Letter of Transmittal
Dear Sir:
Attached to this letter is the report that you requested in April this year. This report contains all the details of the survey about the possibility of moving Northwest Hardware and Warehouse Company operations in Canada. The report provides recommendations made basing on the analysis and findings.
During the survey, my team analyzed all aspects that affect the business environment in Canada. The micro and macroeconomic factors were surveyed because they affect the business. Factors that were given full attention by the company include politics, legal aspects of doing business in the country, business policies and procedures, competition, and cultural factors. The findings of the survey indicate that Canada has a favorable environment for doing hardware business. Therefore, it would be wise if the company moves to set up business ventures in the country. It will be paying for the company to open up a firm in any of the provinces within Canada.
There are many hardware businesses in Canada. However, the outcome of the survey indicates that the high number of the hardware business does not imply business in this sector is closed up. The demand for hardware materials remains high and significant. Additionally, many foreign companies are operating in the country. Market penetration is easy and will further be eased by the level of aggressiveness of the company. We got data from resource materials that have well-documented business statistics in Canada. If clarification of the details is needed, I will be available.
Sincerely.
Executive Summary
This is a comprehensive report regarding a survey done to ascertain the business aspects in Canada and how these aspects can influence the establishment of a firm by a foreign company – Northwest Hardware and Warehouse. The objective of the survey was to help the company decide on whether to move into the country and set up a firm. This report is divided into various parts such as an introduction, the main section, conclusion, and recommendations.
The introduction is a summary of the way the survey was conducted. The main section contains real facts and figures in Canada. Three main areas of business are investigated and a report given in this section. The second part of this section touches on politics and the political climate of Canada. The section gives findings on the different levels of governance and the role of the government of Canada in regulating business.
It also reports on the attempts of the government of Canada to improve the business climate. Besides, there is a section that provides information about Canadian culture and customs. The last portion is the conclusion and recommendations section. This is where the findings have been discussed in brief. Possible key points have been outlined. Therefore, the company can follow these points in making a decision.
Introduction
Purpose, scope, and assumption
To ascertain whether it will be sustainable to start firms in Canada, I surveyed the country’s business environment and how it influences the performance of the hardware business. Therefore, the main purpose of this research was to come up with findings and recommendations about doing business in Canada. The survey explored the factors which determine the performance of hardware enterprises in Canada and opportunities for a business venture that deals in hardware products. It was assumed that Canada has a good environment that favors stabling business.
Methods
This report covers several areas that were investigated. These areas are enterprise location, economic policies and laws, the political climate, and the social and cultural environment. All these aspects affect business both directly and indirectly. The data used for developing this report was extracted from books, magazines, journals, and other online academic sources.
Limitations
This survey was limited to the materials that could be obtained from the library of the university. We majorly relied on secondary resources to gather facts about business in Canada. Recommendations were provided basing on the information that was collected.
Location
There are more than 900 leading hardware companies in Canada. These companies are located across the country. Each of the three main cities of Canada has a share of these companies. Most of the hardware companies, especially the ones dealing with domestic hardware products, are located in cities. The company will be dealing with hardware machinery. Therefore, it will be wise to locate the firm strategically in places where there are lots of construction works or near industries. All cities have a relatively high number of factories. This explains the reasons why most of these firms are located in the cities (Manta, p. 1).
Business Environment – Policies and Laws in Canada
Economic performance of Canada
Canada is an exceptionally affluent society operating like the US. Its economic system is market-oriented. It has a highly skilled workforce and high standards of living. The key development sectors of the Canadian economy are manufacturing, mining, service industries, and high technology (Whittle, pp. 208-210). Canada is also one of the signatories of NAFTA and GATT. Over the last twenty years, Canada has been establishing trade relations with other countries across the globe aiming to open up business opportunities for the country. The country has well-established and independent financial institutions.
It has been noted as the country with the most efficient financial institution in the world. These include banks and other microfinance institutions. This favors business in the country in two ways. Firstly, it encourages the financing of the business. Secondly, in the recent past, the financial sector has been undergoing considerable reforms to raise the participation of foreign companies (Whittle, pp. 208-210).
The Investment Canada Act (ICA) has been in place since its enactment in the year 1985. This Act promotes domestic, as well as foreign investment. The main body that deals with foreign investment in Canada is the department of industry. It is the body responsible for scrutinizing and approving foreign business ventures. Business regulation takes place at the three levels of government. This includes the provincial, federal, and territorial levels. Therefore, any new or foreign investor should know this as it has been reported to be the main problem that faces foreign investors aiming to do business in Canada (Whittle, pp. 208-210).
Business organization in Canada
There are several forms of business organization. Each of these forms of organization has pros and cons. Non-residents are provided with options when establishing a business in Canada. The foreigners can either establish a branch or a permanent enterprise that is foreign-owned. The foreigners may also choose to open a new corporation. This is known as a subsidiary (Industry Canada, para. 1-5).
Canada has had a fairly stable economy, with a stable GDP in the last decade. Only minor fluctuations have been witnessed in the GDP. Most fluctuations in the GDP have emanated from external economic pressures like the global financial crisis (Industry Canada, para. 1-5). Many sectors in Canada have been recording high income. This has boosted the general economic performance of different industries and the country at large. An example is in Figure 1.0. It shows the performance of different sectors of the Canadian economy at different periods.
Figure 1.0 Canadian GDP by industry Sector from 2001 – 2010. Source: Industry Canada.
Just like many countries in the world, Canada has laws that govern the establishment of a business in the country. The time to establish a business in Canada is shorter compared to other countries. It will take a foreign company a maximum of one week to undergo all the procedures for opening a firm in the country. For a company to start a business entity in the country, it should acquire a business permit or license from the government. Licenses and permits must be acquired from the municipal, provincial, and federal governments.
Many online databases assist people with intentions of moving to the country to open business operations. BizPal is one such company. Therefore, one needs not to present himself in the country to get the figures and facts about the business environment in Canada. Business procedures have also been put online. This enables one to complete business transactions using online services. This helps in cutting down costs and increasing the efficiency of doing business. Some firms advise foreign companies or their subsidiaries. They interpret business laws and policies governing business in Canada. These firms attach the companies to legal professionals, who help companies to go through the steps of business setup with ease (Goodman, pp. 1-20).
Labor policies
The Canadian government has continued to work towards eliminating barriers to conducting business within the country. The government has revised its labor policies. In earlier years, the Canadian government restricted the entry of immigrant workers in the country. However, as it is with the new laws, there is a free entry of foreign workers or staff in the country. Also, the country has been involved in trade talks with the European Union.
In this case, the country is supposed to coin favorable trade agreements that will foster trade exchange between Canada and the European Union members by eliminating tariff and non-tariff trade barriers (Economic Policy Reforms 2011, p. 74).
Market entry and competitors
As noted earlier, the business environment in Canada is highly competitive. There are many firms in the country dealing with hardware products. Some of these companies such as the automotive companies do export these products to other nations. However, many companies are still opting to join business and deals in hardware products because this business is sustainable in the country. Hardware products are easily found in the country because of the vast mining activities (Dickinson, pp. 14-24).
Different companies deal in the export of machinery while others only transact business at the global level. Therefore, a company can enter the country and seek a market for machinery or hardware products outside the country. The products are easily found in the country. Therefore, diversity is the key asset for any company that chooses to conduct such a business in Canada (Kerr and Kurtz, p).
The Political Environment of Canada
Government organization
Canada is a federal republic that uses a parliamentary system of governance. It is divided into two main territories. There are ten provinces in the country, and the country has approximately 35 million people according to the latest census results. Canada has numerous resources and is considered to be among the most developed states in the world. Canada is a stable country that has enjoyed a peaceful environment. The country has close relations of trade with many other countries across the globe (Bernier and Potter, p. 3).
Business regulation
Canada has two levels of government: the federal government and the provincial government. Each of these levels of government has legal powers conferred upon it by the constitution to control various business aspects. The federal government has constitutional powers and obligations to regulate patent rights, competition, trademarks, international trade, banking activities, telecommunication, transport, immigration, as well as criminal law. The provincial government regulates the marketing activities of firms located within their territory (Economic Policy Reforms 2011, p. 78).
Customs and Behaviors of the Canadians
Language
Canada is a bilingual country. There is the French-speaking group, which is mostly found in the region of Quebec; and the English speaking group, found in the rest of the regions of the country. The English speaking group is the largest. The interests of the two lingual groups in the country are provided for in the constitution of Canada – Official Languages Act. Canadians have a right to make transactions either in the English Language or French Language.
The official languages have an impact on business in the country as it calls for bilingual labeling, especially for the essential product information. This information includes the manufacturing address, generic name of products, the information on product ingredients, and information on health and safety of the product (Kemerle, pp. 4-15).
Culture
Canadians are polite and transacts business in a diplomatic way. They are also receptive to visitors. Most business transaction is handled formally. However, this might start with informal interaction as most Canadians like socializing. They have adopted an interactive lifestyle. All the cities of Canada are viable centers of active trading activities. Trade is part of the culture among the people of Canada. This is the reason why the country has an active economic environment. Canada has few minor lingual groups with a local dialect. Also, the presence of foreigners from different nationalities in the country has introduced other international languages.
However, such cases are very minor (Walker, Walker, and Schmitz, p. 91). Canadians are environmentally conscious because they actively participate in environmental protection. Therefore, for any business venture to gain the affection of Canadian customers, it must show concern for the environment. It must actively participate in environmental programs as part of its corporate social responsibility (“Economic Policy Reforms 2011: Going for Growth”, p. 12).
Conclusion and recommendations
Conclusion
Canada is one of the vast countries and has a relatively huge population. However, it is not as populated as its neighbor, the United States. Canada is one of the most developed countries in the world with a well-performing economy. This means that business is active in the country. In this case, the country has a favorable climate for investing. Foreign investment in the country is boosted by the fact that the country has created many trading agreements and regional economic agreements. These include NAFTA, GATT, and EU trade agreements among others. Many benefits of international trade come with these agreements.
It has opened up foreign investment in the country through the elimination of cross-border trade barriers. Canada has a stable federal government with stable provincial governments. This stability provides a favorable environment for investment. The government regulates or controls trade at different levels: the federal level and the provincial level. This ensures that trade activities run smoothly and efficiently across the entire country. Therefore, any firm can establish a business in almost all regions or provinces within the country because business services are not entirely centralized.
Recommendations
- Concerning setting up a business in Canada, the information gathered has enough supporting statistics that indicate the necessity for Northwest Hardware and Warehouse Company to move into Canada.
- It will be advisable for the firm to establish a subsidiary firm in the country. Since the different provinces of Canada have their laws governing business, it will be advantageous for the company to choose the province as its first location in setting up the firm. The most preferred province will be the province that relies significantly on the English language for easiness of transaction by expatriates.
- Machinery business is common in Canada. Therefore, it will be of help if the company conducts a feasibility study of the machinery business in the province chosen by the firm.
- The company can establish the firm in the country after evaluating the case for machinery business in a certain province. The performance outcomes of this firm will determine the establishment of other firms in different regions within the country. The assessment and evaluation can be done after two years. One year is given for adaptability.
List of Illustrations
Figure 1.0 Canadian GDP by industry Sector from 2001 – 2010.
Works Cited
Bernier, Luc, and Evan H. Potter. Business Planning in Canadian Public Administration. Toronto: IPAC = IAPC, 2001. Print.
Dickinson, Wright. Guide to doing Business in Canada. 2010 Edition. 2010. Web.
Economic Policy Reforms 2011: Going for Growth. Paris: OECD, 2011. Print.
Goodman, Davis. Doing Business in Canada: A Concise Guide. 2007. Web.
Industry Canada. GDP and Growth in the Canadian Economy. 2011. Web.
Kerr, Margaret H. and JoAnn Kurtz. Canadian Small Business Kit for Dummies. Mississauga, Ont: J. Wiley & Sons Canada, 2011. Print.
Kemerle, Sandra. Bilingualism and Multiculturalism in Canada. Seminar Paper. Canada. Grin Publishers 2003. Print.
Manta, Joe. 984 Hardware Companies in Canada. 2012. Web.
Walker, Danielle M, Thomas Walker and Joerg T. Schmitz. Doing Business Internationally: The Guide to Cross-Cultural Success. New York: McGraw-Hill, 2003. Print.
Whittle, Janet. Canada business: The portable encyclopedia for doing business with Canada. San Rafael, Calif: World Trade Press. 1997. Print.