Marketing assignment essay on: Competitive advantage from the global business viewpoint in Canada
How is this advantage being used? Discuss.??
Solution:
Abstract
Globalization has made territorial borders insignificant and has led to interaction of varying cultures at one place. Cross-culturalism has become common in multinational corporations. In today’s fierce competition, companies want to capture the largest market share and are in continuous search of potential favourable market places. There is difference between national culture and organizational culture. In this situation, the investment location from global business viewpoint is chosen on the basis of suitable business climate and business culture of the country. Attaining competitive advantage is necessary for boosting foreign investments, thus contributing towards growth and development of the country. Canada has competitive advantage due to its culture and attitude of people towards work. Policies and plans by government are framed accordingly so as to attract global business along-with acceptance of changes and focusing on talent and skill whether it is from any culture.
Introduction
In 21st century, globalization and attaining global competitive advantage from the viewpoint of business has become indispensable for many multi-national companies and they are searching for competitive advantages in various countries all over the world so as to remain ahead of the competition and capture significant market share in the industry at the global level (Asmussen 2011). Every country has its specific culture and other factors that affect competitiveness of its business environment. Effective cross cultural management along-with offering favourable environment for grasping business opportunities present in the country can create competitive advantage from global business viewpoint in that country (Haghirian 2009). It is necessary to attract business from all over the world by presenting global companies competitive advantage that the nation presents in comparison to other countries.
Companies attain competitive advantage when the goods they produce or services they offer have greater economic utility than the goods and services provided by their competitors in the industry. Canadian government understands that opening avenues for foreign businesses and creating investments in its country can create business opportunities for its own people, their family and local business as well. Job-linked investments and strategic partnerships with neighbouring countries as well as other key players in the business world can boost its economy and help it gain sustainable competitive advantage as far as global business is concerned (Tsui et al 2007).
There are certain differences in the working culture of every country. The national culture and the organizational culture should be in coherence so as to carry out business activities in an effective and efficient manner. As mentioned by Hofstede’s theory in 1980, the organizational culture is not isolated or independent from the national culture (Hofstede 1993). Creation of competitive advantage in today’s globalized world is dependent on favourable business opportunities and cross-cultural management (Ajami and Goddard 2006).
This essay will discuss the competitive advantage in Canada in terms of global business viewpoint firstly mentioning the factors affecting competitiveness in Canada followed by work of Hofstede in role of culture. It will be followed by Hofstede work’s to business primarily Canada. Further there will be discussion of business in Canada followed by elements of competitive advantage and how are they being used.
Hofstede and Culture
There are certain differences in working culture of every country. The organizational culture is affected by the national culture of the company. The competitiveness of the country depends on the response on cross-cultural issues by the corporation which is again affected by the culture of the country in which the corporation is working.
Nations are brought together through technological transactions through World Wide Web that has made the boundaries of nations insignificant in terms of business activities. Multiculturalism has developed among nations due to assimilation of different cultures, races, gender, religions and different age-groups. Therefore, in the presence of multiculturalism the country those responses to cross-cultural issues in an effective manner attain competitive advantage.
Hofstede’s cultural dimension theory
The dimensions of culture given by Hofstede shed light on the fact that members of various cultures and societies are likely to behave in a different way when put under different situations. PDI (Power Distance Index) indicates the extent to which less powerful people of organizations in the particular country feels that the distribution of power is unequal. A high power index indicates the high level of inequality in distribution of power and its acceptance by less powerful people, while a low power distance shows that the emphasis of the society is on deemphasizing the differences between the power of people and their wealth. It means that the society gives stress to equality and providing opportunity to everyone (Hofstede 1993).
Individualism (IDV) is explained as looking after oneself and one’s family only. Societal ties are loose. High IDV means that there is paramount individuality in the society; while a low IDV means collective nature and coherence among people exist within the society. Masculinity or MAS indicates the degree to which masculine values prevail over feminine values. High MAS shows the society is focused on competitiveness and wealth acquisition, while a low MAS shows the inclination of society towards feminine values, such as building of relationship and focusing on quality of life.
UAI or Uncertainty Avoidance Index shows how much the society is tolerant towards uncertainty and ambiguity. High UAI indicates less tolerance. These societies have rules and certain set procedures to avoid ambiguities. Low UAI shows less dependence on rules. Countries with low UAI are open to new ideas and are risk taking. LTO or Long Term Orientation is focused on the degree to which the society of the country embraces, or does not embraces devotion and dedication to the long term preservation of traditional values. A high LTI means people of the country show commitments for long-term rewards. On the other hand, a low LTI means people believe in short term rewards for their today’s work (Hofstede 1993).
Hofstede’s work in relation to Canada
In Canada, these five cultural dimensions are used for creation of competitive advantage by the country. PDI for the country is low, which means that there is stress on equality and creation of equal opportunities for all. In Canada, employers are kept ion relaxed state as employees are free to give any kind of suggestion to their superiors. There is no pressure at the working place. Most perfect suggestions come at the working time and they are listened to as well by superiors (Krishna et al 2004).
IDV is high in Canadian culture. People believe in their competencies and like to work individually. Workforce of the country has right mix of individual competencies, skills and knowledge. Corporations in the country have to align their business strategies with talent management systems. This leads to formation of highly efficient workforce which is the requirement of every corporation (Bussenius 2011).
MAS are high for the Canadian culture. It means that there is more focus on acquisition of wealth and creation of competitiveness. Pertaining to this dimension, the transportation, communication and development of technology is good in the country that makes it an attractive avenue for making investments. Development of infrastructure is also the result of high masculine index (Moore and Pollushin 2008).
UAI is low. As Canadian managers are relaxed and they prefer living in present, they think that they can solve problems by themselves. Therefore, they are risk-takers and accept change readily. Owing to this factor, the government of Canada has made significant changes in their tax system so as to attract multi-national corporations. Its tax system is quite liberal in comparison to other highly developed countries in the world, such as USA, countries of European Union and G8 member countries (Ford and Chan 2002).
Canadian culture focuses on present day living; therefore, they want short-term rewards for their hard work that they have done today. There is step-by-step planning by the corporations in Canada. When one short-term plan is finished, then only they switch to the next short term plan (Coutts et al 2005).
Business in Canada
There are certain factors that decide whether the country presents an attractive business climate to global companies and decide the strength or position of the country in global market. The following factors affect the competitive advantage of Canada in terms of global business. Sometimes, there are both positive and negative outcomes of these factors for Canadian business climate.
Quality and quantity of natural resources
Canadian territory is rich in natural resources, such as, oil and gas, minerals, forest products and water. This serve as a competitive advantage for the country as companies can get raw materials and other natural resources in the country only that will reduce their economic cost. However, the disadvantage is the cost of transport as well as the time taken to deliver the products from Canada to other parts of the world (Building a competitive advantage for Canada 2009).
Strength of currency and exchange rate
Currency of Canada for the past decade was not very strong in comparison to US dollar. As a result of this, companies operating in Canada have to import machinery components for their business at a higher cost and also have to pay more for bringing any new technology into the country. In terms of TTR (Total Tax Rate), the country holds a strong position against various competitors, such EU countries, BRIC, G8, G20 and NAFTA (Business Taxes in Canada Present a Competitive Advantage 2012).
Infrastructure of the country
The country has a strong infrastructure that helps the companies operating their business activities in Canada to attain economic utility. This is because there is presence of strong transportation and communication network in the country. Appropriate transport facilties help the companies to get their products to the market in an effective and efficient manner. In addition to this, strong communication network of the country helps companies to remain in touch with customers and suppliers all over the world (Innovative 2012).
Characteristics of the workforce
Competitiveness of the country is also affected by the level of education and the extent kf training imparted to people. Although the workforce of Canada is not very large, yet it is highly trained and well educated. Multi-national companies also see how many days are lost due to tackling the problems between the union and the management. Canada has a competitive edge in this concern because citizens of this country always put quality and productivity in their work at priority. The standard of living of the workforce of Canada and the level of health care is high which gives the country an edge over other countries suitable for business growth and development (Building a competitive advantage for Canada 2009).
It is a part of national culture which companies utilize in their organizational culture. The level of tolerance and the diversity of the population of the country attract foreign investment in a significant way. It is used as a competitive advantage by the country.
Involvement of government
The tax environment of the country is suitable for foreign businesses. The government is in continuous work to expand its trade partnership all over the world. Its participation in free trade agreements in North America is also a factor of competitive advantage. According to the Global Competitiveness Report of World Economic Forum 2009-10, Canada stands at the ninth position all over the world in terms of competitiveness. Taxation has relative importance in decisions related to investment location by multinational corporations. Canada is a clear leader in terms of business tax according to the report. It has the lowest payroll taxes among the G7 countries (Business Taxes in Canada present a competitive advantage 2012).
However, the negative aspect of doing business in Canada by making investments is delays in getting approval by the related Ministry and doing negotiations. The delay is caused as the Minister seeks undertakings in regards to the levels of employment and product mandates, as a crucial condition for making approval for the investment.
Moreover, in terms of arrangement, which involve the transaction approved by court and governed by corporate legislation requiring approval of shareholders, is time-consuming and can be relatively more expensive for businesses in Canada (Campbell 2008).
Competitive advantage in Canada due to multiculturalism
There is existence of relevance to leadership in Canadian business culture. Although white middle-class cultural characteristics are dominant, but presence of other characteristics due to Afro-Americans, North American Indians and Asians, etc., makes the culture flexible and a mix of various cultural characteristics. Canadians believe that if enough time, money and efforts are given, the environment can be dominated by the will of human beings (Grayson 2011).
Canadian managers value change highly and take less caution. This shows the orientation of the managers to take risky decisions that are necessary to take in highly dynamic globalized business environment of today (Building a competitive advantage for Canada 2009). They want to remain at the expressive side and informality exists in their business decisions and activities. Canadian culture promotes independence and individual initiatives, which are in coherence with the Hofstede’s rating of IDV (80) for Canada.
Moreover, Canadian culture has sequential view on time. They are short-sighted in regards to their business strategies, which is again in coherence with the LTO rating (23) given by Hofstede in his culture dimension theory (House 2011).
As North American business styles and culture dominates in the world, Canada has used it in creation of competitive advantage in terms of preference of location for making business investments. Free initiative and promotion of private entrepreneurship has led to boost in the economy that attracts foreign investors (The Current State of Multiculturalism in Canada and Research Themes on Canadian Multiculturalism 2008-2010 2010).
The characteristics of Canadian culture, such as, progress and growth, materialism, modernity, knowledge, competition and freedom, orientation towards work and activity, achievement, and informality make it suitable to handle cross-cultural issues and create competitive advantage. When cultural diversity is managed in an effective manner, it leads to competitive advantage. Large companies in Canada, such as Bank of Montreal, Petro-Canada, etc. have recognized the positive contribution of management of cultural diversity to attaining competitive advantages in their businesses Canadian culture focuses on risk raking and accepting new ideas. Therefore, in terms of innovation, Canada has created competitive advantage by investing in research and development activities. It is the leading country of the world in regards to the integrated approach of the nation towards driving growth and development through innovation.
There are favourable tax credits as well as incentives for research and development activities. There is effective protection of IPR (Intellectual property rights), open competition in the market, developed communication infrastructure and openness to allow high-skill immigration. IBM, Canada, Ericsson, Pfizer and Novartis are some of the corporations that have made huge expenditures on R & D in Canada in 2010 (Innovative 2012).
Canada is in a better position to invite foreign investments than its competitors. As the culture is open, the country can afford to invite more talent into the country along-with movement of knowledge, innovation and skill into the country (Innovative 2012).
Companies establishing their business activities in Canada imbibe the national culture of Canada and frame policies accordingly. For instance, IKEA Canada use open door policy and is flat in structure. It involves employees at subordinate level to participate in decision making and people are comfortable talking to each other. As Canadian culture focuses on relationships between employees, every new employee from any culture is treated with equal value and activities are human oriented (Blomqvist 2006).
Competitive advantage in Canada is its business culture and open and inclination towards building relationships and focusing on talent. This has been used in building talent of people and developing skills and infrastructure in the country.
Conclusion
Cultural diversity has become an indispensable part of global organizations today. Countries that have appropriate national culture which is in coherence with the business culture of the company attain competitive advantage and become an attractive avenue from global business viewpoint. Canada has created competitive advantage in terms of highly skilled workforce, highly developed infrastructure facilities, support of government and presence of characteristics of various cultures including North Americans, Afro-Americans, Asians, etc. The culture of Canada is of open type and people there focus on risk-taking along-with inclusion of all employees in decision-making. They focus on development of individual skills which leads to high level of talent management in organizations. Owing to this reason, workforce of Canada is highly skilled and a humanitarian approach is adopted in business activities. According to Hofstede’s theory of dimension and Hall’s theory, Canada is suitable destination for business investment.
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