Opportunities and Challenges Faced by Canadian Businesses in International Market

Assignment on Opportunities & Challenges Faced by Canadian Businesses in International Market

Table of Contents

Part A: Opportunities & Challenges Faced by Canadian Businesses. 2

1. Opportunities. 2
2. Challenges. 3

Part B: Influence of Globalization on Canadian Firms. 5

1. Barrick Gold. 5
2. Loblaw Companies Limited. 6

Part C: Business Proposal 8

1. Detail of Business Venture/ Product/ Services. 8
2. Opportunities Available in Indian Market 8
3. Conclusion. 9

References. 10

Part A: Opportunities & Challenges Faced by Canadian Businesses in International Market

Internationalization is not a novel practice, the prompt development of emerging markets and the growth in communication, information and transportation technologies have modified the international markets’ structure in the past few spans (Global Affiars Canada, 2016). Canadian businesses may face various challenges and opportunities while entering into international markets that are stated below:

1. Opportunities

The various opportunities identified for Canadian companies entering or expanding in international markets are as follows (Global Affiars Canada, 2016):

Access to New Customers

Canadian businesses entering into international markets have the opportunity to compete in a more diversified environment and access new customers. Canada is ranked at 0.5 percent of the total population of the world. Providing and selling services and goods to other 95 percent would be very beneficial and appealing for Canadian companies (Canadian Manufacturers & Exporters (CME) , 2016).

Lowering Costs

Further, offshoring has become a prevalent means to try to reduce the costs. In this way, Canadian businesses can relocate their business activity to another country and new operations can be created in other countries like India and China that proposes cheap labor and can help to reduce costs. Further, many companies can gain cost advantage by introducing and selling their products and enhancing sales volume can lower their average and overall costs of production (Canadian Manufacturers & Exporters (CME) , 2016).

Diversification of Business Risk

The business risk involved in operating one market also reduces by entering into foreign markets. Business risk denotes that potential risk that an operation may flop and if a company is entirely reliant on one country, from market and supply perspective, political, natural disasters or negative economic factors in that country can cause noteworthy exertion. Therefore, the entrance in international markets help them to access new markets and operate in various economies that reduces the failure of operation because the business is operating in various markets (Canadian Manufacturers & Exporters (CME) , 2016).

2. Challenges

Various opportunities are offered to the companies when they enter in international markets like access to new customer, lowering costs and diversification of business risks however going international also carries some frightening challenges including political risks, economic risks, cultural risks, financing and access to markets (Global Affiars Canada, 2016). For Canadian businesses expanding internationally, understanding the complexities of hiring and managing contractors in different countries, such as Canada, is crucial. Remote.com offers a detailed guide on the legalities and best practices for hiring and paying independent contractors in Canada.

Political Risks

Political risks refer to as the potential for government disturbance and intrusion with business to damage a business entity within a country. Entering into new markets can cause a challenge for the companies because of the political instability of international markets, military takeover, outright was or terrorist insurrection are the risks and challenges that Canadian companies can face while entering into international markets. The unstable governments linked with these challenges and uprisings make it difficult for the companies to plan it for future. Further, the tax controls and new regulations are also a challenge for the Canadian companies entering into international markets (Global Affiars Canada, 2016).

Economic Risk

Another challenge that Canadian companies can face by entering into international markets is the economic risk that refers to the potential of the state’s economic policies and conditions, protections, property rights, currency exchange rates to unfavorably impact the operations of a firm. The executives of the companies might have to face tremendous challenges due to the economic risks because of the unpredictability of economies.

Cultural Risk

The cultural risk refers to as the potential of the operations of the company to struggle due to the differences in customs, norms, languages, customer preferences, and other cultural factors. This imposes a challenge for Canadian companies entering in international markets.

 Part B: Influence of Globalization on Canadian Firms

1. Barrick Gold

Barrick Gold is an international gold mining company that has its headquarters in Toronto, Canada. It is a large enterprise and the primary good they service or market is the gold or its mining operations. It also explores nickel and copper deposits. The company is presently undertaking its mining operations in various countries including Australia, Argentina, Canada, Republic, Peru, Saudi Arabia, Zambia, the United States, Dominican, Papua New Guinea and Chile. The American Region contributes more than 75% towards the gold production of the company (Barrick Gold Yahoo Finance, 2016).

The international businesses entry modes for the company is partnership. They make partnerships internationally with mining companies and the authentic partnership model also supports the partnership of the company. The company is making their partnership culture strong by upgrading the leaders to owners and a collective scorecard is also introduced and shared with the investors and partners that supports the long term strategy of the company. Barrick Gold enjoys benefits of operating internationally that include the global expansion, increase in profits, and access to new customers, enhanced sales volume, diversified risks, and expansion of their programs provides the company with a strong brand image. The globalization forces that support their success includes the perfect strategies of the company including the thoughtful understanding and dedication to the idea of maintaining and developing partnerships and trust with the local communities, host governments, indigenous people, NGOs and others; understanding the culture of the countries in which it is expanding and identifying the competitive edge as the largest gold mining corporation of the world (Barrick Gold Corporation, 2016).

2. Loblaw Companies Limited

Loblaw Companies Limited is the biggest food and pharmacy retailer in Canada that includes 1000 franchise and corporate super markets that function under 22 national and market sectors and the company has its headquarters in Brampton, Canada. The company provides pharmacy, beauty and health, general merchandise, grocery, wireless mobile products, apparel and financial services in United States and Canada. It is a large enterprise that also provides household items, baby products, clothing, cellular phones and other services (Loblaw Companies Limited, 2016). The company operates in three segments including Retail, Choice Properties and Financial Services. The retail segment operates in food, pharmaceutical, and other products sectors; the Choice Properties Segment leases, manages and owns commercial properties; and the Financial Segment offers loyalty programs, credit card services, personal banking and other financial services. The company has employed almost 200,000 Canadians and it operate its stores in various communities across the country (Loblaw Companies Limited Yahoo Finance, 2016).

The international business entry modes for Loblaw Companies Limited are the retail stores, franchises and other stores through which it can operate internationally. The various advantages held by the company by operating and expanding internationally include the product flexibility, increased productivity, protection from the national trends and events, and learning from the international markets’ trends. The key success factors for operating internationally are the sensitivity to differences, critical evaluation of international moves, maintaining performance, and effective strategies made by the company that include the well-being of the customers, care, respect, excellence and accountability and commitment of the company and its employees towards the customers.

3. Tim Hortons

Tim Hortons Inc. is a Canadian based international fast food restaurant that is recognized for its doughnuts and coffee and also known as Tim Hortons Cafe and Bake Shop. The company has a total of 4,413 restaurants, comprising 3660 Canadian restaurants, in the Middle East 113 restaurants and in the United States 650 restaurants (Tim Hortons, 2016). Further, the company is also planning to expand into Indian market. For baked food, the company holds 76% of the Canadian markets and for coffee markets the company holds 62% of the Canadian markets. It is a large international enterprise that do business in Canada, United States and Middle East (Tim Hortons Annual Report, 2015).

The international business entry modes for Tim Hortons are the restaurants, coffee shops, and cafes. The various benefits enjoyed by Tim Hortons by operating internationally is its brand awareness, effective brand image, less risk of down falling, increased sales volume and profits. Further, the key success factors for operating internationally are effective strategy implementation, understanding and modifying according to the culture and excellence that they provide (Tim Hortons, 2016).

Part C: Business Proposal

1. Detail of Business Venture/ Product/ Services

E-Commerce Industry has been growing worldwide with the effective telecommunication arrangements and developments in Information Technology (IT). In 2013, worldwide E-Commerce sales amounted to $1.077 trillion worldwide that are expected to rise to $2.489 trillion by the year 2018 (E-Marketer, 2015). As a Canadian Entrepreneur, I am planning to reap the benefits of this growing market and developments by opening an Online Fashion Store in Indian following the opportunities that this sector provides in Global as well as in the domestic market of India. All fashion accessories including jewelry, watches, handbags, scarfs, etc.; apparel; and shoes will be made available on the website for male, female and kids. The reasons of launching this store in India are detailed in the next section of this proposal.

2. Opportunities Available in Indian Market

India is one of countries who has largest share in worldwide E-Commerce sales after China. Even trend of online shopping in India has left US behind, which has made second biggest nation of online shopping (Sangeeta et al., 2014). In 2008, India had 60 million e-commerce clients, which have increased to 354 million by the end of 2015 (Internet and Mobile Association of India, 2015). Factually, it took about a decade for web client base to expand from 10 million to 100 million. Another customer base of 100 million was added to e-commerce in the following three years and total customer base has crossed 200 million (Internet and Mobile Association of India, 2010).

Furthermore, Indian nation is also third largest credit card users across the globe, just after Turkey and Ireland (Sangeeta et al., 2014). Also, use of internet through mobile has also been increasing with the increasing use of smartphones. A significant boom in the number of the mobile internet users was recorded after the end of 2014 in India. The mobile internet users were 173 million in December 2014 which has increased 213 million before the end of June 2015 and these are expected to grow up to 314 million by end of 2017 (Internet and Mobile Association of India, 2015).

Furthermore, India State has been taking initiatives to support the growth of E-Commerce Sector in the country. Indian State Government has announced to offer free 2.6MB broadband availability to all residents of India (McKinsey and Company Inc., 2012), which is likely to more increase the use of internet in the country and is a significant opportunity for potential e-commerce retailers.

3. Conclusion

All of these factors have made India a land of opportunities for E-Commerce Retailers as these factors pose a great opportunity for opening e-commerce retail store in India. The potential e-commerce store will target largely growing untapped customer base, to gain and increase its market share with the overall growth in the market. Further, the new business venture would also increase its target customer base by launching specific shopping app for mobile internet users, which will be made available on both Android Play Store and Apple App Store.

Also Study:

Impact of Globalization on Canada | Positive and Negative Effects

References:

• Barrick Gold Corporation, 2016. About Barrick Gold Corporation. [Online] Available at: https://www.barrick.com/company/default.aspx [Accessed 9 September 2016].
• Barrick Gold Yahoo Finance, 2016. Barrick Gold Corporation Company Profile. [Online] Available at: https://ca.finance.yahoo.com/q?s=ABX.TO [Accessed 9 September 2016].
• Delloite: Online Retail in India, 2014. Online Retail in India: Clicking Towards Growth. Delloitet Touche Tohmatsu Private Limited.
• E-Marketer, 2015. Retail Sales Worldwide Will Top $22 Trillion This Year. [Online] Available at: https://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765 [Accessed 8 January 2016].
• Internet and Mobile Association of India, 2010. E-Commerce Web Report Internet and Mobile Association of India. [Online] Available at: https://www.iamai.in/ [Accessed 8 January 2016].
• Internet and Mobile Association of India, 2015. Report on Internet Users of Internet and Mobile Association of India. Internet and Mobile Association of India.
• Loblaw Companies Limited Yahoo Finance, 2016. Loblaw Companies Limited Company Profile. [Online] Available at: https://ca.finance.yahoo.com/q/pr?s=L.TO [Accessed 8 September 2016].
• Loblaw Companies Limited, 2016. Loblaw Companies Limited About Us. [Online] Available at: https://www.loblaw.ca/en/about-us.html [Accessed 8 September 2016].
• McKinsey & Company Inc., 2012. Online and Upcoming: The Internets Impact on India. McKinsey & Company, Inc.
• Barrick Gold Corporation, 2016. About Barrick Gold Corporation. [Online] Available at: https://www.barrick.com/company/default.aspx [Accessed 9 September 2016].
• Barrick Gold Yahoo Finance, 2016. Barrick Gold Corporation Company Profile. [Online] Available at: https://ca.finance.yahoo.com/q?s=ABX.TO [Accessed 9 September 2016].
• Canadian Manufacturers & Exporters (CME) , 2016. International Markets. [Online] Available at: https://www.cme-mec.ca/english/advocacy/your-issues/international-markets.html [Accessed 9 September 2016].
• Delloite: Online Retail in India, 2014. Online Retail in India: Clicking Towards Growth. Delloitet Touche Tohmatsu Private Limited.
• E-Marketer, 2015. Retail Sales Worldwide Will Top $22 Trillion This Year. [Online] Available at: https://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765 [Accessed 8 January 2016].
• Global Affiars Canada, 2016. Global Markets Action Plan. [Online] Available at: https://international.gc.ca/global-markets-marches-mondiaux/plan.aspx?lang=eng [Accessed 9 Septmerber 2016].
• Internet and Mobile Association of India, 2010. E-Commerce Web Report Internet and Mobile Association of India. [Online] Available at: https://www.iamai.in/ [Accessed 8 January 2016].
• Internet and Mobile Association of India, 2015. Report on Internet Users of Internet and Mobile Association of India. Internet and Mobile Association of India.
• Loblaw Companies Limited Yahoo Finance, 2016. Loblaw Companies Limited Company Profile. [Online] Available at: https://ca.finance.yahoo.com/q/pr?s=L.TO [Accessed 8 September 2016].
• Loblaw Companies Limited, 2016. Loblaw Companies Limited About Us. [Online] Available at: https://www.loblaw.ca/en/about-us.html [Accessed 8 September 2016].
• McKinsey & Company Inc., 2012. Online and Upcoming: The Internets Impact on India. McKinsey & Company, Inc.
• Tim Hortons Annual Report, 2015. Tim Hortons Annual Report 2015.
• Tim Hortons, 2016. ABOUT TIMS. [Online] Available at: https://www.timhortons.com/ca/en/corporate/about-tims.php [Accessed 9 September 2016].
• Sangeeta, S., Koustab, G., and Archana, S., (2013),”“Buyer’s motivation” for online buying: an empirical case of railway e-ticketing in Indian context”, Journal of Asia Business Studies, 8(1). pp. 43 – 64