Module 1 - The Future of Work and Global Markets - STUDENT.pptx

AFM 131/ARBUS 101: Introduction to Business in North America Course introduction  Agenda 1. Brief Introduction 2. Review of Course Syllabus 3. Key Frameworks 4. Module 1 – Future of Work & Competing in Global Markets 2 AFM 131/ARBUS 101: Introdu...

AFM 131/ARBUS 101: Introduction to Business in North America Course introduction  Agenda 1. Brief Introduction 2. Review of Course Syllabus 3. Key Frameworks 4. Module 1 – Future of Work & Competing in Global Markets 2 AFM 131/ARBUS 101: Introduction to Business in North America Course introduction – Administration Information  Looking at the course schedule Course schedule – On LEARN: Content  Course Schedule  Course Schedule Image source: University of Waterloo 4 4  Looking at the course syllabus Course syllabus on Learn – Table of Contents  Syllabus  AFM 131Syllabus – Fall 2024 Image source: University of Waterloo 5 5  Looking at the course activities Course activities 20% 20% 20% 40% Module Midterm 1 Midterm 2 Final exam Quizzes Image source: Created by Magicon from the Noun Project 6 6 Leveraging relationships 1. Teaching Assistants (TAs) 2. Course Manager – Katie Petsch – [email protected] – HH 3174 3. Your Instructor – Andrew Swatridge – [email protected] 7 7 AFM 131/ARBUS 101: Introduction to Business in North America Course introduction – Key Frameworks  What is a business? mage source: https://strategyzer.com/canvas/business-model-canvas 9 9  Understanding the business environment 10 age Source: McGraw Hill, Understanding Canadian Business, 9th edition Module 01: The Future of Work & Global Markets  Understanding the business environment “If you want to understand the underlying situation and conditions in which Canadian businesses operate, it is essential that you: (1)have some grasp of economics (2)be aware of the impact of the global environment, and (3)understand the role of the federal and provincial governments in Canada.” 12 ote Source: McGraw Hill, Understanding Canadian Business, 9th edition At the end of Module 1 you should be able to answer the following questions: 1. Why do businesses go global? What are the opportunities and challenges? 2. Why do we trade with other nations and why is free trade ideal? What is Canada’s trade experience? 3. What strategies can be used by Canadian businesses to enter new global markets and what are some of the advantages and disadvantages of each strategy? 4. What factors can influence a business’ success in a global market? Describe each factor and provide 2-3 examples that might hinder success. 5. What is trade protectionism, what is the role of trade agreements, and what steps does Canada take to protect its domestic industries and workers? 6. How can you prepare yourself for the changing global landscape? 13 13 Module 01: Competing in Global Markets The Future of Work Consider The Following Statement: “Change is the only constant in life” It’s estimated that 85% of the jobs in 2030 haven’t been invented yet (Institute for the Future, 2017). Think about saving files for school projects — You may have relied on a USB key in the past to bring documents from home to school. Today, you most likely have your documents saved in the cloud through services such as Google Drive or Dropbox, allowing you to access files anywhere and through multiple devices. Think about how you listen to music — The days of having a CD collection have quickly disappeared. We’ve seen electronics retailers such as Best Buy significantly cut back on CD sales as more of us have taken advantage of the 15 This Photo by Unknown Author is licensed under 15 CC BY-SA Change Is Upon Us…Because of Us Why have these changes occurred? Outside of advances in technology, they’re influenced by our constantly evolving needs and desires, which include having more options and convenience. These are just a few examples to give context that change is happening, and it’s happening fast. If you review Figure 1, you get a great sense of how much more quickly we’re embracing new innovations. While the products cut across different technological advances over the last few hundred years, you can see how quickly newer technologies are adopted. This should excite you on what products and services could be launched over the next few years, but should also make you reflect on how this rate of change could impact your 16 16 Number of years taken for product to gain 50 million users Source: Statista. (n.d.). Time innovations needed for 50 million users. Retrieved July 5, 2024, from https://www.statista.com/chart/14395/time-innovations-needed-for-50-million-users/ 17 17 Module 01: Competing in Global Markets Going global The global market - perspectives The positive effects of globalization: – Business perspective Global competition drives innovation Increased access to resources/suppliers – Cheaper/better quality – Allows businesses to focus on what they do best Larger market, potential for greater profits – Consumer perspective Increased access and connectivity leads to more options/choice – Better quality – Lower price – Wider Selection 19 19 The global market - perspectives The positive effects of globalization: Interact with customers, clients, or business partners in different parts of the world (global perspective and experience) Employers value the experience (esp. for management/leadership roles) Challenges Potential loss of jobs (due to outsourcing) 24/7 – arranging meetings across time zones Cultural differences (incl. law and 20 20  Going Global – Success Stories McDonald's – Page 94/95 in your textbook – Video here Canada Goose – “When you buy a Canada Goose jacket, you’re buying a piece of Canada. That’s important. You can’t replace that.” Dani Reiss, CEO Canada Goose Article HERE mage sources: https://www.lovefood.com/gallerylist/60910/special-mcdonalds-menu-items-from-around-the-world 21 https://www.mcdonalds.com/ca/en-ca.html , https://www.cnbc.com/2023/11/10/how-canada-goose-ceo-built-outerwear-store-into-billion-dollar-company.html  Going Global – A not so successful story Target Canada – Consumer perspective Limited selection/bare shelves Lack of deals Expectations from US stores not met – Business perspective Underestimated the complexity of our market and geography Led to higher prices and inventory management issues – http://www.macleans.ca/economy/business/what-really-h appened-at-target-canada-the-retailers-last-days/ Image sources: Target Brands, Vito Amati/Target 22 Module 01: Competing in Global Markets Trading with other nations and the Canadian experience  Why countries trade Trade is necessary because no country can produce all of the goods and services its people want and need. Trade allows us to: Get goods that are not available locally (imports) Produce beyond our ability to consume (exports) Free trade is the ideal scenario – Moving goods/services between countries without political or economic obstruction Image source: Created by Stephen Borengasser from the Noun Project 24 24  International trade terminology Exporting: selling products (goods and services) to another country Importing: buying products (goods and services) from another country Image source: Created by Stephen Borengasser from the Noun Project 25 25 International trade terminology Balance of trade: relationship between exports and imports – Favourable balance of trade (trade surplus: exports > imports) – Unfavourable balance of trade (trade deficit: exports < imports) Balance of payments: difference between money coming into a country (from exports) and money leaving the country (for imports) PLUS money flows from tourism, foreign aid, military expenditures, and foreign investment 26 26 27  Test your knowledge Country A has total exports of $2M, while spending $1M on imports. It also collects $0.5M through tourism. Country A has: A. A negative balance of payments B. A positive balance of payments and a trade surplus C. A positive balance of payments and a trade deficit D. A flat balance of payments 28 28 International trade terminology Theory of comparative advantage – Countries export goods/services that they produce most effectively and efficiently – Countries import goods/services that they cannot produce effectively or efficiently – In practice, this economic principle is ignored! Eg. Dairy industry: up to 300% tariff on foreign imports 29 29  Test your knowledge Country A is an extremely efficient producer of tin. However, its climate and terrain makes it difficult to produce corn. According to the theory of comparative advantage, Country A should: A. Produce both tin and corn in order to remain self-sufficient. B. Watch the global market to see which product brings the highest price. C. Import the resources needed to produce corn.  D. Concentrate its production on tin and buy corn from elsewhere. 30 30  International trade terminology Comparativ Canada e Japan advantage Japan Canada Output per Unit of Input Forestry Cars, products electronic s Figure: © 2013 McGraw-Hill Ryerson Limited 31 31 International trade terminology Theory of absolute advantage – Monopoly on producing or can produce more efficiently than all other countries Learn more Learn more Short-lived today about Canada’s diamond Absolute advantage producing history by South Africa reading about the Ekati diamond Output per The Rest of the mine in the Unit of Input World NWT Diamond Production 32 32 Trading in global markets: The Canadian experience - Exports Sales to other markets (exports) – Directly through sales to foreign customers E.g. you make bracelets here in Canada and sell them via your website to someone in Germany – Indirectly through foreign located subsidiaries of Canadian companies E.g. the Slovakian government purchases Bombardier streetcars made and manufactured in the EU 33 33  Trading in global markets: The Canadian experience - Exports Multinational corporations – Manufacture and market products in many different countries – Manufacturing capability or physical presence in different countries Notable Canadian Multinationals Image sources: https://www.magna.com/. http://www.bombardier.com/en/home.html, https://www.fourseasons.com/, 34 34 https://shop.lululemon.com/, https://ca.blackberry.com/company, https://www.descartes.com/  Trading in global markets: The Canadian experience - Exports Small-business sector – Majority of exporters – “Small businesses contribute between 24 and 41 percent to Canada’s gross domestic product and employ approximately seven million individuals (or 69.7percent of the total labour force in the private sector). As well, small businesses account for about 90 percent of Canadian exporters.” Global Affairs Canada and Export Development Canada are government agencies that help SMEs become more involved in global markets ote source: Understanding Canadian Business, 9th edition, McGraw Hill Education 35 35 Trading in global markets: The Canadian experience - Imports Purchases from other markets (imports) – Directly through purchases from foreign suppliers E.g. you purchase clogs online directly from a Dutch company – Indirectly through purchases from Canadian subsidiaries of foreign companies E.g. you purchase life insurance from Munich Re, a Canadian subsidiary of a German insurer 36 36  Trading in global markets: The Canadian experience - Imports Foreign direct investment (FDI) in Canada by non-Canadian multinationals Local governments aim to attract foreign investment eg. Waterloo/Toronto – next tech hub http://www.cbc.ca/news/canada/kitchener-waterloo/sili con-valley-toronto-waterloo-1.3519032 ) Notable local FDIs: Image sources: https://www.google.ca/ https://www.toyota.ca/toyota/en / 37 37  Trading in global markets: The Canadian experience - Imports Direct imports of goods and services from foreign markets Canada Border Services Agency (CBSA) – Protect Canadian citizens and the economy – Enforcement of goods coming into Canada Prohibited items Items requiring permits Adherence to federal laws such as labelling laws, emission standards, health checks Certification standards 38 38 Image source: CBC  Trading in global markets: The Canadian experience The United States is our most significant trading partner – Geography – Location of our population – Culture – Natural resources – Exchange rates Dependent on the U.S. for trade Need to diversify to reduce dependency Image source: Central Intelligence Agency 39 39 Module 01: Competing in Global Markets Strategies to enter global markets  Strategies for reaching global markets Figure: Figure 3.6, Understanding Canadian Business, 9th Cdn ed. © 2016 McGraw-Hill Education Limited 41 41  Strategies for reaching global markets Licensing A company (licensor) allows a foreign company (licensee) to produce and sell its product for a fee (a royalty) – Additional revenue outside of home market – Costs to produce and market are borne by licensee – Have to grant rights for an extended period – Risk of losing trade secrets – Quality control Image source: Stephen Chernin / stringer / Getty Images 42 42  Strategies for reaching global markets age source: https://www.cnbc.com/2017/04/18/star-wars-helps-make-disney-57-billion-in-licensed-products.html 43 43 Strategies for reaching global markets Exporting Selling products to another country Use of export-trading companies 44 44  Strategies for reaching global markets Franchising Selling the rights to use an established business name and sell a product/service to others in a given territory in a specified manner – Adapt offerings Notable Canadian franchises: – Tim Hortons – M&M Meat Shops – Boston Pizza – Canadian Tire – Booster Juice – Beavertails Image source: Domino’s Pizza Japan, Inc. 45 45  Strategies for reaching global markets Contract manufacturing (outsourcing) Foreign company manufactures goods to which a domestic company then attaches its own brand name or trademark – Can be cost effective – Can experiment in a new market Image source: Felipe Dupouy/Digital Vision/Thinkstock 46 46 Strategies for reaching global markets http://manufacturingmap.nikeinc.com/ 47 47 Discussion question Cost is only one factor when considering outsourcing business activities. What other factors should be considered? – Quality control – Public image/company reputation – Expanded capabilities/talent pool – Employment standards – Environmental/cultural impact 48 48 Strategies for reaching global markets Joint venture A partnership where two or more companies join to undertake a major project – E.g. Airbus Canada Limited, JV between Airbus, Bombardier and Investissement Quebec (acting as government of Quebec) https://brand.airbus.com/en/guidelines/sub-identities/airbus-canada-limited-partnership Benefits – Shared technology, risk and expertise – Facilitates entry into countries that wouldn’t otherwise permit foreign business Strategic alliance A long-term partnership between two or more companies established to build competitive market advantages – Does not typically involve sharing costs, risks, management, or profits 49 49 – Strategies for reaching global markets Foreign direct investment Buying permanent property in a foreign market Foreign subsidiary – Large investment – Consider legal requirements of each country – Risk of expropriation 50 50  Test your knowledge When entering a foreign market, Anheuser-Busch will contract with a local company to brew and market the Anheuser-Busch product Budweiser. This is an example of:  A. Licensing. B. Franchising. C. Foreign direct investment. D. Foreign subsidiaries. 51 51 Module 01: Competing in Global Markets Forces affecting trading in global markets Forces affecting trading in global markets 1. Sociocultural forces 2. Economic and financial forces 3. Legal forces 4. Physical and environmental forces 53 53 Forces affecting trading in global markets Sociocultural forces Culture – values, beliefs, rules, and institutions – Also includes social structures, religion, manners, customs, attitudes, language and communication Consideration of these factors is required when: – Determining what goods and services are to be sold – Marketing to customers 54 54 Forces affecting trading in global markets Sociocultural forces Consideration of these factors is required when: – Developing relationships with customers and suppliers – business etiquette can vary significantly from country to country https://www.businessinsider.com/a-guide-to-business-etiquette-around-the-world-2015-5 55 55  Forces affecting trading in global markets Economic and financial forces No unified currency – The value of a nation’s currency changes constantly due to supply and demand. This value is referred to as the currency’s exchange rate. – For Canadian businesses When the value of the dollar is high it means businesses have more purchasing power globally (they can buy more for a dollar). It also means Canadian goods and services are more expensive to global consumers. When the value of the dollar is low, foreign goods and services are more expensive to Canadian consumers, but Canadian goods and services cost less to foreign consumers. Image sources: Created by Austin Condiff from the Noun Project 56 56  Forces affecting trading in global markets Legal forces No central system of law Canadian businesses must follow Canadian laws when conducting business globally – Inconsistencies eg. child labour – Illegal activity eg. bribery Image source: Vladek/iStock/Thinkstock 57 57  Forces affecting trading in global markets Physical and environmental forces Technological constraints – Electricity – Computer and internet usage (developing vs. developed nations), although cell phones are improving connectivity in Africa 58 58 age source: https://wikitravel.org/en/Electrical_systems  Test your knowledge Workers in the nation of Zeeland prefer managers that forcefully tell employees what to do and how to do it. Conversely, employees in Beeland prefer to participate in decision making in the workplace. This _________________ difference between Zeeland workers and Beeland employees represents a management challenge for companies trading in global markets. A. Environmental B. Economic  C. Sociocultural D. Legal 59 59 Module 01: Competing in Global Markets Trade protectionism  Trade protectionism Trade protectionism – Use of government regulations to limit the import of goods and services Image: untouchablephoto/iStock/Thinkstock RomoloTavani/iStock/Thinkstock 61 61  Test your knowledge The Canadian government has announced a $5-million annual limit on beef imported from Argentina. This type of trade restriction is called a(n): A. Embargo. B. Revenue tariff.  C. Import quota. D. Protective tariff. 62 62 Protectionism – common practices Tariffs – Taxes on imports Protective Revenue Import quotas – Limit number of products a nation can import Embargo – Complete ban on the import/export of a product (or all trade) with a country – Current sanctions imposed by Canada (internati onal.gc.ca) 63 63  Protectionism – common practices Image source: https://globalnews.ca/news/4129047/india-seal-fur-skin-ban-canada-seal-hunt/ 64 64  Protectionism – common practices Non-tariff barriers – Informal, include restrictive standards that detail how a product must be sold in the country Eg. Canada’s Health and Safety and labelling standards Image: Canadian Food Inspection Agency. Government of Canada. 65 65 Module 01: Competing in Global Markets The changing landscape of the global market  International trade organizations Mediates trade disputes among nations – Monitors national trade policies – WTO talks can collapse Legal differences Politics Image source: World Trade Organization 67 The state of trade between nations Video and Image Source: What a trade war is, how it works, and why it will impact Canada | Globalnews.ca 68  Trade agreements North American Free Trade Agreement (NAFTA) – An old free-trade agreement among Canada, the United States, and Mexico United States Mexico Canada Agreement (USMCA) – A new free trade agreement that is signed AND ratified and came into force on July 1, 2020 69 Image source: tarras79/iStock/Thinkstock  Trade agreements Canada-European Union (EU) – Free trade deal – CETA - entered into force September 2017 Removes 98% of tariffs Consider impact on: – Canadian consumers – Canadian industries source: http://www.international.gc.ca/gac-amc/campaign-campagne/ceta-aecg/index.aspx?lang=eng 70  Did the pandemic ruin Globalization? Watch the video on Slobalization –The Economist – Will covid kill globalisation? - YouTube – Think about what we learned post-pandemic about globalization Image source: Wikipedia 71  Globalization and your future Global trade opportunities – “Emerging” markets – China has more than 1.3 billion people – India has more than 1.1 billion people To remain competitive, Canada must stay aware of the global opportunities/challenges and focus on innovation and entrepreneurship Image sources: naveen0301/iStock/Thinkstock, danielvfung/iStock/Thinkstock 72 For next week 2 : e n t u l e rn m d e Mo of Gov Role siness Bu in ter 4 C hap d Rea 73 73