March 9th, 2010

Canada’s Global ChallengeCanada 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 entrepreneurialRespond to challenges of an international

market by focussing on producing high-quality products and investing in training and education

Canada’s Global Challenge40% of our GDP and 33% of our jobs depend

on international tradeWill 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 LivingThe way people live as measured by the kinds

and quality of goods and services they can affordIndicators included:

average family income and expenseshousehold ownership of durable goodsnumber of physicians per 1000 people and literacy

rateWe 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 LivingHuman 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 4) Canada 7) Sweden 2) Australia 5) Ireland 8) France 3) Iceland 6) Netherlands 9)

Switzerland 10) Japan

The Knowledge EconomyRefers 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 CapitalThe 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 CapitalIntellectual capital makes companies

powerful/important world wideEg. Netscape 1995, $17 million in sales, 50

employees, $3 billion IPOCompetitive 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 EconomyKnowledge is the prime source of competitive

advantage in the world economy - this is realityDevelop, 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 QualityInnovation: 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. Priceb. unique products; with quality and innovation

Capability to change oftenForce competitors to struggle to catch up

Taxation and InnovationTaxation: a method used to generate the

finances required to run a countryTaxation provides the infrastructure of a

countryCanada’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 InnovationLower 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

RationalizationThe processed used by an organization or

company to change its organizational structure, its product line, or its production process to become more efficient, productive, competitiveDue to changes in consumer demandEconomies of scale: the tendency of the cost per

item to go down when items are bought or produced in large quantities

Closing or downsizing operationsLayoff workers

Causes and Effects of RationalizationThe demand for the industry’s products

The trade balance between two countries

Organizational change

Business activities

Privatization

Developed Nations and EconomiesDeveloped nations: tend to have a high standard of

living and produce a sophisticated range of productsDeveloping 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 EconomiesAs 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