International Business Expansion: A Case Study On Canada (essay).

Rationale behind selecting the country

Describe about the International Business Expansion and Country Analysis.

Rationale behind selecting the country:

The fisheries companies in Canada are one of the oldest sectors having the bright future opportunities. The increased profits from the Canadian fisheries have made it an attractive exploration target. The country has been processing fisheries and base for almost 150 years. The reason for selecting Canada as the country for the expansion of the business of Maldives Industrial Fisheries Company (MIFCL) is that Canada‘s fisheries industry is the major driver and employer in the communities of Canada and provides the vast opportunities for the expansion of the fisheries activities in the country and is one of the most valuable fishing industries all over the world (Fertelet al.2013).

Canada is the second largest country of the world and the country has a strong adherence to the French and Britain tradition. One of the primary industries in Canada is the fisheries industries and is the economic mainstay of approx 15000 communities in the Coastal and rural areas of Canada. Canada is one of the leading countries in the field of fisheries and contributes to the commercial landed fish species in huge way. The fisheries industry is also the contributor to the Canadian economy. The country in the 16^th century has emerged and the growth in the fisheries industries was expanded. The fisheries of Canada is intrinsic to the regional identities and the Maritimes of the country developed the large own fleet and lumbering, trading and ship building reinforced the coastal economy. The great lake fishery of Canada went through major changes in the composition of species and the fisheries company had adapted to the individual quotas and this made them gained a strong voice in the management which is provincially controlled. In the early 2000s, the fisheries in Canada were slowed down but it was regarded as the potentially stable sector. The value of export attributable from the fisheries during the year 2012 was over $ 3 billion. The sector of fisheries supported communities all over the country. The fish harvesters retained their traditional elements of self-reliant and adventure and they continued to gain in field of management and co research (Hutchings and Post 2013).

Pestle analysis of Canada:

Political aspect- The Canada’s political system functions within the federal system of the parliamentary government and has strong traditions of democracy and framework of the parliamentary democracy. The unemployment in Canada caused a major recession after the global financial crisis in the year 2008. The unemployment rate in Canada stands at 8.6%. The labor market in Canada lost about 224000 permanent jobs and 162000 full time jobs between October 2008 and 2010 (Fertelet al. 2013).

Literature review and critical analysis

Economic aspect– One of the wealthiest nations in the world is Canada and the GDP of the country stands at US $ 1.75 trillion. The country is ranked tenth among the top trading nations. The country has been transformed from the agrarian economy to such economic structure that is urban and industrial. The country is ranked seventh and is the largest exporter of seafood and fisheries. The value of export of fish during the year 2014 is 4.9 billion and the largest export market is United States. This is due to the impressive growth of the fisheries, manufacturing and the service sectors in Canada. The fishing sector provided direct jobs to more than 80000 Canadians. The trade relation of Canada with the US has led to the dramatic improvement and the US is the largest foreign investor, which make the investment in the fisheries and for the fish harvesters (Keeling and Sandlos2015).

Social aspect- The culture of Canada is fun, warmhearted, easygoing, polite, and kind. The culture and traditions of Canada has been influenced by the culture of French and Britain. The art, music, language and aboriginal people influence the identity of Canadian. The culture of Canada is being regarded as inherently multicultural there is multiculturalism in the cultural of Canada ).

Legal aspect- The Legal system of Canada has its foundation in the common law system of Britain, whichis inherited from the former colony of the UK and afterwards a member of the common wealth of nations. The legal system is subjected to the constitution of Canada. The constitution of Canada is of the supreme law and the law passed by the federal, territorial government would be regarded as invalid if it were not consistent with the constitution (Sandlos and Keeling 2015).

Technological aspect- The fisheries industries in Canada has the respected control system and fisheries inspection. Fisheries industries is emerging as one of the most technologically advanced sectors in Canada has one of the diverse industries and at least 12000 people are employed in this sector. The country offers a wide variety of fishes that is sustainably harvested from all across the country.

Environmental aspect-The department of the environment of Canada coordinates the environmental programmes and policies. This also provides for the enhancement and preserving of the renewable resources and natural environment. The climate of Canada is not cold throughout the year and the temperature falls below the freezing point during the winter. The climate is relatively mild in the southwestern coast. Southeastern and western Canada experiences high rainfall (Thistle and Langston 2016).

PESTLE analysis of Canada

Cost associated with the fisheries activities-The cost of carrying out the fisheries activities is ever rising in Canada due to the increase in the commodity price and continuing acceleration in the production. The Maldives Industrial Fisheries Company needs to formulate some strategies and bring the cost under control. This would be done by understanding the cost driver, enhancing the energy efficiency.

Labor crunch- There is the risk of shortage of the labor to power the growth of the fisheries company. The company needs to apply the workplace planning and introduce the cross training at the industry level.

Capital project quandaries- Due to the fluctuation in the price of commodities and the widening of the gap between the supply and demand, the capital project concerning fisheries would be mounting. Therefore, the fisheries companies needs to manage the risks so as to achieve the objective of steady production.

Analyzing the national competitiveness of target market using the Porter’s Diamond model:

Factor conditions- The position of Canada in terms of basic factor of production such as land, infrastructure, labor, natural resources. The factor condition also includes the advanced and the specialized pool of skills, infrastructure and technology, which has been tailored to meet the needs of particular industries operating in the country. The country is blessed with the rich abundance of natural resources and the advanced factors are a source of providing international advantage to the expanding company. The physical resources of Canada include a wide variety of nonrenewable and renewable resources encompassing foresting land, metals and minerals, energy and fisheries. The specialized infrastructure of the country provides the sustainable competitive advantage to the particular industries (Vaillancour and Waaub 2012).

Demand conditions-This condition tells about the nature of the demand of the home market for the output of local industries. In this context, the thing, which is of particular importance, is the presence of the local customers who are sophisticated and demanding that forms a pressure on the firms to make the innovation in the product. The needs of such customers help in anticipating the needs of the industries and companies. The emerging needs of the buyers in Canada are understood by the nature of the home demands. The industries in Canada have not been upgraded and the scope of innovation across the industries is constrained by the low cost orientation of the industrial buyers in Canada. The initial sales of the industries are mainly focused in the foreign market due to the conservative pattern in the adoption of technology (Vaillancourt and Waaub 2012).

Risk identification from the macro environmental factors

Firm structure, strategy and rivalry-This is another determinant of the national competitive advantage. The nature and the strategies of the company depend heavily on the national environment. The way in which the firms compete with each other depends on the difference between the business sectors of the different countries. If the Maldives Industrial Fisheries Company faces domestic rivalry in Canada, this would force the expanding company to be cost competitive and help it in becoming competitive and improving the quality. The international competitiveness of the company is determined by the international competitiveness of the company in which it is expanding. The firm in Canada has been forced to adapt to several strategies. The inclination on the cost based strategies is provided by the abundance of factor in Canada which has nurtured it. The foreign forms are prompted to establish the branch in Canada which is oriented solely to the domestic market of the country and this is due to the fact that the domestic industry are traditionally exposed to high tariff (Ajami et al. 2012).

Related and Supporting Industries- This tells us about the absence and presence of the internationally competitive industries and the other related suppliers in the country. The determinant includes the local suppliers that have specialized inputs such as components, services and machinery. This would help in the innovation of the industry by determining the factors that are integral to the innovation. The local companies in the fisheries industries that would relate by the skills, customers and technology is also included (Basuet al. 2015).

Threat of new entrants- The main barriers to the new entrant in the fisheries sector is the high cost of financing. A huge amount of capital is required to set up the fisheries into production. Canada being the seventh largest exporter of sea food would attract many fisheries companies to invest and Maldives Industrial Fisheries Company may face tough competition from them.

Customer bargaining power- The customers switch to another company in order to curb the costs and the Canadian market of fisheries holds the positive image in the mind of customers. As there are not many substitutes available to the consumers in the domestic market of Canada and the bargaining power of the customers is reduced. The impact of the price increases would get diminish as the intended company expanding in Canada focuses on retraining the long term relationship with the customers. Since the global macro environment is expected to stabilize. The upcoming position of the company is likely to be strong (Buckley 2016).

Analyzing the national competitiveness of target market using the Porter’s Diamond model

Supplier bargaining power- The supplier of components, services and raw materials are the source of power over the firm. If the company has a fewer choice of suppliers and is in need of the more suppliers, then the more powerful are the suppliers. The barriers from the supplier come from the fact that gaining permits from the mines can be quite difficult factor. The rules and regulation concerning the fisheries sector can be hindrance in establishing the fisheries by the Maldives Industrial fisheries companies (Cavusgil et al. 2014).

Competitive rivalry-The Maldives Industrial fisheries company would not compete on the price basis because it is set by the market. However, the companies would compete for land and Canada ha abundant sources of natural resources. The power of the company depends upon the reserves that the company is having and the discovery about the activities and scope of exploration depends upon the first come and first server basis.

Availability of substitutes-The Canada has the availability of substitutes in terms of fisheries and is from top Atlantic species such as snow crab, lobster, scallops, shrimps, Greenland Turbot. Canada has largest and most diversified fisheries in the world. However, in regard to the Maldives Industrial fisheries services, the available substitutes for raw materials is low and would be strongly placed due to the board and the diversified portfolio and would not be able to counter the threat of substitutes (De Jong 2013).

Assessment of the product concerning the domestic market that is Maldives:

The company has its major operation in Maldives and has a diversified portfolio of assets and is a renowned natural resources company. The company has its major operation and is based in Maldives and supplies the product such as yellow fin tuna, canned, frozen fish meal, smoked dried tuna. The company is engaged in processing of products of fishes in Maldives. The company is the largest operators of fisheries and has the setup of plants across the country to fulfill the global and the local requirement. However the demand and supply of fishes would get impacted by the rising cost of operations and the impact of the global warming which would affect the sea temperature and the consumption pattern of the people in Maldives is another impacting factor. The competency of company lies in fisheries sector and the fishing activities contribute to 11% GDP of Maldives (Forsgren and Johanson 2014).

Assessment of the product concerning the foreign market:

Maldives Industrial Fisheries Company Limited has been looking for the global opportunities due to the natural resources that are available and is accessible and has been discovered by the company. The company has sold its product to many countries such as south East Asia, United Kingdom, Europe without operating there. The company has focused on the international market by introducing range of products. The major products of company that is exported to the European Union and Asian market are frozen raw material and canned fish products. The operation in the UK is comfortably placed and it is the oldest supplier of canned tuna in Germany. The market growth in Thailand has grown significantly and the market base has expanded (Islam and Berkes 2016).

The cultural analysis of Canada is done by using the Holfstede model and the analysis is done based on six cultural dimensions of the country. Using this model, one country is distinguishing with another by using the cultural dimensions, which represents the independent preferences, about one state of affairs over another. The six dimensions comprised of power distance index, masculinity versus femininity, individualism versus collectivism, uncertainty avoidance, indulgence versus restraint, short-term normative orientation versus long term orientation (Holfstede et al. 2013).

In the analysis of culture of Canada, the home country selected for distinguishing is the home country of MIFCL.

The culture of Canada is regarded as the production laggard and the growth in the business of Canada is currently hindered by the unwillingness of Canadians businesses to make critical investments. Therefore, the culture of Canada is regarded to be of conservative type when it comes to make investment decisions. There is the culture of risk aversion and conservatism, which act as an obstacle in attaining the global competitive advantage. The culture of Canada lacks the entrepreneurial spirits and the people are little timid and of shy nature which restricts the Canadian from taking the financial decisions (Verbeke 2013).

The entry strategies for the MIFCL would be the joint venture.

The creation of the joint venture is the formation of partnership that leads the creation of the independently managed company. The two companies would agree to carry out their operation in the particular market either based on product or geographically. The risk and profits of the newly formed company are normally shared equally. This would enable the company to learn from other, the strategic goals of the partners should converge, and there is a divergence in the competitive goals. The venturing is controlled through the coordination and negotiation.

The assets are managed and operated by the Joint ventures. If the company uses the strategy of joint ventures as the entry strategy, the company would be able to participate in the original discover of fisheries and harvesters. This joint venture contract is for the long term purpose and the processing of the fisheries would take place with the facilities of the joint venture. The company has its operation with the joint ventures in many other countries. The partnership is on the proportional basis. The capital outlay of the MIFCL would be shared with any of the fisheries companies of Canada. If the alliance is formed with the business that is indigenous then the intervention of the government is reduced and simultaneously the risk is also reduced. The company would be able to gain better ‘local market intelligence’ which would be provided by the partner of the joint venture (Poulis et al. 2013). However, there can be the conflict of interest between the parties regarding the invested amount, sharing of profits, management, marketing strategy.

Global strategies are aimed at achieving the objectives of international expansion and comprise of three types of the international expansion. The expansion of the company mainly arises from its capability, resources and the current position that it is holding at the international level. In this case, the world is treated by the organization as one market and there is only the one supply source having little variations. The competitive advantage of the company is developed on the global basis. The global strategy would provide the company with the economies of scale and scope and with the lower cost of labor and global brand recognition (Stahl and Tung 2014).

International strategy- This is the global plan that is specific to the company, it is the action taken by the multinational, and the strategy is based on the resources of the home market. The company would be provided with the large base of the customers

Transnational strategy- The Company opting for this strategy seeks for the middle ground between the global strategy and multi-domestic strategy. This type of company tries to balance the desire for the efficiency and within the various countries; there is the need to adjust to the local preferences.

SWOT analysis to summarize the overall findings-

Strength-The fisheries opportunities in Canada are huge and provided a broad scope of entrepreneurial opportunities and employment and benefit all the area of province. The company expanding the business would be benefitted with the wide opportunities offered. One of the safest industries in Canada is the fisheries and is the largest employer in the private sector. There are huge of people directly employed in the base fisheries of Canada. The population of Canada is relatively healthy and has healthy population of fish. Co management and the success of fisheries is another opportunity and the association of fisheries is strong and effective. There is many IQ fisheries management to the fishing industries.  

Weakness-The people of Canada are risk averse and are conserved and there is a lack of the entrepreneur skills. There are many mining industries in Canada and the MIFCL would face a tough competition with those companies. There is lack of economies of scale due to increased cost of labor and there is poor market concerning few species such as chum and oink salmon. The government and industry are reluctant in changing and cooperating. The fisheries industry in Canada does not have adequate financial rewards which is the reason behind the lack of crew labor.

Opportunity-The Canada is the leading country in the harvesting of fisheries and it would remain the major global fisheries industry which is supported by the stable operating environment and vast reserves. The fishery industry is heavily reliant on trade, which would give MIFCL many opportunities. The province can improve the processing by bulk zoning the broad areas of aquaculture development.

Threats- There is the potential of decline in the resources due to climatic changes and urban encroachment. There is uncertainty in the process of claiming aboriginal land. The dollar of Canada is strengthening which would be threat to MIFCL and there is the lack of support from public and community in supporting the commercial fishery.

The recommended entry strategy for MIFCL is the joint ventures, as it would provide the company with the ample benefits. The company would be able to look into the original sources of exploration and harvesting of fishes. The partnership of the selected company using the joint ventures would act as the source of supply for the host country. The financial strength of the company would be strengthened and there is the sharing of the risk. The company would be able to know how the process, the technology, and the combination of the foreign partner with the local in depth knowledge would boost the ability of the newly managed company.

The recommended internationalization strategy for the selected company is the global strategy. The reason behind this is that there are benefits of adapting to the global strategy. The company would be able to gain access to the mineral resources of the Canada and would enjoy the benefits of the economies of scale. There is also the high potential for the demand of the product globally. The competitive strategies of the company would be controlled by the home office of the country. Since Canada has the adequate fisheries resources, the company is able to buy the raw material in bulk and thus saving on the cost and enjoying economies of scale.

Familiarizing with the basics of culture of the host company, that is Canada and the company needs to get acquainted with the culture and learn about the cultural competence

Conducting research of the target market since the decision making, ideologies and demand of customers varies greatly with the culture

Being acquainted with the needs of the customers is an important aspect to overcome the cultural differences.

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