SCM950a outline a

PRINCIPLES OF
INTERNATIONAL BUSINESS & MARKETING

SCM 950

As Taught by Prof. Tim Richardson School of Marketing and e-Business, Faculty of Business, Seneca College, Toronto, Canada

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This page last updated 2001 May 24

For the section(s) taught by Tim Richardson

Canadian companies in International Business
- check the top Cdn companies in intl business,
http://www.canbus.com/CB500/top50.htm

- check the Fortune Global 500 - only 8 Canadian companies make the list

The biggest areas of Canadian International Business
re: Physical and Environmental Forces

In order for you, as a Canadian student of International Business, to be successful in finding a job in international business in Canada, it is very helpful for you to have an appreciation for what types of business most large and medium sized Canadian companies are involved in. The geographical size of Canada, and the "gifts" of our natural resources means that Canadians companies are doing international business on a large scale, are mostly involved in the following
(WTGR.)

Forest products
Grain export
Fish products
Mining

problems of American based textbooks

different sector focus
different geographic focus
different domestic market size results in differently sized companies

discusses U.S. major international trading partners
We will instead look at Canada's major international trading partners

USA
Japan and China
Europe (U.K. and Germany)
Latin America (Mexico, Brazil, Argentina, Peru)

Canada's major international export products/commodities

forest products (wood, pulp, paper)
grains and oilseeds (wheat, canola)
marine products (frozen fish, roe, crustaceans)
mining and minerals (ore, process metal products, gold and silver)
agricultural products (cheese, beef, maple syrup, etc.)

Canada's major international import products/commodities

consumer products (VCR's, computers, cell phones)
processed food products
automobiles, automotive parts
clothing

Why you need International Experience, and, how to get it - class discussion

TERMS
Multidomestic company - multiple affiliates all mfg locally , product variances depending on regional market and culture (a food products company, Heinz, Nestle)
Global - market same products in many markets - integrates and standardizes operations (suitable for a product like COKE)
International - refers to both global and multidomestic companies - according to the text
Multinational - business in many countries
Transnational - business in many countries with no specific allegiance to one country

Globalization

"Downside of Competition Caused by Globalization"

"Globalization is a current term for the horizontal and vertical integration of manufacturing and trade on an international level"
www.endgame.org/gtt-globalization.html

Wall Street Journal/NBC News poll found that 58% of Americans believed that trade had reduced U.S. jobs and wages, a view that is almost never expressed by commentators or those who shape public opinion.
www.cepr.net/GlobalPrimer.htm

American public opinion is, in the majority, negative towards Globalization. Canadians are even further effected, on an individual basis, by international trade since a higher proportion of Canadians have jobs which are effected by international business competitiveness.

The debate over the positive and negative effects of globalization is a hot topic for many individuals, agencies, organizations and government departments who find themselves in a position to defend or attack the current globalization trends. We can have an interesting debate in class about the merits of globalization but in the end whether we like it or not, it is a situation within which we, as international business people, have to deal with successfully.
WTGR

"Globalization forces everyone to compete with the cheapest producers."
Is this a good thing or a bad thing?

"In the early 1990s, bleached hardwood pulp cost $78 per ton to produce in Brazil, $156 per ton to produce in eastern Canada, and $199 per ton to produce in Sweden."
- therefore the cutting down of the rainforest in Brazil !

http://www.endgame.org/gtt-globalization.html is a web page devoted to an explanation of The Globalization of Timber industry and contains some interesting comments which apply to all industries being challenged globally.

Forest Products
". The vertical integration of the wood products industry "is probably the single most recognized characteristic of the industry" -- for example, most paper sales are by corporations which also control timberland. Now the horizontal integration of the industry is also being completed, as corporations like International Paper spread their operations to dozens of countries."
by George Draffan

Globalization
and
sustainable
development

Globalization and sustainable development

There is available, in many sources (internet based and non-internet based) commentary criticizing the major corporations and leading nations in their drive for competitiveness - which leaves sustainability of agriculture and forestry practices vulnerable. It is not our position here to side with one position or the other, rather to simply point out to the students in this course that the topic is very contentious now, and to note some reasons why.

WTGR

you may find it interesting to read
http://www.icsea.or.id/sea-span/0998/RG1020LL.htm
"Is Globalization Undermining the Prospects for Sustainable Development? "
by Martin Khor

"The ecological crises that threaten the survival of Earth continue to unfold at breakneck speed under the influence of commercial interests, driven even further by the competitive pressures of globalization. At the same time, the globalization process pits company against company, country against country and individuals against one another.... five years after Rio Summit, the process of globalization linked to liberalization has gained so much force that it has undermined and is undermining the sustainable development agenda. Commerce
and the perceived need to remain competitive in a globalizing market and to pamper and cater to the demands of companies and the rich have become the top priorities of governments in the North and some in the South"

"The major reason is that in the five years after Rio, the process of globalization linked to liberalization has gained so much force that it has undermined and is undermining the sustainable development agenda. Commerce and the perceived need to remain competitive in a globalizing market and to pamper and cater to the demands of companies and the rich have become the top priorities of governments in the North and some in the South"

International Trade Theory

Trade Restrictions / Trade Barriers

http://sob.cencol.on.ca/faculty/trichard/INTL220/Chpt3/sld010.htm

Dumping
Subsidies
Countervailing Duties
Tariffs
Nontariff Barriers
Quotas
VERs - Voluntary Export Restraints

Categories Based on Levels of Economic Development -

Developed and Developing
NICs and NIEs

International Institute of Management Development

Class 1

International Institute of Management Development

While studying the theory of international competitiveness is interesting, let's have a look at what it means to Canada in reality.

A newspaper story in the spring of 2001 reported Canada as having slipped to 9th on a list of competitive nations.

Whenever you read a statement that broadcasts so loudly some claim, it is always wise to consider the source, author, and how they in turn obtained their information.

If you read the article, you'll note that it is based on a survey done by the International Institute of Management Development in Lausanne Switzerland.

http://www.witiger.com/univ~of~toronto/MGTC44/Canada9th.jpg

	The web site of International Institute of Management Development in Lausanne
	On this page of the IMD web site, you can read the Executive Summary of the 2001 Report, written by Prof. Stephane Garelli http://www.imd.ch/wcy/esummary/

Prof. Garelli's summary contains the following points

"fear of an economic recession ...

"The world is worried about the threat of a period of economic slowdown, if not recession. This concern has been triggered by the rapid deterioration of the American economy, which, as of March 2001, appears to be reaching the end of a 10-year period of continuous economic expansion....To complicate matters further, the economic outlook for Japan, which has its own structural problems, is grim for 2001. Together, the US and Japan, the world's two largest economies, represent 46% of the world GDP. Thus, when almost half of the world economy loses momentum, one can reasonably expect that it will have a depressive impact on the performance of Europe, Asia and Latin America."

What is the credibility of the survey, that led to this point about Canada. Was it based on a large number of people? The IIMD survey was based on 3,200 executives - which is not a small number, but neither is it a large number compared to the total "population" of executives around the world involved in international business.

Regardless of the survey numbers, some of the points in the report, such as the economic recession potential discussed by Prof. Garelli, appear to have a solid foundation in fact and we will consider this an important resource for MGTC44 for the Sept-Dec 2001 term.

WTGR

.
One of the interesting points about this report is their treatment of the concept of "competitiveness". As Prof. Garelli notes
"The development of technological infrastructure, the efficiency of government administration, the quality of education or the productivity of the workforce are competitive factors that cannot be altered overnight"

Later in this course we will talk about the IMF and the World Bank as large NGO's involved in helping struggling economies. It will be worthwhile to remember this point about how competitiveness is something that changes slowly over time, because the IMF has been quite "firm" with some countries about how they have to change quickly.

WTGR

.
For those of you who are interested, Prof. Garelli also makes some interesting comments about the "brain drain" into the U.S. in the Executive Summary "Between 1994 and 1999, the US 'imported' 124'000 Indians, 68'000 Chinese, 57'000 Filipinos, 49'000 Canadians and 42'000 British holders of higher education degrees. Of the 5 million people employed in the US by the Information Technology sector, 1 million are foreign born."

useful sources of information

Canadexport is a publication from the federal government.
This publication is free and it contains much much information relevant to international business development. You can be on the mailing list "for free" and it will allow you to learn a lot about Canada's business with many countries + provide you with helpful Canadian government contacts at embassies and consulates overseas.

A copy of the first page on the web site was handed out in class today.

The archives section allows you to search the many previous documents they have on specific countries or specific types of international business
http://www.infoexport.gc.ca/canadexport/archives-e.asp

current issues
http://www.infoexport.gc.ca/canadexport/menu-e.asp
strongly recommended bookmark

It was suggested to students in class that they could contact canadexport and be put on the mailing list.

The Canadian government plays a big role in Canadian international business development therefore it is important to know the Internet resources provided
http://www.dfait-maeci.gc.ca/menu-e.asp
.

flags on this page come from
http://www.theodora.com/flags/

good explanation of the Forex Market and Currency Futures

http://www.customhouse.com/

Exchange Rate Convertor This on-line calculator, from the Bank of Canada Web Site, works based on the actual Cdn/U.S. dollar exchange rate of the day. Helpful for quick references.

richardson@witiger.com