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Globalization and Canadian Firms

2394 words (10 pages) Essay in International Business

23/09/19 International Business Reference this

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Globalization and Canadian Firms

 

Part A: Analyzing Challenges that Canadian Firms Encounter

Globalization has opened up opportunities for businesses to explore outside the national boundaries of the home country. Exploring outside the Canadian economy gives access to over 7 billion customers to a corporation. However, all the 195 countries in the world represent 195 different set of economies. Moreover, running a business in a different country is also a way of representing your home country. Breaking in to the external sector of Canadian economy presents numerous challenges and opportunities for Canadian firms. Cultural differences and varying ethical standards, political relation and stability, and economic condition of the country are some of the primary challenges while it offers the opportunities of market expansion and growth, economies of scale, and additional resource availability (Wild & Wild, 2016).

Cultural differences and varying ethical standards is one of the key challenges to tackle before entering a new market. Culture is essentially the unique set of values, beliefs and practices followed in a particular society. Each country has its own history, culture and tradition developed over time. The ethical values followed in the particular society is developed from these cultural and traditional values. It is important for businesses to analyze and understand the cultural differences and ethical practices of a country before planning expansion in that country.  This involves analysing the aesthetics, vales & attitudes, manners & customs, social structure, religion, personal communication, education and Physical & Material environments of the new country that form the culture. Countries like Russia, France and Germany frown upon gifting knives as it symbolises ending of a relationship. Japanese customs promote gifting valuables to seal a relationship while U.S might frown upon this since a valuable gift might signal bribery. Similarly, governments often engage in economic sanctions to exert disapproval. Currently, Canada has imposed sanctions and/or related measures against countries like Iran, Iraq, North Korea, and Russia (Wild & Wild, 2016). Doing business in such countries while being a Canadian business is almost impossible. Whereas as a Canadian business, expanding into other North American markets like United States and Mexico is comparatively easier due to the presence of the North American Free Trade Agreement. The economic condition of the country is also an important factor. The intended product or service should be economically affordable in the new country. Expanding a luxury car business to economically poor countries Haiti, Comoros, Mali, and Ethiopia would be a futile while it might be the best idea for a company that manufacturers basic or necessity goods or services.   

While the challenges might appear to be cumbersome, globalization offers equally rewarding opportunities. Macroeconomists believe that no country has an absolute advantage in production of any goods or services while a country can have a comparative advantage over another in producing a certain good or service (Mankiw, 2014). International trade essentially facilitates this. China has a comparative advantage in electronic manufacturing due to the abundant availability of cheap and efficient labour. Businesses can outsource their manufacturing division to China to take advantage of this. Moreover, the Canadian population constitutes only 0.48% of the world population. Expanding to the international market gives a access to the new potential consumer base and access to abundant resources and technology. Blackberry, D+H, Hudson’s Bay Company, and Celestica Inc are some examples of Canadian companies that expanded to the international market to exploit these opportunities.

Part B: Analyzing the Influence of Globalization on Canadian Firms

Using information from the textbook on the drivers for international business, and by researching information from the Internet, present examples of three Canadian companies that are entering or expanding their role in international business.

For each, identify: Who is the company? Is it a large, medium, or small enterprise? What is the primary good or service it markets? Where does it do business?

Conduct a preliminary analysis of these three companies’ international business entry modes, identify advantages they may be enjoying, and evaluate which globalization forces may be supporting their success. Defend your statements with evidence from the textbook, company reports, or other literature. The goal is to show your understanding of the challenges and opportunities of international business.

  1. Hootsuite Media Inc.

Hootsuite Media Inc, commonly known as Hootsuite, is a social media management technology corporation based on Vancouver, Canada developed by Ryan Holmes, Dario Meli, and David Tedman in 2008 (Shaw, 2009). Hootsuite is a large multinational enterprise with nearly 1000 employees in over 13 locations. Holmes, the CEO of Hoostsuite, envisioned the corporation as a one-stop platform to integrate all the social media activities of corporations or individuals, simplifying social media management. Hootsuite primary business service involves a platform for management of social media pages and accounts on Facebook, Twitter, Google+, YouTube and Mixi. The products are available in Free, Pro, Team, Business and Enterprise versions with each supporting advanced integration of multiple social media accounts and easier management. The company also provides URL shorter service with ow.ly extension.

The company has successfully expanded its business from its prime location in Vancouver to over 12 other locations throughout the world including United States, Mexico, United Kingdom, Australia, Romania and Italy. Hootsuite uses direct service exporting strategies to engages in international business. The company operates over a client base of 15 million users spread through 175 countries (Lunden, 2018). The 2012 Webby Awards nominee’s clientele involve prominent names such as Facebook, HBO, Obama administration, The Gap, Panasonic, Virgin Group and Martha Stewards Media.

  1. BlackBerry Ltd.

BlackBerry Ltd is a Canadian multinational corporation focusing on the internet of things and enterprise software. The Waterloo based corporation, formed as Research In Motion by Mike Lazaridis and Douglas Fregin in 1984 was later renamed to BlackBerry in 2013 (McQueen, 2010). According to the fourth quarter financial report released by the firm reported over US $ 1.309 billion in revenue (BlackBerry, 2017). The company’s consumer base involves customers from all around the world including major economies like United States, United Kingdom, Australia, and India. BlackBerry limited can be classified as a large enterprise as it has over 4000 employees. The company is best known for its brand of smartphones and smartphones. BlackBerry Unified Endpoint Manager, BlackBerry Dynamics, BlackBerry Workspaces, BlackBerry 2FA, atHoc, SecuSuite, and QNX are some of the most popular services offered by the software giant. The growth of BlackBerry limited is fairly a consequent of its major acquaints over the years which include 2006 Slip Stream Data acquisition, Certicom Corp in 2009, Dash Navigation, Torch Mobile, Data Viz, Viigo, and Encription. Apart from acquisitions, BlackBerry’s expansion in the worldwide market is through partnership. In 2015, the corporation partnered with Amazon to develop over 24,000 android applications (BlackBerry Annual Report, 2015). The company partnered with the Chinese manufacturing giant Foxconn to develop BlackBerry Z3, a smartphone specifically designed for the Indonesian market.

  1. Tim Hortons Inc.

Tim Hortons, also known as the Bake Shop, is a multinational fast food chain based on Oakville, Ontario. Tim Hortons is the largest fast food restaurant chain in Canada with over 4500 outlets in fourteen countries (RBI, 2019). The company, initially incorporated as Tim Donuts Limited was co founded by Tim Horton and Jim Charade in 1964. The Canadian billionaire Ron Joyce partnered with the founders later in 1967 and expanded it to a multi billion-dollar food chain after Horton’s death. It’s a large enterprise, the largest of the three presented here, with over 100,000 employees worldwide. Bahrain, Ireland, Oman, Saudi Arabia, Kuwait, UAE, UK, US, Mexico, Spain and China are some of the prominent international locations covered by Tim Hortons. The growth and expansion of the company has been mainly through acquisitions, mergers, and franchising. Tim Hortons outlets are owned and operated by individuals as franchises and they pay royalty for the brand name and recognition. The fast food chain entered into a merger with Wendy’s in 1992 to expand its operations. The company’s initial expansion to United States was a result of the merger. In 2014, the company negotiated a $18 billion merger deal with Burger King and formed a new holding company 3G Capital (Young, 2014). Tim Hortons leveraged the popularity and recognition of Burger King to establish a trend in the international market.

Analysis

Hootsuite entered the international market using direct exporting of its services. This is the best method for the company because of the digital nature of the service and worldwide accessibility. Technological innovation is a key globalization force supporting the expansion of the company. However, it is difficult for the company to establish market share in China, unlike other countries, due to the internet restrictions and the non-existence of social media platforms like Facebook and Twitter managed by the service in the country. BlackBerry mainly relies on partnering and acquisitions to expand into the international market. BlackBerry acquired several software firms to spread its wings internationally. The reputation of the company established over the years and financial strength are key factors in facilitating these acquisitions. The falling barriers to trade and investments is a globalization force enabling this expansion. Tim Hortons’s expansion is also a result of the falling barriers to trade and investments. The food chain relies on franchising and mergers to enter the international market. In North America, the expansions are a result of the North American Free Trade Agreement.

Final Project Proposal

Kira Systems

Ganesh Baburaj

January 28, 2019

Machine learning and artificial intelligence has marked its importance in the business performance efficiency in the 21st century. Venture capitalists invested over $9.3 billion in AI start ups in 2018 (Chapman, 2019). This is the highest hike in the industry since 2000. With the technology advancing everyday, the business implications of AI in simplifying tasks and improving efficiency is increasing exponentially.

Kira Systems is a Toronto based software company focusing on using AI and machine learning in uncovering relevant information from contracts easily and quickly. The company was formed in 2010 by Noah Waisberg in Toronto and is estimated to have an annual revenue of $5 million. It is a small business enterprise with just over 100 employees. Kira Systems is a top competitor in Seal Software and a majority of its clientele involves law and consultation firms (Galang, 2018).

I propose to study the opportunities and challenges in expanding the products and services of Kira Systems internationally.

The key globalization forces are technological innovation and falling barriers to trade and investments (Wild & Wild, 2019). Kira Systems can utilise the technological uprising and scope of the internet to gain a worldwide market share for its products and services. Since Kira Systems deal with the Internet of Things in simplifying business, the business will have a worldwide scope for any small, medium or large enterprises looking forward to improving their performance efficiency by automation. The AI will be able to successfully grab and summarize important information from contracts and documents saving time and money, two most important resources for any organization.

Currently, the company only covers Canada. I believe the business have international scope, however, it will be easier to penetrate a developing or developed economy like India, Japan, UK, or the United States. The internet regulations in China makes it almost impossible to expand this business to the country, even though the country has a lot of potential clients.

The project will explore in detail about the products and services offered by Kira Systems, current clientele, pricing and industry applications. The project will also require information regarding the demographics, corporate structures, Gross Domestic Product, economic and political stability, legal and technological opportunities and barriers and business culture of countries the company may expand to. The research will mainly involve the use of secondary data from the Kira Systems, Statistics Canada, Industry Canada, IMF, World Bank, WTO, and UNDP websites.

Appendix A: Websites

Industry Canada – www.ic.gc.ca

International Monetary Fund – www.imf.org

Kira Systems – www.kirasystems.com

Statistics Canada – www.statcan.gc.ca

World Trade Organizationwww.wto.org

World Bank Group – www.worldbank.org

References

  1. BlackBerry Limited. (2015) FORM 40-F: 2015 Annual Report.
  2. BlackBerry (2017). Q4 Financial Statements. Retrieved from https://global.blackberry.com/content/dam/bbCompany/Desktop/Global/PDF/Investors/Documents/2017/Q417_Financial_Statements.pdf
  3. Chapman, L. (January 8, 2019). VCs plowed a record $9.3 billion into AI startups last year. The Seattle Times. Retrieved from https://www.seattletimes.com/business/vcs-plowed-a-record-9-3-billion-into-ai-startups-last-year/
  4. Galang, J. (September 5, 2018). Kira Systems receives $65 million cad investment from New York’s insight venture partners. Betakit. Retrieved from https://betakit.com/kira-systems-receives-65-million-cad-investment-from-new-yorks-insight-venture-partners/
  5. Lunden, I. (March 15, 2018).Hootsuite nabs $50M in growth capital for its social media management platform, passes 16M customers.  Techcrunch. Retrieved from https://techcrunch.com/2018/03/15/hootsuite-raises-50m-more-for-its-social-media-management-platform-passes-16m-customers/
  6. Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.
  7. McQueen, R. (2010). Blackberry: the inside story of Research In Motion. Key Porter Books.
  8. RBI (2019). Investor Home. Restaurant Brands International. Retrieved from www.rbi.com/investor-home
  9. Shaw, G. (May 14, 2009). Hootsuite for President, Obama that is. Vancouver Sun. Retrieved from https://vancouversun.com/news/staff-blogs/hootsuite-for-president-obama-that-is
  10. Wild, J. J., & Wild, K. L. (2016). International business: The challenges of globalization (8th ed.). Upper Saddle River, NJ: Prentice Hall, Pearson Education.
  11. Young, C. (August 25, 2014). Tim Hortons shares soar on Burger King merger talks. The Globe and Mail. Retrieved from https://www.theglobeandmail.com/report-on-business/burger-king-in-talks-to-acquire-tim-hortons-report/article20187310/
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