Chapter 1

The Dynamic Business Environment

PART A

Major Trends Major Trends Affecting Affecting Canadian Canadian BusinessBusiness

Two Main Trends

• 1. The Technological Revolution

• 2. The Globalization of the World’s Economy

The Globalization of Business

• International trade is not new - Marco Polo, Voyages of Discovery, etc.

• Integration of global trade, investment, manufacturing, purchasing and financing is new

• Globalization depends upon new travel, communication and transportation capabilities

Canada and the Pacific Rim

• British Columbia leads the country in trade with the Pacific Rim

• Canada does over 80% of its trade with the U.S.

• B.C. has only 63% of its trade with the U.S. due to its trade ties with the Orient

• Immigrants, entrepreneurs, and capital from the Pacific Rim have flocked to B.C.

Big Business Cuts Costs

• Restructuring - computers have allowed companies to become “lean and mean.”

• Employee Empowerment - has led to “cutting the fat” at the management level.

• Quality - Edwards Deming taught the Japanese that quality can cost less not more. We are relearning this lesson.

Small Business: It is Dynamic

• This sector creates most of the new jobs. Most Canadians have worked in a small business

• Home-Based Businesses are the fastest growing sector of the economy; they are technology driven

• 40% of the workforce are expected to “telecommute” in the near future

Benefits of aHome-Based Business

• Flexible work hours• Quality lifestyle• Doing the work of your

choice• Opportunity to expand

using technology• Self-motivation

.

The Service Sector

• This sector includes government, hospitals, schools, etc.

• The growth rate for employment in the service sector is over 3 times the rate of growth in the goods sector

• In 2000 over 78% of all workers were employed in the Service Sector!

Manufacturing in Canada

• Canada was the 4th largest manufacturer in the world at the end of WWII

• 1945 to 1995 manufacturing accounted for about 20% of GDP

• 1945 to 1995 manufacturing declined from 30% to 15% of the workforce

• Our economy needs a strong manufacturing sector to go along with a strong service sector

Population Trends

• Demographic trends have a huge effect on the economy

• The post WWII baby boom dominated the economy in recent memory

• The Pill and declining birth rates since the ’60s has touched everyone - schools, teachers, real estate developers, etc.

• Immigration has off-set some of the effects of declining birth rates

• Our population continues to age• Caring for the aged is a growth sector in our

economy

Environmental Issues

• Population growth, industrial expansion, new processes, new chemicals, insecticides, automobile exhaust, waste disposal, hydrocarbon burning, etc., all contribute to environmental problems

• Recycling and sustainable development are being proposed

The need for more education continues

Adults with a degree beyond high school

20.7%

23.3%

25.2%

28.1%

30.7%

1984

1987

1990

1995

2000

PART B

DYNAMICS OF A BUSINESS THAT NEED TO BE

CONSIDERED IN TODAYS SOCIETY

Stakeholders: Those Who Stand to Lose or

Gain• Customers want value• Employees want security • Investors want returns• Suppliers want to be paid• Dealers want support• Financial institutions want returns • Surrounding communities want “equity”• Governments want compliance• Environmentalists want change

The Business Environment

oThe Legal and Regulatory Environment

oThe Economic Environment

oThe Technological Environment

oThe Competitive Environment

oThe Social Environment

oThe Global Environment

Legal and Regulatory Environment

• Freedom of ownership

• Contract laws and regulations

• Elimination of corruption

Economic Environment

• Economic indicators: consumer spending, employment levels and productivity.

• Income, expenditures and resources that effect the cost of running a business.

• Currency fluctuations that affect imports and exports.

• Government regulations and business ownership.

Technological Environment

• Information, technology and productivity• Growth of E-commerce• Business-to-consumer (B2C)• Business-to-business (B2B)• Internet marketing• Databases• Identity theft• Personal Information Protection and Electronic

Documents Act (PIPEDA)

Competitive Environment

• Components of competition

• Competing by exceeding customer expectations

• Competing by restructuring and empowerment

Social Environment

• Demographic changes:• Aging population

• Managing diversity

• Two-income families

• Single parents

Global Environment

• Importance to all other environmental influences

• Growth of international competition

• Increase of free trade and trade agreements

• Importance of innovation