ECONOMIC ENVIRONMENT OF BUSINESS
Trimester III
CASE REPORT
On
Automotive Industry of Canada in Dwindle
Submitted To: Submitted By:
Dr. Veena Keshav Pailwar Section B || Group No - 3
Aditi Bhandakkar 2015073
Anshuman Thakur 2015085
Brajesh Lahoti 2015090
Prathamesh Dicholkar 2015094
Radhika Rathi 2015111
Varddhaman Jain 2015126
INTRODUCTION
Automotive industry in Canada consists of primarily assembly plants of foreign automakers having their headquarters in US and Japan, along with hundreds of manufacturers of automotive parts and systems. The Canadian automotive industry is integrated into NAFTA (Canada, US, Mexico), globally competitive, and is the 8th largest in the world with positive trade balance, and also a major contributor
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The reason was the lack of investments in the industry as compared to the other countries like Mexico, United States etc. This was benefiting the other countries and the investors were driving away from Canada. Canadian Dollar appreciation had made the automotive raw material (parts, oil, etc.) and the finished goods prices dearer and the labor prices which were previously cheaper were becoming expensive. This resulted in the major automotive companies to move out of Canada, hence affecting the GDP of the country and the employment.
Now the major question arises that should the Canadian Government be dependent on just Automotive industry? Will the employment problem be aggravated if the Canadian Government shifts its focus to other industries? Will the shift be helpful in bringing more foreign investments in the country?
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With Canadian auto industry now accounting for 15.6% sales only in North America compared to 17% in 2010 and an increase in 4000 jobs since 2009, making it a clear cut understanding that the Canadian Auto Industry is slowly decelerating. Since the Auto Industry is on a decline and eventually would reach to the shutdown point, unemployment would take place on a massive scale, so in order to curb down unemployment during the upcoming event, Carmakers should open up avenues featuring like after sales service, ancillary industries i.e. Car accessories, manufacturing of parts, etc. Similarly, Government should also invest money in retraining the unemployed workers in other sectors. With the decline in the auto industry, the Canadian government should try to focus onto different sectors which are growing at a good pace instead, like Tourism & Hospitality, Manufacturing, Oil, Natural Gas & Banking and Finance. A recent research conducted by Deloitte Inc. suggested that the increase in Tourism industry was $100 Million generating $69 Million in indirect spending. The research also suggests that Canada’s 2015 international arrivals have grown at the same rate as the U.S., Canadian export volumes would have risen by $4.1 billion, which is nearly as much as Canada exports to Brazil and Russia combined ($4.3 billion).
During 2014 there was an ethical dilemma that occurred at Canadian Tire. There was an employee named Samantha and she held the position of a Supervisor at Canadian Tire. Canadian Tire would give out Canadian Tire money to their clients depending on how much they have spent at the store and this was basically a marketing strategy for Canadian Tire whereby the clients could use the Canadian Tire money to purchase merchandise at the store. Samantha was in charge for restocking the Canadian Tire money at all times. Every time Samantha restocked the Canadian Tire money she would always withdraw few dollars out for herself and make adjustments on the paperwork and she would go to the Canadian Tire Gas station and purchase gas for herself. She went
To begin with, the companies of USA were located in Canada, even if they are controlled by USA. “The US companies built the factories in order to avoid the tariffs when they import the wares to Canada” (Bell, 2012, para.1). In other words, as the US companies could establish many factories in Canada as well as they circumvented the importing tariffs, they could get double profits by both two advantages of setting up the branch plants. Additionally, since the branch plants, partially for automobile companies, thrived, many Canadian auto-industries lost their control. “It was in these boom years, as well, that Canadian control of the industry was lost, as the US automakers with whom the Canadians had partnere...
Ultimately, however, it is Canadian exporters of all sizes and in all industries that make this relationship as successful as it is. In 2003, Canada exported approximately C$365 billion worth of goods and services to the U.S., while it imported nearly C$280 billion from its southern neighbour. In fact, U.S. exporters sold more goods to Canada in 2003 than they did to the European Union.
...nguage, and religion all make up Canada’s human face, but also front how the cultural accommodation will continue with the risk of losing Canada’s main traditions. Faultlines again come into perspective within demographic issues, especially with newcomers/old-timers, aboriginal population expansions, and French/English language. The core/periphery model is also represented. The end of the chapter places a focus on Canada’s economic face as well, dealing with stresses inside the global economy as well as its strong dependency on the U.S markets (Bone, 169) especially with the stimulating global recession. Canada’s economic structure leans on the relative share of activity in the primary (natural resource extraction), secondary (raw material assembly), tertiary (sale/exchange of goods and services), and quaternary (decision-making) sectors of the economy (Bone, 166).
People outside of Canada are baffled at how Canada ended up in such a state of affairs. Canada as a country has a lot going for it. A high GNP, and high per capita income in international terms. It is ranked at the top of the...
spending in Canada was 24.4% greater than in the U.S. and if you subtract the
Over the past few years, Canada's economy has done comparatively well and has demonstrated some resilience to the fluctuating global economy. However, Canada remains to be relatively less competitive with respect to other developed countries. In this paper I will attempt to take a closer look at Canada's position in the global economy today and examine the relevant issues.
Employment Opportunities in Canada Canada has always been a dream destination for people around the world to live and work. Citizens of UAE are constantly looking for Canadian visa to enable them work and live in this wonderful country. Due to the continuous application of Canadian Immigration Visa around the world, it has become difficult to get one and this is a challenge people with the dream of travelling to Canada are facing in UAE. It is a known fact that Canada provides several employment opportunities to people from other countries that have the required skills and are passionate about living and working in Canada. These employments opportunities are made possible because of the fact that Canada has a viable and striving economy with
Based on current issues of Honda, Honda Canada announced that it will export vehicles to Europe for the first time. They stated that Honda’s decision to build it’s the next generation of EU-destined CR-Vs in Canada is a result of the Historic free trade agreement we reached in EU, which provides preferential market access to a half-billion new customer. Under Canada-EU Agreement, the European Union will eliminate 10% tariff on the passenger of vehicles, providing Canada’s automakers with a competitive advantages in the EU market. The EU also eliminates – upon the agreement coming into effect – its tariffs on auto parts, which run as high as 4.5%. How Honda penetrate their business in China Honda entered the Chinese market in 1982 by cooperated
The third journal that was done was about how China has shown plans to open up a trading hub for its currency to encourage trade between Canada and China. As a result of this, exports will increase which will allow for companies to grow themselves and this will lead to a creation of more jobs, thus a movement towards the economic goal of full employment.In addition, by encouraging trade between the two countries, both have the opportunity of economic growth. With the increase of the injection known as exports, more money flows into the economy’s income spending stream allowing for economic growth the occur.Another goal that the hub achieves, is the goal of economic efficiency. If China specializes in a certain industry that Canada struggles in, then the trade would allow Canada to instead use those resources in areas that Canada may be better in, for example fishing. This would allow Canada to employ its limited resources in a way to achieve highest
I Canada’s Poor Productivity Performance Canada is unique, since the quality of life for Canadians is phenomenal, yet, our productivity growth is quite poor in comparison to other first world countries (Alini, 2013, para. 1). Productivity growth is important, since it increases our purchasing power, and the quality of life of its citizens (Alini, 2013, para. 1). Prior to the 1980’s, Canada faced high inflation, growing public debt, internal and external trade restrictions, and high rates of taxation (Alini, 2013, para. 4). However, many benefits were awarded with the North American Free Trade Agreement (NAFTA), inflation-reducing budget cuts from the Bank of Canada, and a reduction in corporate taxation, and yet to no avail (Alini, 2013, para.
And Outsourcing the assembling of auto parts to Mexican plants. Canadian suppliers must compete based on lowest-cost, highest-quality, high value-added; components. The low value of the peso will encourage parts and vehicle sourcing from Mexico while discouraging exports to the Mexican vehicle market. Global competition will intensify for both parts companies and assemblers, particularly as emerging countries struggle to develop their economies, many using the automotive sector to spur economic growth.
Canada's labour productivity growth has lagged behind the US numbers for over 30 years and could be from a number of possible explanations. One reason in particular could be the sluggish innovation in the information technology industry. The tertiary sector of the global economy has been increasing in the last 30 years. However, Canada has been emphasizing focus on the primary industries such as mining and agriculture and the secondary industries like
Because of Canada’s low population the country is forced to sell to other countries which in return is a massive boost to the Canadian economy. However Canada needs to improve and adapt to meet the worlds
- Our foreign debt rose from $41 billion to $194 billion in the first few months of 2010. - Our economy is currently stable but the country is troubled by our slow-growth. We are the second largest country in the world yet we have only about 35 million people. - Another problem that troubles us is our higher-than usual unemployment rates. -As we all know Canada is a multicultural country.