Ch.1 – The challenge of Business: Managing the internal and External Forces
Business in Canada
- U.S a good neighbour?
- More U.S expansions and relocations are ending up in Canada
- The Economist Intelligence Unit rates Canada no.1 among 60 countries for the years
2005 -2009 in its general business environment ranking.
- Canada is expected to be the best place in the world to conduct business during the
next 5 years (EIU)
Business & Industry
- today Canada ranks 11 among countries worldwide in its gross domestic product
and per capita GDP.
- Manufacturing is the key part of the Canadian economy
- More then 14% of Canadians work in manufacturing operations
Employment & Labor
- Canadian workers are highly skilled and reasonably priced
- Their wages have remained fairly stable (Alberta oil rich $5.90 min wage since 99)
- Canada is leader in KPMG’s study which compared business operating costs in 11
countries and 98 cities worldwide.
- Labor costs are key to being cost competitive regardless of industry since
compromise from 605- 80% of the costs of most business operations (stuarts
MacKay of MMK consulting)
Taxes & spending
- no shortage of incentives to assist business taxpayers in Canada
- in the latest fiscal year, corporate income taxes accounted for slightly more than 8%
of federal, provincial, territorial and local government revenue.
- Consumption & personal income taxes are more than half of government revenues in
the latest fiscal year (stats Canada)
Internal Context of Business
- three fundamental concepts
Effectively managing people
- doesn’t matter whether non-profit, small business or giant multinational all business
need to be managed
- organizations are made up of people and this factor is clearly that we must carefully
examine Developing a suitable organizational structure
- organizational structure is a deliberately planned network or patter of relationships
that exist among individuals in various roles or positions.
- This includes the formal hierarchy of authority, grouping of work and the rules or
procedures that control behaviour in the organization
Generating a winning business strategy
- deciding what strategies the organization should pursue is a key task of managers
External Context of Business
- Scholars have defined the environment of an organization along two dimensions:
o The organizations specific or task environment
o The organizations general environment
- each factor in an organization’s external environment can be considered as existing
in two spheres:
o specific sphere: or environment within which the organization directly
o general sphere: or environment that would encompass the external
environments of all organizations in a society
- organizations have external stakeholders
- stakeholders are groups that have direct influence on the organizations ability to
obtain resources and generate outputs
- they have some kind of stake or interest in the organization
- could include customers, competitors, unions, distributors, creditors, the local public
and the government.
- the sphere surrounding the organizations specific sphere is referred to as the general
- the forces that make up this sphere shape the specific sphere of the organization
- general sphere factors include: economic, competitive, technological, societal,
global, and political forces.
- The economic environment acts as a strong influence on the present and future
prospects of any organization.
- We can also consider the international economic environment as exerting an
influence on Canadian organizations.
- Competitive forces operate at two levels of any organization
- As mentions organizations will have its own set of competi