BBB4M

CHAPTER 3

Important TermsAbsolute advantageComparative advantageCompetitive advantageDeveloped/developing nationsEconomies of scaleGross domestic product (GDP)

Intellectual capitalOpportunity costProductivityRationalizationStandard of livingTotal quality management (TQM) utility

Global Presence and Canada

Canada’s global presence is important because it means other countries are aware of the products, standards and reliability we offer. CAPITAL – the money or other assets that are available for investment purposes.Strong International or global presenceA country is considered to be international, rather than global, if it operates and sources its needs in only a few countries.

Global Presence and Canada

Global/International presence plan should answer these questions

Which product will lead the way as the company launches or “rolls out” an international business initiative?

Which markets should be entered first? What is the best way to enter these markets? How rapidly should the company expand

internationally?

Competitive AdvantageCanada is 8th among 80 countries measured for their competitive growthEconomic utility is a product’s ability to satisfy the needs and wants of the customer.

Gross Domestic ProductGDP – The total value of all goods and services produced in a country during a specific period. GDP per capita – Total GDP divided by the number of people n the country.

3.2 Factors affecting Canada’s competitiveness

Quality and quantity of natural resourcesStrength of the country’s currency and it’s exchange rateInfrastructure in the countryResearch and DevelopmentWorkforce CharacteristicsSocietal CharacteristicsEntrepreneurshipGovernment Involvement

Opportunity Cost – The forgone alternativeCalculates in financial terms, the benefits of the next best opportunity that was forgone or not taken.

When one country has a lower cost in producing at a lower opportunity cost than another country, it is said to have COMPARATIVE ADVANTAGE.ABSOLUTE ADVANTAGE – If a country can produce the good at a lower cost or with a higher rate of productvity

3.3The Meaning of Productivity

Productivity refers to the amount of work that is accomplished in a unit of time using the factors of prodcution

Factors Influencing a Country’s productivity

Efficient use of human and physical resourcesCosts associated with labourAccessibility and quantity of a country’s usable natural resourcesQuality and availability of a nation’s technologyQuality of education and government services

Factors Influencing a Country’s productivity

Quality of business leadership and strategyGeneral work ethic and healthy lifestyleEfficiency of plants and of organizational structuresSize of both domestic and international markets for a country’s products and servicesAmount of support given to research and development

3.4 Canada’s Global Challenge

Standard of living is the way people live as measured by the kinds and quality of goods and services they can afford.Knowledge economy refers to the increased reliance of business, labour, and government on knowledge, information, and ideas-and information technology to put them to use.Intellectual capital is the sum of knowledge, information, intellectual property, talent, and experience within a country or an organization.

Innovation and quality Technological and scientific breakthroughs,

constant improvements in the way businesses adopt new processes and adapt to new markets.

Taxation and innovation Taxation is the method used to generate

the finances required to run the country.

RATIONALIZATIONRATIONALIZATION is the process used by an organization or company to change its organizational structure, its product line, or its production process to become more efficient, productive, and competitive.Economies of scale refer to the tendency of the cost per item to go down when items are bought or produced In large quantities.

Factors that companies/industries look

at when RationalizingConsumer demandA country’s trade balance and business climateOrganizational changeBusiness activities

Developed Nations and Economies

Developed Nations Developing NationsLess-developed nations

3.5 Quality control and continual improvement

Japanese name for the concept of continual improvement: Kaizen(Ki-zan).Kaizen is the belief that to gain competitive advantage, there must be commitment to quality

Promotes everyone working together to make improvementsHelps eliminates waste in all systems and processes od an organizationDoes not necessarily mean an increase in investments or costs.

Quality control and continual improvement

Some of Deming’s best known management points Always continuously improve the product or service

to stay competitive and create jobs. Encourage education of the workforce, both on and

off the job. Allow workers to take responsibility for and pride in

their work. Remove communication barriers between

management and the factory floor Encourage teamwork between departments to

improve product quality and to create common goals.

TQMTotal Quality Management(TOM) – method of managing organizations with a commitment to continuously improve the products, processes, and the work habits of employees; management also is determined to consistently meet customer needs.MARKET-DRIVEN ORGANIZATIONS are those that respond to market needs by providing customers with high quality goods and services that are low in cost and available when required.

ISOInternational Organization for Standardization (ISO)Mission – to promote the development of voluntary standards and related activities in the world, with a view to facilitating the international exchange of goods and services, and to developing cooperation in the spheres of intellectual, scientific, technological, and economic activity.