Tài liệu New visions for Canadian business ... doc

With this in mind, we commissioned this study to inject fresh ideas ito the business environment in ‘order to encourage discussion an these important Issues Asan active payer in the Cana

NEW VISIONS FOR CANADIAN BUSINESS:

STRATEGIES FOR COMPETING IN THE

FOREWORD

‘by Ronald C Morison

‘Overthe course of the 1980s, the Canadian corporate

sector hs had to face a wide variety of domestic and

international pressures We have seen record periods

of infation and widespread recession nthe early part

ofthe decade, increased competition in both the

‘manufacturing and service sector from around the

globe, and deregulation within our on borders

‘across selected industries These factors, combined

with incremental globalization, have ead toa com

petitive climate which has created new challenges

‘and obstacles for Canadian business While Canad-

‘ans have been forunate fo experience high overall

industial performance over the pas few yeas, Con-

tinuing change in the nature ofthe global marke

place has created an uncertain environment In order

to compete effectively in this rapidly changing global

‘economy, Canada's manufacturing and service sec-

tors will have to make adjustments and changes

which respond appropriately to the impact of global

ization Moreover, our ability to succeed inthis mar-

ketplace will now depend even more upon our

willingness to embrace a more entrepreneurial mind-

set and to build upon te substantial levels of growth

that we have all been proud to achieve inthe past

For oolong, much of Canada’s private sector, 38

‘well asthe publicaarge, have looked to govern-

‘ments for ideas and solutions to assist Canadian

industries a they venture into the intermational mac

‘etplace believe that we have gone past the point

where we can or should, look to government or this

kind of assistance, Industry must take hold ofthe reins

‘of leadership, both in working with government to

‘explore consructive polices fr increasing our com

petitive postion, and in seking solutions indepen-

ently amongst ourselves to seize new trading

‘opportunites

‘At Kodak Canada in, over the lst five years, the

changing competitive environment, domestically and

internationally, forced us to come to terms with some

tough decisions inorder to maintain our positon in

the marketplace What we had discovered throughout

that period was that new sources of competition had

‘eroded the raditional distinction between the domes:

ticand the intemational marketplace We, lke a varie

ety of oer industries, were no longer afforded the

luxury ofa protected domestic marketplace that we had enjoyed inthe past, We had to reasess all aspects of aur business and examine every opport

Ì compete more effectively onal rons

Through the launch ofa multi-million dollar program

‘of consolidation, product rationalization, manufactur ing upgrades, teamwork development and quality

‘management, we were able to achieve our shor to

‘medium term business goals, and establish anew base

‘fom which to launch ou strategies forthe future [New ideas and iiatives for tackling the chal lenges ofthe 1990s ned tobe generated by indus, academics and those who have diectly experienced the pressures of the changing nature of global compe- tition With this in mind, we commissioned this study

to inject fresh ideas ito the business environment in

‘order to encourage discussion an these important Issues Asan active payer in the Canadian business

‘community and in te international marketplace, tis four hope that by presenting this independent research suy, “New Visions Fr Canadian Busines: State fies for Competing n The Global Economy,” we will

‘encourage thoughtful review on this issue among a

‘ros section of Canadians inal sectors ofthe

‘economy

peleve that only through a constructive and rle- vantexchange of views will governments, educators, industry andthe technological community be leo

<develop competitive stategies which will place Cana tian businesses ina postion to face a single European

‘market in 1992, the challenge of vital Pacific ir, a

‘more open North American market, andthe many

‘oppoctniies ahead ina rapidly transforming Eastern Europe Yet, we must aggressively purse these

‘opportunities ublizing our ast human, indvstial and natural resources a effectively as possible rather than merely responding to these changes nthis regard, Kodak gratefully acknowledges the valuable Contributions of Professors Alan Rugman and Joseph Cru, two of Canada's pre-eminent scholars to this important dalogue They have brought to this study

‘on Canadian competitiveness five interesting and insightul recommendations which I believe are deserving of serious consideration by all Canadians,

NEW VISIONS FOR CANADIAN BUSINESS:

STRATEGIES FOR COMPETING IN THE

FOREWORD

‘by Ronald C Morison

‘Overthe course of the 1980s, the Canadian corporate

sector hs had to face a wide variety of domestic and

international pressures We have seen record periods

of infation and widespread recession nthe early part

ofthe decade, increased competition in both the

‘manufacturing and service sector from around the

globe, and deregulation within our on borders

‘across selected industries These factors, combined

with incremental globalization, have ead toa com

petitive climate which has created new challenges

‘and obstacles for Canadian business While Canad-

‘ans have been forunate fo experience high overall

industial performance over the pas few yeas, Con-

tinuing change in the nature ofthe global marke

place has created an uncertain environment In order

to compete effectively in this rapidly changing global

‘economy, Canada's manufacturing and service sec-

tors will have to make adjustments and changes

which respond appropriately to the impact of global

ization Moreover, our ability to succeed inthis mar-

ketplace will now depend even more upon our

willingness to embrace a more entrepreneurial mind-

set and to build upon te substantial levels of growth

that we have all been proud to achieve inthe past

For oolong, much of Canada’s private sector, 38

‘well asthe publicaarge, have looked to govern-

‘ments for ideas and solutions to assist Canadian

industries a they venture into the intermational mac

‘etplace believe that we have gone past the point

where we can or should, look to government or this

kind of assistance, Industry must take hold ofthe reins

‘of leadership, both in working with government to

‘explore consructive polices fr increasing our com

petitive postion, and in seking solutions indepen-

ently amongst ourselves to seize new trading

‘opportunites

‘At Kodak Canada in, over the lst five years, the

changing competitive environment, domestically and

internationally, forced us to come to terms with some

tough decisions inorder to maintain our positon in

the marketplace What we had discovered throughout

that period was that new sources of competition had

‘eroded the raditional distinction between the domes:

ticand the intemational marketplace We, lke a varie

ety of oer industries, were no longer afforded the

luxury ofa protected domestic marketplace that we had enjoyed inthe past, We had to reasess all aspects of aur business and examine every opport

Ì compete more effectively onal rons

Through the launch ofa multi-million dollar program

‘of consolidation, product rationalization, manufactur ing upgrades, teamwork development and quality

‘management, we were able to achieve our shor to

‘medium term business goals, and establish anew base

‘fom which to launch ou strategies forthe future [New ideas and iiatives for tackling the chal lenges ofthe 1990s ned tobe generated by indus, academics and those who have diectly experienced the pressures of the changing nature of global compe- tition With this in mind, we commissioned this study

to inject fresh ideas ito the business environment in

‘order to encourage discussion an these important Issues Asan active payer in the Canadian business

‘community and in te international marketplace, tis four hope that by presenting this independent research suy, “New Visions Fr Canadian Busines: State fies for Competing n The Global Economy,” we will

‘encourage thoughtful review on this issue among a

‘ros section of Canadians inal sectors ofthe

‘economy

peleve that only through a constructive and rle- vantexchange of views will governments, educators, industry andthe technological community be leo

<develop competitive stategies which will place Cana tian businesses ina postion to face a single European

‘market in 1992, the challenge of vital Pacific ir, a

‘more open North American market, andthe many

‘oppoctniies ahead ina rapidly transforming Eastern Europe Yet, we must aggressively purse these

‘opportunities ublizing our ast human, indvstial and natural resources a effectively as possible rather than merely responding to these changes nthis regard, Kodak gratefully acknowledges the valuable Contributions of Professors Alan Rugman and Joseph Cru, two of Canada's pre-eminent scholars to this important dalogue They have brought to this study

‘on Canadian competitiveness five interesting and insightul recommendations which I believe are deserving of serious consideration by all Canadians,

As the authors have pointed out, conventional and

protectionist trade polices are only stop-gap mea-

Sure tothe problem of maintaining our competitive

position Seeking refuge behind protectionist ade

barriers, tarifs, and outdated industrial technology

and investment polices is nota solution We believe

that Canadian businesses must proactively urge pol

Jey makers to, ifnot provide opportunities for

enhanced trade, allow Canadian manufacturing and

Service industries to experince the opportunities and

pressures of an open market in Canada and abroad,

‘Moreover, government can best encourage business

to pursue new initiatives by promoting efficient eco-

nomic, fiscal ane! monetary policies which suengthen

the foundation on which Canadian businesses can

‘operate Infact, all Canadians have a crucial stake in

Suppoting the implementation of solid and responsi-

ble national economic polices Our manufacturing

and sevice sectors nee to know tha cal restraint

and deficit reduction isthe united goal ofall levels of goverment The overall heath of our economy is Inextricably linked to both the strength of Canadian

‘manufacturing and service industries and to ensuring private and public sector confidence as we tackle the

<hallenges of the global market lam cerain that Can

‘adian businesses, both large and small, ar in a sương, Postion to capitalize on our existing politcal, indus

‘wal and cultural strengths to maintain our place among leading industrial nations, and build on our position as viable competitors onthe iteration nope that this study provides you and all Canadi- ans with some new ideas and informed insights into the competitiveness isue andthe choices which must be made to meet the challenges ofthe next decade

TABLE OF CONTENTS

Kodak Canada Foreword by Mi R.C Mowson

Executive Summary

Chapter 1: Canada’s Busnes Scorecard = The Overall Competitiveness Scoreboard

Understanding National Compativenss

= The Ten Facto of Compctiivenes

= The Business Conidence Scoreboard :

= Diagnosing Canada’s industrial Portis,

= Canada’s National Indus Portola

= anclisions

(Chapter 2: Doing Business inthe Global Economy

“'Giobalizaion of Mancfacturng, Series are Local 8utInponant

The Global Matin

Keowledge Sills 5a Comptiive Advanage

= Goveenment and Business

= Conclusions

‘Chapter 3: Manufacturing and Services ina

Global Economy ~ Productive: Canada’s Priormance

= The Role ofthe Service Sector

= Predetvtyin Service Industrie

= Bath Goods and Services Mater

= Eamings in Goods and Services

= Rand D- The Real Soy

= Canad’ Fiseal Deft

= Canadas Exchange Rate

= Conclusions

‘Chapter strategies for Canada's International Competitiveness “an instil Policy for Canad

Diagnosis the Premiers Counc

= Developing Sustainable Compete Advantages

= Resource industries Canada's Cash Com

The Future for Canad Mature Industries

= The Decline of Canada’ Low Wages lndustos

= The Deceptive Glamour of High Technology

= Conclusions

(Chapter 5: Recommendations Rece Fiscal Deis fr a Competitive Future

= Change the Protections Mindset

Balance Manufacturing and Service Actives

= ANew Role or Goverment :

= beter Elation and Tang

About the Authors

EXECUTIVE SUMMARY

[As Canada prepares fo the 2st century, business and

government will need todo some cew thinking The

Impact of globalization onthe Canadian economy

signals a profound change in the way that business is

to be conducted Everyone in Canada wil be affected

by intemational forces

Inthe manufacturing sector, Canadian business is

already involved in global action Some business

leaders have already started to develop a new vision

‘of Canada which is outward looking and esponsive

to worldwide changes affecting production, market

ing and human resource management

Canada's major problem i that many people in

government, and inthe service industries, do not yet

‘hare this global vision Yt seventy percent of Cana:

cians work inthe service sector A major theme of

this study isthe need to develop an awarenes of the

interational facts of life forall sectors, including er-

vices, and for government policies inal sectors tobe

‘more responsive to global forces

Until the manufacturing and service sectors share

the same vision for Canada with government, the

future will be clouded, Responsible government poli

cies and successful corporate strategies are possible in

‘Canada once the nature of global competion i flly

realized, The Canada-US Free Trade Agreement was

sep in the right direction Much more needs to be

‘done to build upon this foundation and bring 2

broader constituency the table of international

activity

Canada already has.ahigh degree of international

trade and investment Much of Canada’s manufactu-

ing sector builds value added into resource-based

industries and is successful in global competion,

While both large and small manufactures are

fected by international forces, most of Canada’s

Service sector is dominated by small business in local

‘regional markets with the exception ofthose

Targe banks and other financial services operating

internationally)

Inthis project we examine the trends afecting the imerntional competitiveness of manufacturing and service industries We examine imadly microeco- omic factors affecting productivity in these sectors, ineluding Rand D We also consider relevant

‘macroeconomic factors affecting comperitveness, Such as budget deficis, interest ates and exchange rates, We consider government policy in these areas,

‘especially wade and industrial policy and strategies

‘or competitiveness We ind that governments should Contine themselves to improving the climate for doing busines; selective suppor for some businesses and related discriminatory aspects of industial policy are not likely to be successful We do se, however, the need fora much greater emphasis on education and labour taining policies Finally, we discuss cor porate svategies and the methods by which Canadian business can suceeed inthe 2st century

Conclusion:

Canadian business is now faced with domestic mar kets that are tuning ito global markets Both Canada's manufacturing and service sectors need to improve their ability to operate at interationalstan- dards, The nature of ntematonal competitiveness demands knowledge-intensive sls An appropriate role of government sto work with business and Tabourin generating a more innovative and effective educational system Workers and manages need to haven international outlook pus the knowledge,

‘managerial expertise and entepreneurial to helpall sectors of Canada’s business become globally competitive

Recommendations:

Reduce Fiscal Deficits Curing the seemingly insatiable appetites of Cana tan goverment for increasing fiscal deficits remains the fst priory in economic policy Estab- lishment of the proper economic environment for

<evelopment of ntemational competitiveness cannot proceed far without responsible government policy

Business leaders have an important role to play

“They must continue to keep up the pressure on gov

ermments to find ways to bring order to the fiscal

regimes They must ensure that thee voices continue

to be heard on tis issue, paniculaly since business is

‘one ofthe few stakeholder groups able to speak efec-

tively on behalf of economic rationality

Change the Protectonist Mindset

For decades, Canadian business and government

have assumed that government policy could effec-

tively isolate the domestic economy om the forces

‘ofintemational competion The protectionist mind-

Sse ssl central tothe Canadian vision of economic

development This must be changed

Itisa dangerousillusion to believe thatthe forces

of globalization and interational competition an be

restrained by Canagian government policy The pro-

tectonist mindset mustbe replaced by a uly interna

tional perspective that seeks Canada’s future

prosperity inthe competitive abilities ofits businesses

rather than in measures to attenuate the impact of

slobal competition Canadian businesses have to

Tearn to lok within themselves for means to address

the problems they face rater than tum to govern

‘mens fr help

Balance Manufacturing and Senice Activites

Services representa large and growing component of

‘manufacturing costs; they are a key determinant of

the international competitiveness of Canadian indus-

‘ry Government policies and corporate strategies

need to understand the balanced nature of manulac-

turing and service activites

‘Canada will prosper in the new international envi-

ronment ts businesses develop the management

systems and competencies for operating knowledge

itensive businesses As they advance towards these

structures and systems, Canadian businesses wil find

thatthe distinctions between manufacturing and ser

vie businesses will become less sharp and that the

two types of operations wll converge in essential

‘managerial characterises Manufacturing businesses

will havea larger service content while service bus

nesses wil have to adopt the productivity approaches

‘of knowledge-intensive manufacturing This corpo- rate imperative wll need an appropriate response

ftom governments, which need to understand that

‘manufacturing and service activites ae equally

‘entific knowledge and commercial technology, gov-

‘emments need to devote their eneries to helping Canadian businesses become more adept consumers

‘ofthe science and knowhow ofthe es ofthe world Instead of puting government resources into physical resources such a5 bricks and mortar, governments need to pay more atention tothe development ofthe

"hoan resources of Canada

‘eter Education and Taning

‘The conversion of the Canadian economy into a truly modem knowledge-intensive one will nt proceed

‘without major effons to change our educational sys tem, Atal levels School, technical college, university and inhouse) business education and taining must

be revamped to provide the knowiedge and skils

‘needed to build competitive businesses Canada must evelop a national competitive advantage in its peo- ple Canadians can be as intelligent and hard working fas workers and managers in other countries Whats reed is vision and a guiding hand through beter corporate and government taining programmes,

In panicular, Canadian businesses have to learn to address their education and taining agendas with the Same level of competence and attention they now

‘devote tothe financial and capital Budgeting pro-

‘cesses, They have to make intemational business con-

‘siderations central to thelr human resource programmes Canaan fms can buld upon and fur: ther develop busines skills in well educated and motivated people Together, Canadian workers and

‘Canadian firms can improve Canadk’s international

‘competitiveness, The challenge for the future forall Sectors in Canadian society ito develop and share a slobal vision

CHAPTER 1: CANADA’S BUSINESS SCORECARD

‘This iroductory chapter examines Canada’s sanding on

the scoreboard of nteational competivenes I vi

Show that Canada making progress in improving the

Intemational compettvenes ois economy, hụt hefe are

teas of weakness which need to be improved to reduce

oneem about the utr prospects ofthe economy

‘The Overall Competitiveness Scoreboard

Canada has made substantial improvement ints tandings

Inthe league ales on nternadoualcompeffvesee-

Tey, Canada ranks fourth among the OECD nations in

overalinemational competitiveness, acordingtothe

‘Weld Competitiveness Reprtof 1963

‘The World Competitiveness Report i produced by

Swe based academic consortium, consisting of IMEDE—

the eternational management education specialists and

‘The World Economie Forum, which among ether things

runstne annual Davos Symposium The Repor has

‘become the standard scorecard for compating the nera-

‘onal competivenes of major counties inthe glbal

‘economy, eaves 32 counties; 23 memes of he Orga

‘ization for Economic Co-operation and Development

(OECD) anda group of Newly Industlized Economies

“The Overall Competitiveness Score i consuctd fom

292 “ocr of campesivenes hat are assembled by the team that produces the Report, These ar of two kinds frst there ae the factual elements of compatitveness which are dawn mainly fom oficial stasis about the

‘conomy and socal structure ofthe county Secon, there Sethe "percepoal” elements of compitveness which dre collected through a special worwie Busnes Con

‘dence Survey conducted forthe Report This survey

‘eseribed below: Togetber, the factual and percept ac- tors rovide a comprehensive picture ofthe competitive ness ofeach country covered inthe Repo

In 1986, Canad was ranked seven, with some mined signals abouts futur prospec A an be seen om Fi lure 1.1, Canada was ensierably behind the leading (ECD hasions Japan, Switzerland and he United tates Inadaton,itmust be keptin mind thatthe Rep does notrank the newly industries economies (NIE) nthe

Se group asthe OECD counties itd, Canada

‘would have ranked below Singapore, Hong Kong, Korea {and Taiwan a well Canadas performance nthe 1989 Reports quite respectable Infact the Report ranks {Canada ahead of Germany 3 county whichis generally (NIE, provides aconvenint and ible tol or man Bde as being highly competitive

agestoases the changes that are taking pace inthe abil

ltyof various counties to support the compeiiveness of

bbsinesses that operate within thei boundaries

nan:

Canada Ranked Fourth

In the Overall Competitiveness Scoreboard

Chapter 1: Canade's Business Scorecard

Understanding National Competitiveness

‘The concept national competitiveness hast be under

stood inthe context ofthe concept of business compet

tiveness A county that soe considered compet

tne that succeeds in providing an economic ad soca ch

‘mate that utes compeativ business ts the navi

ta besiesses that eventually compat inthe markeplce

CCourres, on theater hand, can beseen a competing

locations fr compattive Business Thus, counties with

atactveenviroaments would end fodertheceaion

and gown of competitive businesses

‘The World Competitiveness Report defines business

compettivenessas

+ the bility t design, produce and market goods and

Services, the prices and non price quaits a which

fouma more atacve package of bene than hone

of competitors

Within his context the Word Comptitveness Report

Is designed

+ focus on how national envionment are conducive or

devimentalto the domestic and global competitive

res of enterpites operating in hose counties,

‘ses with ch natural endowments and a sable macroeeo

‘omic climate highly compete On the ate: hand, besiesss that requleow wage costs and weak foreign achange rates wil notfnd this ensronment atactve

“The Report therefore denies 10 Faclons of Competive- nes, within which are placed the 392 elcmene me: tioned above These ae listed in Figure 1.2 which eports Canada’s latest perfomancen these 10 facts

X SodiPolica! tity

These 10 Factors provide the basis for diagnosing the

underlying seucture ofthe county's competitiveness This

faclitates the development of understanding of theea-

tionships between the county's characteris (what

‘economist fefr tas the Country Specie Advanages)

Spd the tenths and weaknesses of business fms

(refered to as Fim Spctic Advantages

‘The changes in Canada’s perimance on each ofthe 10

acon it smmarizedia Figure 1-3 below: Weshallds-

css each ofthe actors separately

[Chapter Canada’s Business Scorecard

Figures icant Changes Have Occurred in Canada’s

‘Rankings nthe 10 Factors of Compettiveness

Shnce the 1966 Report

Facto: Dynamism ofthe Economy measures the macros

‘onomic performance ofthe county and is contibuton

‘to competitveness OF primary importance fhe manh

fnteof Gross Domestic Produc Since Canad macrosco-

‘omic performance hasbeen reasonably song nthe ast

{ew yeas, and since the country was consired to have

00d infastrocture or the needs of companies competing,

Intemational, ranked third song the developed oun

tres inthis acon

Factor: Indust Eciency is concemed with heeft

‘eney wth which economic resoures ae uid My

ofthe classic indcators of competivenes ar incladed

here: abou oss, productivity corporate profs, inves

‘ment oss of ving and ination Canada sored fourth

Inti Factor, considerably behind the leaders ~Iapan,

Switzerland andthe USA, Some sat pots in Canada's pe

formance inthis Factor ae: labour bene and

turove rates labours unwilingnes to accepiaboursa\-

ing technology, high corporate ncometax ates, elatively

low rates of rlavestnent of corporate prs, anda dectn-

irate of el eaitl formation,

Factor: Dynamics ofthe Market covers the extent

‘which the business community inthe country is subjected tonatonal market forces Counties hich attempt ns Tae thei busineses om market forces through such devices as protective regulation, marketing boards ak iovernment price contol, tend to diminish the alte of these businesses to compete inthe international market place where such protection is unavalbl

Canada's performance in his Factor has improve con- siderably in he as few yess emen which have con {ebuted to this improvement ae: elaation of government regulation and congo ofthe market, adoption of amas

‘rented approach by companies and therabust pero

‘mance ofall slo,

Chapter 1 Canad’ Business Scorecard

Factor IV Finacial Dynamism coves facets ofthe nan

Cla environment within which fms operate const of

clemeot suchas goverment debt and deck sending

the regulation of ancl transactons by government,

‘monetary policy, swell as indeators of the volume and

Coss of rancia services valle to the busines em

‘Counties wih sound monetary nd cal polices and an

‘ficient capital market Sppcopinte nancial envionment are considered to provide the for fering comp

tie business,

Canada's performance has deteriorated considerably in

ths Facto In 1986, Canada ranked fourth n nancial

Dynamism, whereas in 1989, aha alent

eleventh A major contbutor to poor performance ithe

high evel federal and provincial goverment dfs

and he public debt needed to und them The lack of bi:

itytomake asigntiant improvement in thee areas,

pled with relatively ow domestic saving rat, esi

‘monetary polices featuring high intestate alsohas a

negative impacton the coafidence ofthe business comm

rity abou the future course of nancial pois tha wil

Eeentualy be needed to cope wih the deteriorating public

finance picture

Factor V: Human Resources examines the source of com

petve advantage fei, age scare and tat of health the county hat derive om the sls, mavation,

—

Canada has cond very wel in this Factor ts abour

forces silled healthy and well motivated Canada’s man

agershave ale received reasonably high ranking in com

trastothe past when they were luted ors ack oftalent

ed adaptability, Canada's secondary schooling system,

Fanked wel, 35 iis proportion of he 2024 year old

population atendinguniversty,

Factor Vir Stat erference measures the yes of sate

Intervemon that are deimenta tthe intentional com

petiveness of companies Apart om the publi str =

‘hae of Gross National Product and employment this Fa

torcoves regulation, subsidies and the sal burden the

state places on companies and individuals

‘Canada hae made significant improves init ratings

In this Factor sincethe 1986 Repo The curent gover

‘ments policies of privatization, reducion of repultory

burden and estan the use of subsist suppot

uneconomic ventures have al contributed the improve

‘ent in Canada’s ratings, However major ates fem

‘ern remain, Government expenditures (ath edealand

provincial consume ahh level of Canada's sources

nd the trends inthis area arent saison

Factor Vl Natural Endowment measures the eure

‘base with which the county has been endowed How:

‘eve inthe manner in which is measured inthis Repo, thishae as much todo with the eficiency with whieh he

‘county assis natural sources swith hires

As expected, Canada aes wel inthis Factor, ranking second only to Norway The county fated parila wellon criteria covering energy-related resoute ad tes, incloding pevelum and hydroelectric On the

‘other hand, Canada me poody on cieei related tothe Stes tlein the management of natural resources or

‘example, sricultual policies were seen ar serving poli- clinleress more than longterm needs Silly, Canada {id no do wel on substitution programs fe sare or

‘only materials naron recycling Factor Vl: Outward Orientation i cuca ingredientin International compativeness inthe apy globalizing world This factor measures both he county's presence in

‘ther markets trough export and eign dưecivee ment ae well it openness to imports, Gowertmertsup- Porat eons to enhance outward entation a0

‘rial in this rating Uniotunately, Canada ares poorly in this Factor, sit

id inthe 1986 Report White Canadas asgniant exporter its dvesieation of expos is poor ree ven, heavily on the US maha, and onthe exports of aw ond Semi processed materi ks major manufactured expr utomobies, almost excovely othe United Sites The prices of Canadas exports have na sen a st 9 the Pres ois imports Canadas seen as being poy p= Pareto adjust othe changes taking place n world mar fet, sucha the developmen in "Europe 1992",

‘Factor Forward Orientation deals wth the deg of innovativeness inthe products ad senicesofered by businesses inthe county also covers proces innovation

‘efarding production echiques and management Not only i Cana fare poorly in his Fact, butalso lsratinghas deteriorated signal fom the 1986 Repo Mucha the Blane has ben placed onthe coo t's poor performance in esearch and development While Canada does reasonably wel ranking fhe umber and capabilities of RAD personne, ls se

‘ously behind in the powson of nancial resources © R&D effons Canada alo ates poly in menses con ected with atonal success inthe award of patents,

‘Aboveall, Canada allsto commercialize avaableech-

‘aly, 0 fim lack abe for developing ssanable

‘vantages We shall develop hs pont in Chapter 3 Fact X Soco ola Stability deals wth perceptions lout the county's poll stability, he quality ats labour relations imate as well as objecive elements such

As would be expec, Canada as sored reasonably

eli this regards song points are the ability ofits

poitial system, the confidence ofthe pubic inthe amin-

Satin ofthe justice system andthe general feling of

‘cul ofthe Individual and Nis propery On the other

hand, Canadas perceived as having a eave poor

Isbour elation record rime rates are higher than those

in 7 other developed counts,

“The Business Confidence Scoreboard

‘The perceptions of pinion leaders inthe county about

the competitiveness of ther atonal envionment and

‘hose oftheir puincipl competitors are of tial impor-

‘ance assessing overall compettiveness Accorinsy,

the Report has section which based on amajor survey

ofthe business opinion leaders inthe couniries coveted A

Comprehensive quesionnaite consisting of 112 tem,

‘seo gather the views of espondn’ o ato tres

‘ofthe envionment tei counties, nd heir averse

Othe overall competitiveness ofthe countries in the study

For the 1989 Repo this questonnare was sent to 12,000,

Selected respondent, fom wom 1,57 well queson-

rare were received, The Report has created an ndestor

‘which summarizes the opinions of the respondents fom

‘each counay about the compatitvenes of hl national

‘envionment

Pou Canada Placed Sixth in the Confidence

My

i

it

THHỊH 11H PHT

CChaper 1: Canada's Busines Scorecard

“Canada placed sth in the Business Confidence rating,

‘See Figure I Examination ofthe deta ofthe suey

‘responses rom Canada eval someintresting insights

Jn the thinking of Canadian busines opinion leader On theone hand, they ae reasonably satisfied withthe cu rentmacroecanomic climate inthe county ats sen to atfect compettiveness.On the other hand, the ae some wnat more pessimistic about he fature than thel peers are Inothe counties Thee views about the growth prospects

‘ofthe Canadian economy are cautious They are con

‘cerned about the at of development of new producs and

“ences, Ther assesment that he Canadian manages havea mediocre sent of eve, responsibilty and cetepmeneunhip

14 Scoreboards

(Chapter 1: Canada’s Business Scorecard

‘As would be expected, Canadian busines opinion lead

cersae cial ofthe mannerin which he federal govern:

‘ment manages ts own afar, They ste concerned about

the level and direction of the federal dict Move impo

tantly, they donot approve ofthe ole othe eel gow

ernment subsidizing unprofitable ventures in parieuar

Sethe goverment economic prone gener

Diagnosing Canada’s Industral Prtoio

“Te final section ofthe Report provides an analysis ofthe

-sructue and relative competvenes ofthe coun’

Indust base, This ection ofthe World Competveness

Report examines the stucure, performace and principal

teens inthe porto of 19 developed counties tases

cexpor data asthe measoreofperirmance, since the bi

ito compte in the international marketplace 3 prime

measure ofa county's competitiveness Total world

‘exports foal commodities were allocsed 71 Industy

“ategories that correspond tothe major industries in which

‘he developed counties rade Fr each county ndhid-

USI "portatoe” were constructed onthe bai of export

perormance of ese 71 indies forthe period 1982

to 1907,

‘The ndustialportolio of these countries i depicted in Figure 15 uses a Growh/Share Mati, analogous to that pioneered by the Boston Consulting Group to dag- nose the business potolios of lage corporations Each

‘Country: indusral portolio is depicted ae acl whose eas propoional othe total exports ofthat county The Poston onthe vertical ass the weighted average at of [wth a total world market for that country during the Period 1982 o 1987 The poston onthe horzontal axis

‘he country's weighted average share of wold exports for the 71 industries, This axiuesa reverse logscae, ith Tage shares onthe leftand smallshares onthe ight,

Export Performance ofthe Leading Developed Economies

‘The car clealy shows that there are thre clusters of

‘counties with respectotheirindustil porlios

+ The Big3 Nations — Japan, Gemany and he United

States = wih large industrial porto that are wall

posttoned bath in ems of market growth and market

tham

‘The Industrial Pack ~11indstilized nations,

including Canada — wih smaller potolos, sme ‘shat ess tong than the leaders both ines of mar

et rot ard marketshare

‘The Caching Up Category ~3 ndusalized nations

wth smal potolios that are characterized by low

‘market gowth and low mathe share

(Chaper:Canada’s Business Scorecard

Canada's National Industral Prtoio

‘The national nds prtolo can be reported for Canada tis gain represented by a market growth/manet share ai

Using data or Canada's agest ten export indusies

‘over the 1982-1967 peso sueh an export bated growth!

‘Share mati reported in igre 1.6 Each Gel pc

‘ents an ndsty whose ares propotona tthe tal exports ofthat indus The dashed vertical ines the

"erage export share fal of Canada’s industes and the

<ashed horizontal line the average growth ate oF world

(Chap 1: Canada's Business Scorecard

‘The export growthshare max reveals that some of

Canada’s indus remove competitive than hes in

the global economy Canada's mont competitive indus

'splpand paper, withthe largest export share and a la

tively high ate of owt in world exports Mature indus

thes such asthe the auto rete one shown ere have

high gromah but a smaller share of worl expos The poe

Performance of Canada’s peoleum and natural as

elects both the price competitiveness of Sato owned

Industles inthe idle East and the unfortunate legacy of

‘Cana’ misconceived National Energy Progra of 1360

1961 The late served putthenallsin the cain of

(Canada's and was indy?

‘The compettivenes of Canad’ nds pono has been helped by the CanadoU.S Free Trade Agreement {led over the aut-pactin Chapter Ten, so Canada's, reliance on auto wade safeguarded, as muchas ny Indes canbein tens of global competion, The FTA also helped secure market acces othe United Sates, thereby making longer investment feasblein Canad’ oter ects

Det abou the evolution of Canada’s export market sharin these indies over the as 11 years are pre Seotedin Figure 17

ngà?

.CansdisLeaẢngEspolndueies shrec Wor Exports)

Inthe hon sơn the strength of Canada's industrial port

{alo woul argo fora continsation of the prosperity the

‘county has experienced inthe ast decade, However, €

lickof diversion in manufactured expos and te

excessive reliance on US markets ae acoso once or

‘he long run future the county

Condoion

‘The findings of the 1983 Wivld Cơmpciivenes Repor

provide a number ofeatons for Canadian managers to be

leased with the improverents in the court's tern

onal competitiveness over the at fe years However,

‘ually importants the nee to guard aginst compla-

nc The long run compeitvenesso he county is by

hho means assured Tete ae many uctural weakneses

\ehich need tobe addressed, partially inthe aes of

Improving the Outward Orientation of Canadian manages

and in improving the performance of Canadian business in

the development and commercializaton of new products

and services, Chapter 3 we shal develop the point that

Canada nets to use the bes availabe technology,

wherever nthe world tis produced

‘As he findings ofthe Repo make clear, Cana com

pets are not standing sil The developed nations ae

Siving to improve thee competitiveness wile several of

the more aggresive developing counties are in close pur

Suitand winning in important aes Canada to rai

tain and improve its position, Canadian managers have 0

adopt an agressive programme of mproving teint

tonal performance,

Inthe nex chapter we consider the nature of slobalza

tion of manufacturing ia more deta We late manuf:

turing sevice industry actities and develop anew

‘concept framework to analyze Canada's international

competitiveness

(Chapter Canada’s Business Scoreca

References for Chapter 1

| For deals ofthis mahodoog sc Joseph ROC andt Times Fle, Canada Can Compete Sate Manage

‘ent ofthe Canaan Porto oneal anal nt {efor Research D'cur, “Diagnosing Nairn Poti, The on Pblic ai, 1985) Also soe oseph 8 ald Competnvees Repo, 1999 (Genew: The Word

‘ronomic Fv nd sana: MEDE, 1909) 19129,

2 Se Alan M Rug ad Ma Ware Foren neti,

ee Tad and he CandanEety edor"Jawnaioi£neay

nd Developmen (1980, oheomin

”

CHAPTER 2: DOING BUSINESS IN THE GLOBAL

ECONOMY

Bote the dawn ofthe 2s century Canadian business wil

have to adstto the elites of lbal competition Bath

Canada's manufactringand sence industries will

become increasingly drawn into the imerdependent slbal

‘conomie system alfeady unolding today

‘Most of Canada’s manufacturing indusies already oper

_aeinterrationaly Many of Canad’ service indus ae

iceal in arentaion but even these experienc nde

international ees, Both manufacturing and eviews ae

titel components of Canada’s economy, generating jobs

and income 50 analysis of heir adjustment to gabal

‘market ores ea prio

(Globalization of Manutaturing

Manufacturing snow loblized, Vinually ever aspectof

‘Cana’ manufacturing sector isaffectedby Intemational

‘competion American, Japanese and European produc

Tine the shelves of Canadian retailer, joing domestic

products for space and consumer atenton Balancing the

limpor of foreign mide, and foreign owed pod are

exports of Canadian produc The ability sel and pro-

ce abroad fsa measure ofthe succes of Canada's mand

facturing seco

‘The ky pont that need to be stresses that, in man

facturing there are twoway movements of goods

Canada's “domestic” manufacturing sector na ongee

‘es, stead foreign product arr salen Canada and

CCanadian-madepreucs sell abroad An example wl

ikstate the rel imporanee of his woway set the

automobile vector

Automile assembly and related production ithe

largest component of Canadian manufacturing Autos ako

dominate Canadas commodity trae One td ofall

(Canad United Sates ade sin automobiles The Wade is

balanced; Canada’s exports in autos vitally equals

import actually there hasbeen a meds spon recent

yeas, butts sa very smal percentage ofthe absolte

Yale of auto ade)

‘The auto pac a type of managed rade agreement

‘benween the United States nd Canad, overs 20 year

history has been of immense benefit Canad xo

lempotant that was incorporate int the Canad US,

Fre Trade Agreementas Chater 10 The “igh” US

auto manufectres have been abl to create thousands of

Jobsin Canada, contuteo Canada’s socal and health

rowammes though payment of tas, and provide high

‘rages to a0 workers, The Canaan content ules of the

ute pact calor 50 percent value-added in production in

‘o1de to qui for duystee wade Thistarget hasbeen Substanally exceeded in recent year, at atime when the USS auto makers have found itfnanciallyvable to make subsantal investments i nw and renovted plats a Canada

Pecaps no industry inthe word as been affected by Invemattonal competition as much a the at indy The temendous gow of apanesemade autos, along with ther Asian and European impor’, has changes the Face of Noh American cis After the Chose balou, and sme ital ization with potectonsm, the US

‘owned aito companies in Canada have survived the ne inernatonal competion by major rehinklng of thei

‘produc lines nd intemal structural reorganizations, was

‘cal eson for North American managers, workers and foverament leaders to lenin even the auto indus is sobalize,

‘The estofthe foreign owned manufsturingsetorin Canada salto globalize, Fs ate companies such 5 TBM Canada, DuPont Canada, CGE and another 20 oF 50 with sales of ver one bln dollars annually alloperate inthe arena of ntrnational eampestion Over the st 20

‘yeas most the oreign-owned fms in Canada have

‘made neal sretural improvements to make the esp

‘fom branch plans to become ficient fly negated, subiais a global companies”

‘The three American owned companies listed aboveall

‘now operat witha high degree of manage autonory, Imaing products in Canada fo global mares, A consider ble amount of Rand D is undertaken n Canada by BM,

‘word product mandates havebeen developed and mar-

‘etd wocdwide by DuPont Canada nd CG All fms

‘veto operat as viable atonomous proitcentre within the company’s global seucure

None of these thre oreign.owned multinationals are now reign” fms; they ae Canadianbased manic

‘rand dsributore wit indigenous management and

‘workers The 40 percent of Canadian manufacturing

‘ihc statistically defined a foreign owned i neal,

2 Canadiana sector of imense importance to Canadas interatonalcompettivenes

a

Chapter 2: Doing Businesin the Global Economy

In ation today Canadian owned manufcturng rms

a operating globally Companies ike Norther Telecom,

oranda, Alan and Bombardier are Canadian-owned

linaional with sce oeign operations These

Companies have grown rapidly insze aed imporance

‘over the last 20 years, atime period when Canadian bus-

‘es ad finan services have matured to reach global

‘The canlusion which follows frm hese observations

‘that both ses of multinational enterprises are important

lociofinenational competitvenes fr Canada Not ony

CCenadian-owned manufacuring companies, butas for

‘growed anes ae payers in the game of global com

petition?

‘The ecentinteral stu advances inthe foreign

‘owned companies have strengthened Canads comp

tive postion and enforced the rapid growth of Canada's

‘own multinationals Both sete of multinational contribute

‘oradeand investment For example, the forignownes

‘companies in Canada expo, on average, 25 percent fall

‘heir outer nearly 35 mich 5 hey impor Both ses of

‘multinationals build pon Canada’s countryspeite

‘vantages in resourees, but bth st offs now empha-

Size valueadded by procesing and marketing these

‘resources isto the ole of such sevice and marketing

‘kills tht we tr in the net section

‘Within the manufacturing sector some ndustes

attempt tonsa themscves rom laa ray, The

‘bvieus examples are those sectors exempted fom the

(Canadas Fre Trade Agreement (FIN) because of thle

success lobbying effects They incloe the beer an tex

tle industries, he dir and pouty industries, clara

Industries and so on Ofcourse, none ofthese Industries is

exempted rom economic aly

Since th FTA, the eer industry hasbeen shaken up by

Molson’ jin venture wih Elders KL, which efecively

‘merge the Avsalan owned Carling O'Keefe brewing

‘operations wth Molzon's The exemption for Canadian

fas marketing bards in he FTA has nov edo pressures

“onthe fod procesing industry The processors have >

buy high cost inputs tom Canadian farmers while atempe-

Ingo compete with American processors who have lower

‘oss due tothe established economies of sealebull to

the large US neral mare Fialy, book publishers,

fn makers and ther culrally-based Canaan industes

ko sufer ave retained the ight to be protected and sbsilze, fom alackof sale economies although they

Allo these tre industries represent backward looking

‘management afaid of gabal competition The future or

Such industies poe because by ignotng labaization

the industries nee even greater degrees of protection and

‘ther types of shelter, delaying adjustment economic

realy

2

Services are Local but Important

‘Seventy percent of Canadians now wotkin service indus tres, Peoplein the serve sector incl the widely cited low pac workers in fat ood restaurants bt a0 bigh pal cers, lawyers and nancial executives Thus the aver

‘ape pay in services s much higher than many people

‘woul think The well tained and educated profesional bring up the average

‘The sevice sectors vast that generalizations are dif cut indeed dangerous, to make: However, itis clear that

270 perent of Canada’s jobs cannot be dsegarded as

‘unimportant tothe economy andthe ations nteatonal

‘ompetvenes, note ong outhe impact of er

‘ices for Canaan policy on competitiveness its uel o Aisinguish vo groups of service industries

First, many services are not rade The barbers, lower Shop operates, restaurant workers, doco lawyes and related service groups prfoem mos of theists or residents of Canad, These services ae priced and

<delvered locally Mostare serente rom direct intema- onal competion et ven fr such al sevies there are increasing nde nieratonl lec,

For example, touts Vist Canada’ restaurant, new

‘pharmaceutical and medial advances discovered abroad

‘fect Canadan health eve, and even lwyers id that

om of heir cents demand a knowledge of intentional business and foreign cultures Thus many ofthese nde, Intemational influences cannot be ignored, even forthe major chunks of Canadas service sector which ea het Tivingoffthe "domestic" economy, the ring lve of Jntemational competition safecting Canadian mantac- {uringand agriculture then nde tects even te

“ai senlee

Second, ther sa st of service acts which s treaty globalized: These include al banking nd an

al services plus growing component of business se

‘es The Canaian banking Indy fr aundred years

‘was protected ftom foreign ent Now tare are dozens of Foreign banks and financial instutons operating within Canad, The intestinal operations of Canadas bak, ineurance companies and stockbroker are already king acein globalized industries