• E.g. - giving up a job paying $25,000/ year to go back to school for four years.– $25000 x 4 = $100000!– How long will it take to recoup these funds in

the new job? – What are the positives / negatives of this

scenario

Achieving Competitive Advantage

• Comparative Advantage - when a company can specialize what it does well at a reasonable cost, e.g. Canada’s fishing industry

• Absolute Advantage - a country that can produce a good cheaper will compete most effectively, e.g. Taiwan

Factors Affecting Canada’s Competitiveness

Factors Affecting Canada’s Competitiveness

1. Abundance of Natural Resources

• Oil• Gas• Forest products• Minerals • Water

2. Proximity to USA• Open borders, makes for

easy and productive trade

Factors Affecting Canada’s Competitiveness

3. Strength of Currency and Exchange Rate

• Currency traditionally lower vs. USA• Leads to increased foreign investment

and number of foreign exports• A negative is that we pay more to import

machinery, components and new technology into the country

Factors Affecting Canada’s Competitiveness

4. Infrastructure• Canada has strong transportation

and communication systems that support growth

• Allows easier access to products, and ability to communicate with customers / suppliers worldwide

Factors Affecting Canada’s Competitiveness

5. Research and Development• Canada’s R&D inconsistent• Telecommunication and information

technology are very strong• Many manufactured goods aren’t produced

within Canada

Factors Affecting Canada’s Competitiveness

6. Workforce Characteristics• Level of education and amount of training in

the workforce are major factors• Have a high level of literacy, and well -

educated workforce

7. Societal Characteristics• Quality of work• Level of health care• Diverse population

Factors Affecting Canada’s Competitiveness

8. Entrepreneurship• Ingenuity and risk-taking encouraged in

Canadian business• Results in a more attractive and competitive

environment

9. Government Involvement• Country’s taxes (GST/ PST) affect

negatively• Free trade agreements and willingness to

expand trade partnerships are positives• Canada-QUEBEC = Unstable