Letter of Transmittal
May 03, 2012
The Chief Executive Officer,
Northwest Hardware and Warehouse
100 Freeway Exchange Provo, UT84610 (801) 555-4685 www.northwesthardware.com
Dear Sir:
Attached here is the report that you requested in the month of April this year. This report contains all the details of the survey on the possibility of moving Northwest Hardware and Warehouse Company operations in Canada. Also in the report are the recommendations made basing on the analysis of the findings. These recommendations can act as a basis upon which the company will make a choices and decisions on this on the subject of this report.
During the survey, my team paid respect to all the aspects that affect the business environment in Canada. Both the micro and macroeconomic factors were surveyed as they both impact on business. Factors that were given full attention by the company include politics, the 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 Canada in any of the provinces in the country.
There are many hardware businesses in Canada. However, the outcome of the survey indicates the high number of hardware business does not imply that business in this sector is closed up. The demand for hardware materials still remain high and significant.to add to this, there are many foreign companies 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 Canada. I would like to thank you in for giving me the opportunity to conduct this survey as it also opened me up to many aspects of international commerce. If clarification of any detail is needed, I will be available.
Sincerely
Executive Summary
This is a comprehensive report of a survey done to ascertain the business aspects in Canada and how they can influence the establishment of a firm by a foreign company – Northwest Hardware and Warehouse. This survey was meant the company to decide on whether to move into the country and set-up a firm there or not. This report is divided into various sections. These are introduction, the main section and the conclusion and recommendations section.
The introduction is a summary of the way the survey was conducted. The introduction elaborates on the modalities that were used to do the research. It explains why it was necessary to do this research. The introduction has also explained the general methodology that was used in doing the research and the factors that limited the research.
The main section of this report is this paper is the most comprehensive detail of this report. It contains the real facts and figures or comprehensive information about Canada as it pertains to business. Three major areas of business are investigated and a report given in this section. These are the economic climate in the country – covering business laws and policies and how they can influence operation of foreign investors. The second part under this section is the part of the 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 better the business climate for both local and foreign investors. There is also a section that gives information about the culture and the customs of the people of Canada.
The last part of this section 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 decision.
Introduction
Purpose, scope and assumption
For the company to remain relevant in business there is a need to venture into the newer markets. Opening firms in new markets is one of the steps that help in achieving this objective. To ascertain whether it will be sustainable to start firms in Canada, I conducted a survey on the business environment in the country and how it influences the performance of hardware business which is what the company deals in. 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.
Methods
This report thus 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 areas affect business both directly and indirectly.
The data that was used for coming up with this report was extracted from books, magazine, journals and other online and academic sources.
Limitations
This survey was limited to the materials that could be availed from the library of the university. We majorly relied on secondary resources to gather facts about business in Canada and made recommendations basing on the information that we managed to access.
Location
There are more than 900 major hardware companies in Canada. These companies are located across the country. Each of the three major cities of Canada has a share of these companies. As most of the hardware companies, especially the ones dealing in domestic hardware products are located in cities. As the company will be dealing in hardware machinery, it will be wiser to do strategically locate the firm in places where there are lots of construction works or near industries. All the cities have a relatively high number of factories which is the reason why many of these firms are located in the cities (Manta, pp. 1).
Business Environment – Policies and Laws in Canada
Economic performance of Canada
Canada is a very affluent society operating like the US. Its economic system is market oriented. It has highly skilled workforce and high standards of living. The major 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. This has aided in changing business deals in the country particularly by opening by eliminating business restrictions to foreign firms. Canada is also a party to GATT. Over the last twenty years, it has been entering trade relations with other countries across the world with the aim of opening up business opportunities for the country. The country has well established and independent financial institutions. It has been termed to be the country with the most efficient financial institution in the world. The include banks and other micro-finance institutions. This favors business in the country in two ways. The first one is that it encourages financing of business. In the recent past, the financial sector has been undergoing more reforms in order to raise the participation of foreign companies (Whittle, pp. 208-210).
The Investment Canada Act abbreviated as ICA has been in place since its enactment in the year 1985. This act promotes both domestic and foreign investment in the country. The major body that deals with the 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 namely the provincial, federal and the territorial levels. Therefore, any new or foreign investor has to be aware of this as it has been reported to be the major 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 their pros and cons. Non-residents are provided with several options when it comes to establishing 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 totally new corporation. This is known as a subsidiary (Industry Canada, para. 1-5).
For the last ten years, Canada has had a fairly stab le economy with a stable GDP. Only minor fluctuations have ben witnessed in the GDP. Most fluctuation in the GDP have emanated from external economic pressures like the global financial crisis (Industry Canada, para. 1-5).
Many sectors in the Canada have been recording high income thus boosting 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 time periods.
Gross Domestic Product (GDP) by Industry Sector: 2001-2010
Canadian Economy (NAICS 11-91)
NAICS
Code
Sector
GDP* (millions of chained 2002 dollars)
CAGR**
2001-2010
% Change
2009-2010
2001
2010
11
Agriculture, Forestry, Fishing and Hunting
24,674
26,357
0.7%
0.3%
21
Mining and Oil and Gas Extraction
51,236
53,930
0.5%
4.8%
22
Utilities
27,384
29,845
0.9%
-0.2%
23
Construction
55,542
73,856
2.9%
6.6%
31-33
Manufacturing
181,084
159,740
-1.2%
5.7%
Goods Producing Industries
(NAICS 11-33)
339,779
347,710
0.3%
4.9%
41
Wholesale Trade
53,438
69,513
2.7%
5.3%
44-45
Retail Trade
55,234
76,319
3.3%
3.8%
48-49
Transportation and Warehousing
50,176
58,439
1.5%
4.3%
51
Information and Cultural Industries
36,498
45,634
2.3%
0.7%
52, 53, 55***
Finance and Insurance, Real Estate and Leasing and Management of Companies and Enterprises
196,769
257,454
2.7%
2.6%
54
Professional, Scientific, and Technical Services
47,453
60,804
2.5%
0.6%
56
Administrative and Support, Waste Management and Remediation Services
22,820
30,566
3.0%
1.6%
61
Educational Services
50,675
62,626
2.1%
2.2%
62
Health Care and Social Assistance
67,198
82,962
2.1%
2.3%
71
Arts, Entertainment and Recreation
10,142
11,265
1.1%
0.9%
72
Accommodation and Food Services
24,950
27,410
0.9%
2.6%
81
Other Services (except Public Administration)
26,101
32,483
2.2%
1.6%
91
Public Administration
59,705
74,892
2.3%
2.3%
Services-Producing Industries
(NAICS 41-91)
701,115
890,219
2.7%
2.6%
Canadian Economy
(NAICS 11-91)
1,040,943
1,233,611
1.9%
3.3%
Figure 1.0 Canadian GDP by industry Sector from 2001 – 2010
Source: Industry Canada
Just like many countries in the world, Canada has laws which govern the establishment of a business in the country. The time taken to establish a business in Canada is shorter. It will take a foreign company a maximum of one week to undergo all the procedures of opening a firm in the country. For a company to establish a business in the country there is need to acquire business permit or license from the government. Licenses and permits must be acquired from the municipal, provincial and the federal governments. There are many online databases which assist people who have intentions of moving into the country to open business operations. BizPal is one such company. Therefore one needs not to physically present himself in the country to get the figures and facts about the business environment in Canada. Business procedures have also been put online enabling to complete business transactions using online services. This helps in cutting down costs and increases efficiency of doing business. There are also firms which gives advice to foreign companies or subsidiaries. They do interpret business laws and policies governing business in Canada. These firms attach the companies to legal professionals who help the companies to go through the steps of business set-up with ease (Goodman, pp. 1-20).
Labor policies
The Canadian government has continued to work towards ensuring that it eliminates barriers to conducting business in the country. The government has revised its labor policies. In the 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 room for the entry of foreign workers or staffs in the country. Also the country has been involved in trade talks with the European Union and is supposed to coin favorable trade agreements that will foster trade exchange between Canada and the European Union members through the elimination of tariff and non-tariff trade barriers (Economic Policy Reforms 2011, pp. 74-78).
Market entry and competitors
As noted earlier, the business environment in Canada is highly competitive. There are many firms in the country dealing in hardware products. Some of these companies for instance 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 Wright, pp. 14-24).
Different companies deal in the export of machineries while others only transact business at the global level. Therefore it is possible for a company to enter the country and seek for market of machinery or hardware products outside the country. The products are easily fund in the country therefore diversity is the key asset for any company that chooses to conduct such a business in Canada (Kerr and Kurtz, np).
The Political Environment of Canada
Government organization
Canada is a federal republic that uses a parliamentary system of governance. It is divided into two major territories. There are a total of ten provinces in the country. The country has approximately 35 million people according to the latest census results. Canada is rich in natural resources and has been categorized among the most developed states in the world. Canada is a stable country which has enjoyed a peaceful environment. The country has good relations of trade with many other countries across the globe (Bernier and Potter, pp. 3-10).
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 marketing activities of firms located within their territory (Economic Policy Reforms 2011, pp. 78).
Customs and Behaviors of the Canadians
Language
Canada is a bilingual country. There are two lingual groups in Canada. 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 aright to make transactions either in the English Language or in the French Language. The official languages has an impact on business in the country as it calls for bilingual labeling especially so for the essential product information. This information include the manufacturing address, generic name of products, the information on product ingredients and the information on health and safety of the product (Kemerle, pp. 4-15).
Culture
Canadians are generally polite and transacts in a diplomatic way. They are also receptive more so to visitors. Most business transaction is handled in a formal way though 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 of the people of Canada. This is why the country has ever busy or active economic environment. Canada has few minor lingual groups who have a local dialect. Also the presence of foreigners from different nationalities in the country brings in other international languages. However, such cases are very minor (Walker, Walker and Schmitz, pp. 91).
The Canadians are environment conscious. Thy actively participate in environmental protection. Therefore for any business venture to gain the affection of Canadians thence customers, it must show concern for the environment. It must actively participate in environmental programs as part f its corporate social responsibility.
Conclusion and recommendations
Conclusion
Canada is a large country with a relatively large population though it is not as populated as the neighboring countries for instance the United States. It is one of the most developed countries in the world with a well performing economy. This means that business is active in the country. The country therefore has a good climate for investing. Foreign in vestment in the country is boosted by the fact that the country has entered many trading agreements and regional economic agreements. These include NAFTA, GATT, and EU trade agreement among others. Many benefits of international trade come with these agreements. It has opened ump foreign in vestment in the country through the elimination of cross trade barriers.
Canada has a stable federal government with stable provincial governments. This stability gives a good environment for investment. The government regulates or controls trade at different levels; the federal level and the provincial levels. This ensures the trading activities run smoothly and efficiently across the entire country. Therefore any firm can establish business in almost all regions or provinces in the country because business services are not entirely centralized.
Recommendations
With respect to the setting up a business in the Canada, the information gathered has enough supporting statistics w2hmichindictae that it will be worthwhile 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 has it specific laws governing business it will be good for the company to choose on province as its first location and set up its firm there. The most preferred province will be the province that mostly transacts in English for easiness of transaction by the expatriates.
Machinery business is common in Canada. It will thus be of help if the company conducts a feasibility study of the machinery business in the province chosen by the firm.
After evaluating the case for machinery business in the specific province, the company can then establish the firm in the country. The performance outcomes of this firm will determine the setting up of other firms in different regions in the country. The assessment and evaluation can be done after two years. One year is given for adaptability.
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