Transcript 3.1 Establishing a Global Presence

3.1 Establishing a Global Presence
and
3.2 Achieving Competitive Advantage
March 3rd, 2010
Global Presence and Canada
 globalization of world’s
economy
 being recognized
internationally (for reliability,
fairness, integrity, standards)
 may have a negative
connotation (nondemocratic, unsafe and unfair
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
(international = a few
countries; global = many
countries)
 Going global can often make or
break an organization
Global Presence and Canada
 Need to establish: distribution, offices, manufacturing facilities,
hiring local staff, toll-free telephone number, web site, ecommerce, marketing over the Internet
 To minimize risks and maximize profits, develop a plan that
answers:
 Which product to lead way?
 Which market to enter first?
 What is best way to enter market?
 How fast to expand internationally?
 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
 Can be measured by market share and performance, partnerships with
suppliers, customer demand or loyalty, distribution, service, resources,
and financial indices
 Canada ranks 8th according to the World Economic Forum’s Global
Competitiveness Report (2002)
 More recently, was 3rd in Forbes’ Top Countries to do Business List
Competitive Advantage and Canada
 GDP (Gross Domestic Product): is the total value of all
goods and services produced in a country during a specific
period (includes items produced by foreign-owned
companies)
 Means Canada is not as productive, not as internationally
competitive; reasons due to manufacturing, R&D,
technology,
 service dependent
 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
What factors affect competitive advantage?
Factors Affecting Canada’s
Competitiveness
 Quality and quantity of natural resources
 Strength of the country’s currency and its exchange rate
 Infrastructure in the country
 Research and development
 Workforce characteristics
 Social characteristics
 Entrepreneurship
 Government involvement
Opportunity Cost, and Absolute and
Comparative Advantage
 Opportunity cost: whenever one opportunity is chosen or
pursued by a company, others are sacrificed; the benefits of
the value of the next best opportunity that was foregone or
not taken (often expressed in dollars)
 Absolute advantage: when a country can produce a good
relative to another country at a lower cost or with a higher
rate of productivity
 Comparative advantage: when one country has a lower
cost in producing a product at lower opportunity cost than
another country