Transcript International Competitiveness 2

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
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Is achieved when companies and
countries outperform their competitors
around the world by:
Improved or superior products
Better pricing
Higher quality
Better service
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 foreignowned 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
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Societal Characteristics
Quality of work
Level of health care
Diverse population
Factors Affecting Canada’s Competitiveness
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Entrepreneurship
Ingenuity and risk-taking encouraged in
Canadian business
Results in a more attractive and competitive
environment
Government Involvement
Country’s taxes (GST/ PST) affect
negatively
Free trade agreements and willingness to
expand trade partnerships are positives
Canada-QUEBEC = Unstable