MGMT 1035 Presentation Articles - Alcohol Industry in Alberta & Ontario PDF

Week 7: The Alcohol Industry Alberta's and Ontario's liquor boards: Why such divergent outcomes? Key Points: General Context: All Canadian provinces, except Alberta, rely on publicly owned liquor boards for alcohol distribution. Alberta privatized its Alberta Liqu...

Week 7: The Alcohol Industry Alberta's and Ontario's liquor boards: Why such divergent outcomes? Key Points: General Context: All Canadian provinces, except Alberta, rely on publicly owned liquor boards for alcohol distribution. Alberta privatized its Alberta Liquor Control Board (ALCB) in 1993, replacing it with a private retail market. Ontario retained its Liquor Control Board of Ontario (LCBO) and invested heavily in its modernization. Alberta: Economic Context: In 1993, Alberta faced a recession, high unemployment (~10%), and a $2.3 billion deficit. Privatizing the ALCB aligned with the Klein government’s neoliberal ideology to reduce government size and generate revenue. Policy Actions: Privatization was announced in September 1993 by Minister Steve West. By March 1994, ALCB stores were closed, replaced by 500 private stores by year-end. The wholesale system was retained under Connect Logistics, ensuring uniform costs and delivery fees for all retailers. Restrictions favored small businesses over large supermarket chains. Outcomes: Over 1,100 liquor retail outlets emerged by 2006. Consumers experienced longer store hours but lower-quality service compared to Ontario. Prices remained similar to other provinces due to flat taxation. Ontario: Economic Context: Ontario faced a $9 billion deficit and 8.9% unemployment in the mid-1990s. Harris’ "Common Sense Revolution" advocated deficit reduction and scaling back the welfare state but refrained from privatizing the LCBO.  Policy Actions: The LCBO underwent modernization starting in the mid-1980s under Liberal and NDP governments. Harris’ government increased capital funding for the LCBO after 1995, averaging $50 million annually. Modernization efforts included improved store designs, better staff training, and increased operational efficiency. The LCBO focused on "up-selling" higher-value products to consumers, particularly targeting women. Outcomes: The LCBO became a modern, consumer-friendly retailer with high customer satisfaction (80%+). Revenues to the government increased without significant volume growth, achieved by promoting premium products. Comparative Insights: Key Differences: Alberta fully privatized its liquor distribution, emphasizing market competition. Ontario retained public ownership, transforming the LCBO into an efficient and consumer-centric organization. Political and Cultural Factors: Alberta’s populist and entrepreneurial political culture supported privatization. Ontario’s historical caution regarding alcohol accessibility and acceptance of state intervention influenced the decision to modernize rather than privatize. Interest Groups: Ontario had strong interest groups (e.g., breweries, wine producers) advocating for the LCBO’s retention. Alberta lacked comparable opposition to privatization, enabling swift policy implementation. Economic Similarities: Despite differing systems, both Alberta and Ontario maintained government revenue from alcohol sales. Neither system resulted in significant price differences for consumers. Theoretical Implications: Context Matters: Decisions in both provinces were shaped by historical, cultural, and institutional factors, not solely neoliberal ideology.  Pragmatism Over Ideology: Alberta’s privatization was pragmatic, favoring small businesses. Ontario’s LCBO modernization reflected its unique political and cultural landscape, ensuring strong government revenues. Limits of Universal Theories: Marxist and rational choice theories fail to fully explain the outcomes, emphasizing the importance of province-specific contexts. Conclusion: Both Alberta and Ontario illustrate that effective liquor distribution can take contrasting forms—privatization or public modernization—while maintaining consumer satisfaction and government revenue.  Litigation and Lobbying in Support of the Marque: The Scotch Whisky Association, c. 1945–c. 1990 Here’s a simplified bullet-point summary of the article: Focus: The Scotch Whisky Association (SWA) worked from 1945 to 1990 to protect and promote Scotch whisky as a distinct product, despite challenges in achieving official legal recognition as an appellation until 1989. Key Themes: SWA’s Role: Advocated for laws and regulations to define and protect "Scotch whisky" in the UK and abroad. Coordinated legal and lobbying efforts domestically and internationally. Played a vital role in shaping industry standards and securing Scotch whisky's global reputation. Litigation Efforts: Initiated over 100 legal actions worldwide to prevent the misrepresentation of Scotch whisky. Early cases in the UK focused on distinguishing Scotch whisky from blends mixed with foreign spirits. Significant victories included landmark cases in Belgium in the 1960s, reinforcing that Scotch whisky must only be produced in Scotland. Lobbying for Legal Definitions: The 1909 Royal Commission provided basic definitions of whisky and Scotch whisky but lacked statutory power. Stronger definitions were included in the UK’s Finance Act of 1969 and the Scotch Whisky Act of 1988. The 1988 Act set a minimum strength of 40% ABV and required that Scotch whisky be made in Scotland. International Challenges: Misrepresentation of Scotch whisky (e.g., blends with neutral spirits) was widespread in Europe, leading to legal disputes in markets like Belgium, Italy, and Spain. The SWA’s efforts were complicated by differences in legal systems and the lack of harmonized regulations in the European Economic Community (EEC). Outcome in Europe: The SWA influenced EEC Regulation 1576/89, recognizing Scotch whisky as a protected geographical indication.  This regulation provided a unified legal framework across Europe to prevent imitation products. Broader Impacts: Industry Structure: The SWA’s lobbying favored larger producers, like DCL (Distillers Company Limited), sometimes disadvantaging smaller firms. The prohibition of under-strength Scotch whisky (below 40% ABV) eliminated some low-cost competitors. Global Reputation: The SWA’s lobbying and legal activities ensured that Scotch whisky gained international recognition as a high-quality product linked exclusively to Scotland. Stronger regulatory protections helped major brands like Johnnie Walker and Dewar's thrive in global markets. Key Achievements: Official recognition of Scotch whisky as an appellation in 1989. Alignment of UK laws with European regulations, culminating in the Scotch Whisky Order of 1990 and subsequent global enforcement. Conclusion: The SWA’s nonmarket strategies (litigation and lobbying) played a crucial role in securing Scotch whisky’s global prestige. The association balanced domestic and international efforts, navigating complex legal systems to protect the industry's interests. Scotch whisky’s success today owes much to the SWA’s proactive and persistent advocacy during this period.  Week 8 - Travel and Tourism Why Latin America Has Embraced Ecotourism Origins and Definition of Ecotourism: ○ In 1983, Mexican architect Hector Ceballos-Lascuráin popularized the term "ecotourism," defined as traveling to undisturbed natural areas to enjoy scenery and cultural manifestations. ○ Earlier references include Nicolas Hetzer organizing "ecotours" in the Yucatán Peninsula in the 1960s and Gerardo Budowski promoting conservation-tourism relationships in the 1970s. ○ Ecotourism originated and remains best represented in Latin America. Rise of Sustainable Development and Ecotourism: ○ The 1987 Brundtland Report, “Our Common Future,” highlighted the need for sustainable development, rejecting growth-focused models. ○ By the 1992 Rio Earth Summit, ecotourism was hailed as a strategy for sustainable economic activity, biodiversity conservation, and empowering marginalized communities. Impact of Ecotourism in Latin America: ○ Galápagos Islands: Declared a UNESCO World Heritage Site in 1978, tourism in the Galápagos grew significantly, with the population increasing from 1,500 in 1950 to over 35,000 by 2020. Visitor numbers reached 270,000 annually pre-COVID-19, supporting the Galápagos Marine Reserve (established in 1998 and expanded in 2021) and subsidizing Ecuador’s National Park System. ○ Amazon Region: Ecotourism in the 1980s provided alternatives to destructive activities like petroleum extraction, cattle ranching, and agriculture (soy, palm oil). Indigenous communities participated in ecolodge management, preserving cultural heritage and biodiversity. ○ Costa Rica: Known as a leader in ecotourism, Costa Rica abolished its military in 1948, redirecting funds to education and conservation. Ecotourism supported reforestation, especially in areas like Corcovado National Park, which combated deforestation caused by palm oil production and ranching. Challenges and Successes: ○ Nicaragua: Despite government incentives (e.g., 1999’s Law 306), tourism was marred by corruption and environmental exploitation.  Tourism arrivals fell 28% in 2018 due to political unrest and remained low through the COVID-19 pandemic. ○ Broader concerns include overtourism (e.g., Galápagos) and the carbon footprint of long-haul travel, prompting local park use during pandemic lockdowns. Post-COVID-19 Outlook: ○ Tourism reached 1.47 billion international travelers in 2019 before the pandemic. ○ Protected areas hosted over 8 billion visitors annually, with ecotourism remaining a critical strategy for conservation and community support in Latin America. Key Takeaways: ○ Ecotourism helps protect biodiversity and rural communities against threats like industrial agriculture, mining, and mass tourism. ○ Limitations exist, but ecotourism continues to provide a sustainable development model in Latin America. Our Dollars are Celebrities Abroad’: American Tourists, consumption and Power after World War ll Post-WWII Tourism and Dollar Gap: Late 1940s and 1950s: Tourism industry and government leaders promoted American tourism abroad as a solution to the "dollar gap"—a shortage of U.S. dollars in war-devastated countries. Juan Trippe, Pan Am president, in 1948 described U.S. tourists as vital for foreign trade: “Our dollars are celebrities abroad.” Tourism as Economic Aid: American tourists were seen as informal diplomats, spreading goodwill and rebuilding economies through consumption. By 1949, international spending by U.S. tourists accounted for 10.5% of U.S. imports, second only to coffee as the most imported commodity. Growth of Tourism Post-War: By 1955, over 1 million Americans traveled overseas, more than double the number in 1929. U.S. tourists in Europe in 1949 averaged stays of 63 days, decreasing slightly to 52 days by 1958, with trips costing $1,531 (a third of the median annual family income). Economic Context: Between 1945–1949, the dollar gap reached over $32 billion as U.S. exports exceeded imports. The Marshall Plan (1948) funneled billions to Europe, but dollar shortages persisted. 1949: Tourism was the largest dollar earner in Western Europe, surpassing the value of the top exported goods. Democratization of Travel: Affordable airfares and increased paid vacations expanded accessibility: 86% of private industry employees had paid vacations by 1946. Middle- and working-class Americans began traveling through chartered flights and group tours. Despite claims of widespread travel, overseas vacations remained largely for elites—only 0.055% of Americans traveled outside North America in 1954. Tourism's Role in U.S. Hegemony: Tourism was used to bolster the global economy and maintain American influence abroad, showcasing consumer power and the "benevolence" of U.S. actions. U.S. dollars abroad also symbolized America’s wealth and power but drew criticism as emblems of imperialism. Cold War Dynamics:  American tourists were cultural ambassadors, contributing to alliances with Western Europe while addressing fears of Soviet expansion. U.S. propaganda highlighted consumer spending as a demonstration of free market superiority over socialism. Challenges to U.S. Tourism: By the 1960s, the declining value of the U.S. dollar abroad caused concerns about America’s diminishing global stature. European bargains disappeared, and travel costs continued to rise, limiting accessibility for average Americans. Key Statistics: 1949: Tourism generated twice the value of Europe’s largest single merchandise export. 1955: U.S. tourists spent $427 million in Europe and $104 million in the Caribbean, excluding transportation costs. 1958: Average European trip cost $1,531, and median U.S. family income was $4,650.  Week 9 - Global Finance The History of Black Management Reveals an Overlooked Form of Capitalism Rev. Al Sharpton's Eulogy and African American Management: ○ On June 4, 2020, Rev. Al Sharpton gave a eulogy for George Floyd, highlighting systemic racism and its economic impact on Black Americans. ○ Sharpton's statement, "We could run corporations… but you had your knee on our neck," resonated with management professors Leon Prieto and Simone Phipps. Black Management History and Afrocentric Capitalism: ○ Prieto and Phipps wrote African American Management History (2019), exploring contributions of Black business leaders. ○ They advocate for rejecting traditional capitalism in favor of Afrocentric communitarianism and cooperative economics. ○ "Capitalism has failed Black folks," says Prieto; trust should be placed in community networks. Origins and Inspiration: ○ Prieto and Phipps, from Trinidad and Tobago, studied at Claflin University and noticed management texts excluded Black contributors. ○ Inspired by scholars like Henry Louis Gates Jr., they aimed to include Black voices in management history. Charles Clinton Spaulding's Contributions: ○ Spaulding led North Carolina Mutual Life Insurance Company for 50 years until 1952. ○ In 1927, he published an article outlining eight fundamentals of management: Cooperation and teamwork Authority and responsibility Division of labor Adequate manpower Adequate capital Feasibility analysis Advertising budget Conflict resolution ○ Spaulding's insights predated Henri Fayol's theories (translated in the 1940s). Spaulding's Legacy and Ubuntu Philosophy: ○ Born in 1874 in North Carolina, Spaulding emphasized corporate social responsibility and community welfare. ○ His philosophy, rooted in "Ubuntu" (human interconnectedness), shaped Black business cooperatives like those in Durham's "Black Wall Street." ○ By 1908, North Carolina Mutual had over 100,000 clients, 16-state reach, and hundreds of employees.  Maggie Lena Walker's Influence: ○ Walker, born in 1864, became the first U.S. woman to start a bank: St. Luke Penny Savings Bank in 1903. ○ She led the Independent Order of St. Luke for 35 years, promoting economic independence and women's empowerment. ○ Advocated for Black businesses to boycott white enterprises, aiming for self-sufficiency. Modern Challenges for Black Entrepreneurs: ○ Between 2012-2017, only 47% of Black-owned businesses' loan applications were approved, versus 75% for white-owned businesses. ○ Black Americans hold just 3.2% of executive roles, reflecting corporate inequality. Educational Reform and Recognition: ○ Prieto and Phipps' research has led to updates in at least five management textbooks to include Spaulding's contributions. ○ Scholars worldwide have begun incorporating their work into teaching, highlighting neglected Black management history. Potential for a Cooperative Renaissance: ○ The term "Sankofa" (Ghanaian for "go back and get it") underscores reclaiming Afrocentric traditions for future success. ○ Scholars note that Black cooperatives surged after slavery ended and during the 1970s Civil Rights era. ○ Prieto and Phipps see potential for the Black Lives Matter movement to inspire a new wave of cooperative businesses. Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968–1991 The article “Citibank, Credit Cards, and the Local Politics of National Consumer Finance, 1968-1991,” is written by Sean H. Vanatta, and focuses on jurisdictions competing to entice economic activity Sean H. Vanatta studies at Princeton University in New Jersey and is a PhD candidate in history. He spends time researching the business and regulatory history of the credit card industry in the United States after WW2. In the 1950s and 1960s, banks had to manage complex laws, politics, and regulations. Sean H. Vanatta studies how banks navigated these barriers to build the credit card market; Cards were later used to reshape the systems in the 1970s and 1980s The article goes into depth and explains all the relevant events that occurred between 1968 and 1991, with regards to banks navigating usury laws to transform the credit card industry Usury laws are “laws that set a limit on how much interest can be charged on a variety of loans” The article begins with the Great Depression and how it revealed the fundamental instability of the U.S. financial system, so New Deal Banking Acts were created which established a financial system where banks were regulated and state usury limits were established In the 1960s - Citibank faced declining profits, and established that it was necessary for them to expand and collect profits off consumer loans; Citibank could not do this since state and federal laws made it clear that Citibank could only provide its services to New York City and surrounding counties Between the 1950s and 1960s, credit card programs started to serve small businesses that could not afford the credit systems used by large retailers; This became extremely popular between 1967-1969 (1970s - 20% annual increase on credit card balances held by national banks); BankAmericard (later Visa) and Master Charge (later MasterCard) were established Banks liked the Marquette National Bank in Minnesota charged a $10 annual service fee when a 12% interest rate cap made its card program unprofitable The Fred Fisher’s Lawsuit in 1969 - Iowa resident Fred Fisher sues 2 banks for charging him higher interest rates than Iowa allowed; The banks from Nebraska and Illinois applied their home state’s interest rates; courts ruled that the banks were allowed to do this, leading to disputes Marquette Case in 1978 - Marquette National Bank in Minnesota sued First of Omaha Service Corporation for exporting Nebraska’s higher interest rates to Minnesota, which had lower usury limits; The final decision was that banks were allowed to “export” their home state’s usury laws to other states  Later on in 1980, South Dakota eliminated its usury laws as a result of the rising interest rates everywhere else, and Citibank decided to relocate its credit card operations to South Dakota, where it was allowed to apply South Dakota’s interest rates The Major Issues raised by the author: ○ Citibank’s Impact - Because of Citibank’s move to South Dakota, other banks across the U.S. started to move also, leading to banks bypassing laws ○ Consumer Debt Skyrocketed - Credit card debt skyrocketed as a result of the increase in interest rates; Outstanding revolving consumer debt doubled from 1980 to 1985, and again by 1990, and again by 1995, and again by 2005 - April 2008 - $1 trillion in debt ○ Banks taking advantage of consumers - Banks took advantage of the regulatory system by finding ways to bypass laws, which took advantage of consumers, posing a threat to the consumers ○ The Marquette Ruling - This demonstrated how powerful precedents can be and how once it is set, everyone can follow the lead ○ Ongoing debate: Should consumers be protected from high fees and interest rates - political dilemma Finally, Sean H. Vanatta argues how Citibank’s relocation to South Dakota was a large moment in the U.S.’s finance history as it impacted all of the U.S. Usury laws were eliminated, and consumer debt started to skyrocket  Week 10 - The Textile Industry Zara-Inditex and the Growth of Fast Fashion Origins and Growth: Founded by Amancio Ortega Gaona in Galicia, Spain, in the 1960s. Grew from a local business with $30 million annual sales to a global presence with $8 billion in sales by 2005. Inditex became the second-largest fashion company in the world by 2006 with 2,700 stores in over 60 countries. Fast Fashion Model: Focuses on "creativity and quality design together with a rapid response to market demands." Abandoned traditional seasonal fashion cycles for continuous adaptation based on customer demand. Vertically integrated processes: design, production, distribution, and retailing are streamlined to reduce time and costs. Design and Customer Feedback: 300+ designers gather information from fashion shows, opinion leaders, and direct input from stores. Twice-weekly store updates to headquarters include detailed sales data, customer preferences, and orders. Vertical Integration: Retains in-house control of capital-intensive processes like design, cutting, dyeing, and quality control. Outsources labor-intensive processes like sewing to 400+ sewing cooperatives in Spain and Portugal. All products distributed from logistics centers in Spain, enabling fast delivery (24 hours in Europe, 48 hours worldwide). Production and Supply Chain: Average design-to-retail cycle is 5 weeks (compared to 5-6 months in the industry). Small, frequent deliveries (twice weekly) reduce inventory needs and prevent stockpile clearance sales. 89% of stores were company-managed in 2005. Sales and Market Expansion: Sales grew from $0.086 billion in 1985 to $8.2 billion in 2005. International sales increased from 30% in 1995 to 57% in 2005. Number of stores grew from 41 in 1985 to 2,717 in 2006. Key Milestones:  First Zara store opened in 1975 in La Coruña, Spain. Initial Public Offering (IPO) in 2001 valued Inditex at $24 billion, making Ortega Spain’s richest man. Inditex’s IPO shares were oversubscribed 25 times, and stock value rose 46% by year-end. Brands: Operates eight brands: Zara (1975), Pull & Bear (1991), Massimo Dutti (1991), Bershka (1998), Stradivarius (1999), Oysho (2001), Kiddy’s Class (2002), Zara Home (2003). Zara accounted for 65.9% of Inditex’s FY2005 sales. Cost and Pricing: Avoids cost-plus pricing; instead, targets prices 15% lower than competitors. Minimal advertising expenditure (0.3% of revenues compared to 5% at Gap). Gross profit margins: 56.2% at Inditex compared to 50% for U.S. specialty retailers in 2005. Challenges and Prospects: Centralized sourcing in Spain could face challenges with global expansion. Production abroad increased to 48% in 2004 (13% in China, 14% in Asia). Plans to double store count by 2010, opening 410-490 new stores annually. Impact on Industry: Influenced competitors like H&M and Gap to adopt elements of the fast-fashion model. U.S. adoption remains limited, with brands like Forever 21, Bebe, and Charlotte Russe adapting parts of the model. Future Investments: Invested $1 billion in 2006 to upgrade logistics and expand capacity. Launched a textile design institute in Galicia to develop expertise and maintain competitive advantage. The Indian Fashion Industry and Traditional Indian Crafts Emergence and Evolution: The Indian high-end fashion industry emerged in the mid-1980s. By 2005, it earned approximately 2 billion INR (USD 61.5 million) in revenues with over 200 self-identified designers as part of the Fashion Design Council of India (FDCI). Industry concentrated in New Delhi and featured regular fashion events, training institutes, retail outlets, and media coverage. Indian Context in the 1980s: India had a strong tradition of diverse handwoven fabrics and craftsmanship. Limited appeal of Western clothing, especially for formal occasions. Affordable custom-made clothing by local tailors was common. Women predominantly wore traditional Indian clothing like saris or salwar-kameez. Western-style garments were viewed as everyday casual wear and not suitable for formal occasions. Challenges for Early Designers: Cultural conservatism limited design innovation; Indian women preferred traditional styles. Designers were perceived as "glorified tailors." High prices for designer garments were often questioned by consumers who compared them to tailored alternatives. Socialist-leaning economic policies discouraged consumerism, impacting designer clothing demand. Key Developments in the Industry: Early Designers: First wave (1980–1987) included figures like Ritu Kumar and Rohit Bal, mostly self-trained or family-funded. Later designers (1987–1991) were formally trained abroad. Training Institutes: National Institute of Fashion Technology (NIFT) established in 1986 in New Delhi, focusing on both export and indigenous crafts. By 2005, there were 93 fashion institutes in India. Media: Femina magazine evolved to focus on fashion, increasing articles from 4 in 1985 to 65 in 2005. Verve launched in 1992 as India's first dedicated fashion magazine. Elle entered in 1997, followed by Vogue in 2007. Retail: First multidesigner outlet (MDO), Ensemble, launched in Mumbai in 1987.  By 2005, organized retail expanded to include designer sections in larger stores. Institutionalization: Fashion Design Council of India (FDCI) established in 1999, modeled on the Chambre Syndicale de la Haute Couture (Paris) and CFDA (New York). FDCI launched an annual Fashion Week in 2000, later expanded to two seasons per year. Industry Identity: Known for heavily embellished, traditional Indian styles such as wedding wear, accounting for 70% of designer revenues. Designers emphasized craft preservation, linking fashion to India's textile heritage. By 2005, global perception of Indian fashion was tied to opulence and traditional aesthetics. Economic and Cultural Impact: The industry grew alongside India's economic liberalization in 1991, with disposable incomes rising from USD 231 billion in 1990 to USD 482 billion in 2004. Femina documented the industry's growth, with 127 unique designer mentions in 2005 compared to 1 in 1985. Global Recognition and Challenges: Indian designers presented collections abroad starting in the 1990s, emphasizing traditional Indian textiles and embroidery. Designers faced tension between adhering to traditional styles and innovating for global appeal. Westernized styles began gaining traction among younger designers post-1990s, reflecting India's growing consumerism and Western influence. Future Prospects: The industry's heavy reliance on traditional styles may limit global competitiveness. Younger designers are increasingly experimenting with Western-style garments while retaining Indian aesthetics. Continued Westernization and rising domestic demand for modern styles present opportunities for industry transformation.  Week 11 -The Oil Industry Forks in the Road: Energy Policies in Canada and the US since the Shale Revolution Introduction The US and Canada share a long history of cooperation in energy production and markets, with significant hydrocarbon deposits spanning borders (e.g., Bakken and Utica shale plays). The shale revolution since 2008 marked a divergence in energy policies: US: Expanded domestic production and pipelines. Canada: Faced internal and external challenges to pipeline development and regulatory reform. Canada has vast oil reserves (167.8 billion barrels) and produces 4.8 million barrels per day (2018), while the US has smaller reserves (61.2 billion barrels) but higher daily production (12 million barrels, 2019). Key Developments in Oil and Gas US Shale Revolution: Enabled by technological innovations like hydraulic fracturing and horizontal drilling (introduced in 2008). Increased US crude oil production from 5 million barrels/day (2007) to over 12 million barrels/day (2019). Reduced US oil imports by 20% and added 77,000 km of new pipeline capacity (2008–2018). Canada: Oil production increased by 84% from 2.6 million barrels/day (2008) to 4.8 million barrels/day (2019). Oil sands production rose from 45% to 63% of total production during the same period. Pipeline expansion was minimal (under 2,000 km since 2008). Pipeline and Market Access Challenges Keystone XL Pipeline: Proposed in 2008 to transport Canadian crude to US Gulf Coast refineries. Approved in Canada in 2010 but delayed by US presidential orders and judicial reviews. Rejected by President Obama in 2015 for climate and energy security concerns but reconsidered by President Trump in 2017.  Canada’s Pipeline Proposals: Five major projects proposed since 2008 (e.g., Keystone XL, Northern Gateway, Energy East). Many canceled or delayed due to environmental concerns, regulatory uncertainty, and Indigenous rights issues. Oil production exceeded pipeline capacity by 2012, prompting increased crude-by-rail exports. Energy Security and Policy Divergence United States: Historically focused on energy security and reducing dependence on foreign oil. Enacted policies like the Energy Policy Act (2005), Energy Independence and Security Act (2007), and lifted a crude oil export ban in 2015. By 2019, domestic production met 60% of US crude oil demand (20.4 million barrels/day). Canada: Reliant on the US for oil exports (98% of crude oil exports go to the US). Increasing domestic opposition to oil sands development and pipeline expansion. Policies under Justin Trudeau included banning northern oil tankers and Arctic drilling and revamping regulatory systems, creating uncertainty for the oil sector. Economic and Geopolitical Impacts US: Benefited from the shale revolution, with significant cost reductions and enhanced global influence in oil markets. Increased pipeline capacity supported rising production and exports. Canada: Faced foreign capital exodus and constrained market access due to stalled pipeline projects. Regulatory and legal battles over Indigenous rights added delays. Oil-by-rail exports increased from near-zero pre-2012 to 350,000 barrels/day by 2019. Historical Context Canada–US Energy Relations: Strong integration since the 20th century, reinforced by agreements like the Canada–US Free Trade Agreement (CUSFTA, 1989).  Canada became the largest supplier of US crude oil imports by the 1970s. Policy Shifts: US: Shale revolution and energy independence goals transformed US energy security. Canada: National Energy Program (NEP, 1980) aimed for self-sufficiency but caused long-term tensions in domestic politics and with the US. Future Outlook US: Continued focus on energy independence and expansion of domestic oil production. Canada: Faces challenges in diversifying export markets and addressing climate policy commitments. Prospects for pipeline expansion remain uncertain, with delays tied to political, regulatory, and Indigenous issues. Statistics and Figures US crude oil production: Increased from 5 million barrels/day (2007) to 12 million barrels/day (2019). Canada oil production: Increased from 2.6 million barrels/day (2008) to 4.8 million barrels/day (2019). Canadian proven reserves: 167.8 billion barrels; US reserves: 61.2 billion barrels. US pipeline capacity added: 77,000 km (2010–2018). Canadian rail exports: Reached 350,000 barrels/day by 2019. Keystone XL proposed capacity: 830,000 barrels/day; initial application submitted in 2008. This divergence highlights the contrasting priorities and outcomes of energy policies in Canada and the US since the shale revolution. The British Petroleum Company plc - Company Profile, Information, Business Description, History, Background Information on The British Petroleum Company plc Company Overview BP is one of the five largest oil companies globally and the UK’s largest corporation. By the mid-1990s, BP produced over 1.2 million barrels of oil and 1.5 million cubic feet of natural gas daily. Operates 16,400 service stations worldwide and engages in oil exploration, refining, chemicals, and plastics. Early 20th Century Origins Founded by William Knox D'Arcy in 1901 with a concession to explore for oil in Persia (Iran). 1908: Oil discovered in Masjid-i-Suleiman, Persia. 1909: Anglo-Persian Oil Company (APOC) was established. 1914: British government invested £2 million, securing a majority shareholding. World War I Era Oil production in Iran increased tenfold between 1912 and 1918. Established its own oil tanker subsidiary in 1915 with more than 30 tankers by 1920. Acquired British Petroleum Company (a subsidiary of the European Petroleum Union) in 1917. 1920s Expansion By the late 1920s, APOC was a global oil powerhouse, competing with Royal Dutch/Shell and Standard Oil of New Jersey. Established refineries in Scotland, France, and Wales. Built a research laboratory in Sunbury, UK, in 1917. Depression and Iranian Nationalism (1930s) Growth of Persian nationalism under Reza Shah led to the 1933 concession agreement, reducing APOC’s area of operations in Iran. Renamed to Anglo-Iranian Oil Company (AIOC) in 1935. Post-World War II and Nationalization Iranian oil nationalized in 1951 under Prime Minister Muhammad Mossadegh.  1953: CIA-backed coup reinstated Western oil companies under a new consortium; AIOC held a 40% stake. Renamed British Petroleum (BP) in 1954. Diversification in the 1950s–60s Expanded oil production in Iraq, Kuwait, and the North Sea. Major discoveries: 1965: North Sea gas. 1969: Prudhoe Bay oil field, Alaska. Entered petrochemicals in the late 1940s and became the UK’s second-largest chemicals producer by 1967. Oil Crisis of the 1970s Lost oil assets in Libya (1971) and Nigeria (1979) due to nationalizations. Diversified into coal (US, Australia, South Africa) and chemicals (acquired assets from Union Carbide and Monsanto in 1978). Acquired Selection Trust for mining interests in the mid-1970s. Acquisitions and Privatization (1980s) Spent £10 billion on acquisitions under CEO Peter Walters, including full ownership of SOHIO in 1987. UK government sold its remaining stake in BP in 1987, completing privatization. Restructuring in the 1990s 1990 Project: Chairman Robert Horton initiated cost cuts, reducing workforce by 19,000 jobs (16% of total) between 1990 and 1992. Horton was forced to resign in 1992 after BP reported its first-ever quarterly loss (£458 million). New management under David Simon further cut costs and divested $4 billion in assets. Mid-1990s Revival Workforce reduced to 54,000 employees by 1996, with plans to further reduce to 50,000. Joint ventures with Mobil in Europe and Shanghai Petrochemical in China expanded operations. Sales increased from £33.3 billion (1992) to £44.7 billion (1996); profits reached £2.6 billion (1996). Key Divisions and Statistics (1996) Principal Divisions: BP Oil, BP Chemicals, BP Exploration. Employees: 53,700. Sales: £44.7 billion (US$69.8 billion). Stock Exchanges: London, New York, Toronto, Tokyo, Paris, Zurich, Amsterdam, Frankfurt. This history demonstrates BP’s evolution from a Middle Eastern oil pioneer to a diversified global energy leader.  Week 12 - The Service Industry WAL-MART Goes to Germany, Culture, Institutions, and the Limits of Globalization Key Points Wal-Mart's German Venture (1997-2006): Entered the German market in 1997 by acquiring 21 Wertkauf stores and 74 Spar supermarkets. Exited in 2006 after incurring $1 billion in losses, marking a failure in adapting its U.S.-centric business model. Context of Failure Cultural and Institutional Misalignment: Wal-Mart’s U.S. model of lean retailing and customer service did not align with German consumer preferences or market conditions. German shoppers preferred no-frills shopping at hard discounters like Aldi and Lidl, which had strong low-price branding. Retail Market Characteristics: Low prices and slim profit margins in Germany required retailers to achieve economies of scale, creating high entry barriers. Family-owned and cooperative structures dominated German retail, hindering acquisitions and hostile takeovers. Zoning laws limited the establishment of large "big-box" stores over 800 square meters. Shopping hours restrictions constrained 24/7 operations, with stores closing by 8 PM on weekdays and 4 PM on Saturdays. Key Management and Strategic Failures Acquisition Overpriced: Paid €560 million for 74 Spar stores, while Spar had acquired half of them for only €85 million two years earlier. Spar stores were small and outdated, ill-suited to Wal-Mart’s model, resulting in high renovation costs. Frequent Leadership Changes: A succession of CEOs—none German-speaking—resulted in poor local management. Language barriers alienated German employees and excluded their expertise. Branding Issues:  Efforts to create a "customer-friendly" shopping experience failed; German shoppers viewed services like greeters and baggers as wasteful. German consumers never perceived Wal-Mart as a low-price leader, favoring Aldi and Lidl instead. Labor Relations: Wal-Mart's refusal to align with Germany's consensual labor relations system (collective bargaining and works councils) led to strikes. Despite paying workers 3% above industry wages, the rejection of local norms created distrust. Missteps in Supplier Relations: U.S.-style adversarial supplier relations clashed with Germany’s cooperative culture. Suppliers canceled contracts due to Wal-Mart’s aggressive tactics, limiting its ability to dominate its input network. Ethics Code Backlash: Prohibition on workplace relationships and a whistleblower policy violated German cultural norms and labor laws. Courts struck down the ethics code in 2005 as inconsistent with German labor rights. Competitive Landscape Hard Discounters' Dominance: Aldi and Lidl offered ultra-low prices and no-frills shopping, aligning better with German preferences. Aldi sold items like bread for €0.34, compared to Wal-Mart's $1.13 for the same product. Antitrust and Fair Competition Laws: German laws restricted price wars and promotions, such as "buy one, get one free." In 2000, the Federal Cartel Office banned Wal-Mart from dumping prices on basic goods like milk and butter. Comparative Success Stories Foreign retailers like IKEA, H&M, Ebay, and Amazon succeeded by: Tailoring their models to German tastes. Establishing unique brand identities (e.g., IKEA's experiential shopping model). Conclusion Wal-Mart's failure in Germany illustrates that efficiency is context-specific and that cultural and institutional differences significantly impact globalization. Future success for global retailers in Germany requires: Emphasizing consensus-based labor relations. Adjusting business strategies to local consumer preferences and regulatory environments. Are You in This Country? How “Local” Social Relations Can Limit the “Globalisation” of Customer Services Supply Chains ​ Overview Explores the challenges of relocating customer service work offshore, focusing on Bankco, a UK bank, which outsourced 1,000 call center jobs to India in 2004, only to return the operations to the UK in 2007. Highlights the difficulties of transferring customer service labor processes to different cultural and social contexts. ​ Key Events and Findings 2004: Bankco's Relocation to India Bankco outsourced 1,000 jobs from its UK call center to India to reduce costs, increase flexibility, and escape a "troublesome" UK workforce. Indian staff were paid 10–15% of UK counterparts’ salaries but required extensive 16-week training to understand UK banking systems and customer expectations. Challenges in India High attrition rates: Outsourcer lost 20–30 employees per month to competitors due to India’s competitive BPO sector. Limited cultural alignment: Indian advisors lacked familiarity with UK geography, accents, and cultural references. Customers complained about the service quality and frequently asked, "Are you in this country?" Some refused to speak to Indian advisors, leading to racial abuse incidents. Performance issues: Calls required flexibility beyond scripted responses, which Indian advisors initially struggled to provide. Advisors were penalized for exceeding 6 days of sickness leave, compared to 22 days for UK employees. Customer Backlash British customers revolted, citing a decline in service quality and cultural misalignment. Competitors capitalized on this by advertising their commitment to onshore customer service. 2007: Return to the UK Bankco withdrew its operations from India, prioritizing customer satisfaction over cost savings. Work was relocated to Outsourcer’s UK "near shore" call centers under a new "multi-country delivery" strategy. ​ ​ UK Call Center Context 2001: Opening of UK Call Center Initially targeted working mothers for part-time roles but ended up relying on students and school leavers due to labor market limitations. High turnover and absenteeism: 30–40 employees left monthly in the early years. Up to 20% absenteeism, with some exploiting 22 days of paid sickness leave as extra vacation. Cost of Turnover Recruitment and training costs estimated at £5,000 per employee. Management struggled with high attrition and absenteeism, exacerbating workforce instability. ​ ​ Analysis and Broader Implications Labor Dynamics Offshore customer services require both technical and "soft" skills, which are difficult to replicate in different cultural and social contexts. High attrition rates in both UK and Indian centers illustrate the challenges of maintaining workforce stability in call centers. Cultural Fit Customers and advisors share implicit cultural knowledge in local settings, which is hard to replicate offshore. Outsourcing complex, customer-facing roles requires alignment with the cultural expectations of end users. Strategic Adjustments The failure of the India venture led Bankco to adopt a "near-shoring" strategy, leveraging local labor for culturally aligned customer service. Global Service Supply Chains Future outsourcing trends may involve segmentation: Simple, cost-driven tasks may remain offshore. Complex, customer-facing roles may stay onshore or nearshore for better cultural alignment and control. ​ ​ Conclusion Bankco’s offshore experiment demonstrated how deeply local labor relations and customer expectations can limit global supply chain strategies. Relocation was as much about controlling labor as cost savings, reflecting the spatial politics of globalization.  The case underscores the importance of cultural and social factors in global service operations, highlighting the nuanced and strategic nature of "best-shoring" approaches.