Chapter 3 International Competitiveness, Productivity, and Quality.
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Transcript of Chapter 3 International Competitiveness, Productivity, and Quality.
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