Diploma Management Individual Assignment
Individual Business
Report FUNM 1100
Student Name:
Student ID:
Class:
Lecturer’s Name:
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Executive Summary
The objective of this report is to explore the viability of Puawei Pty Ltd of extending
their operations to Canada. The results of the report indicate that opportunities exist
in political, economic, socio-cultural, technological and legal environment while the
economic and technological environment presents as threats. According to the
findings, the opportunities outweigh the threats. Therefore, it is recommended that
Puawei Pty Ltd expand to Canada by outsourcing from other Canadian company as
the company has no experience in expanding overseas.
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Table of Contents
1.0 Introduction 4
2.0 Political Environment 5
2.1 Government Stability
2.2 Government Relations
2.3 Analysis
3.0 Legal Environment 7
3.1 Business Laws
3.2 Labour Laws
3.3 Analysis
4.0 Economic Environment 9
4.1 Current Exchange Rate
4.2 Economic Trends / Forecasts
4.3 Analysis
5.0 Socio-cultural Environment 12
5.1 Hofstede’s Cultural Dimensions
5.2 Analysis
6.0 Technological Environment 14
6.1 Technological Infrastructure
6.2 Communication Networks
6.3 Analysis
7.0 SWOT Analysis 17
8.0 Conclusion 18
9.0 Recommendations 19
References 20
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1.0 Introduction
An Australian-owned electronics manufacturer company named Puawei Ptd Ltd is
considering to expand their business operations into Canada. Resources required for
manufacturing are divided into three categories – raw materials, technology and
skills. The objective of the report is to investigate the political, legal, economic, socio-
cultural and technological environments (PESTL) of Canada. This report covers the
strengths and weaknesses of the company, opportunities and threats of expanding
business into Canada and recommendations on expansion. The suggested
expansion strategy is outsourcing form Canadian supplier as the company has no
experience in expanding overseas.
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2.0 Political Environment
2.1 Government stability
Canada is a politically stable country which is governed by a parliamentary system
which spans 4 years per election (Ferris and Olmstead 2017). Canada is ranked the
84th percent for Political Stability and Absence of Violence and Terrorism and also
97th percent for Government Effectiveness as stated by The Worldwide Governance
Indicators (WGI) project (Edunova 2019).
Figure 1: Political risk index of Canada
Source: Figure reproduced from The Global Economy (2019).
Based on the graph above, he political risk index of Canada has been increasing
over the last few years but drops slightly in 2017. This could be due to the influx of
refugees that they have accepted into their country. Overall, Canada is still a safe
and stable place for businesses to hold their operations at.
2.2 Government relations
The Australian and Canadian governments have a very good trade relationship with
one another and both countries are members of the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (Austrade 2019). Canada is also a member
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of the Group of Seven (G7) which has Free Trade Agreements with huge nations
such as US and Mexico which indicates their friendliness toward foreign investments
(Edunova 2019).
The positive political relations may facilitate the company with regards to obtaining
resources for their manufacturing plant.
2.3 Analysis
Political stability in Canada and the positive government relations with other large
countries exhibit as an opportunity for Puawei Pty Ltd as these conditions point to a
suitable environment for conducting operations.
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3.0 Legal Environment
3.1 Business laws
Figure 2: Canada Corruption Rank
Source: Figure reproduced from Trading Economics (2019).
The ease of doing business in Canada has dropped throughout the years with
Canada ranking in the 22nd worldwide (Trading Economics 2019). On the brighter side,
Canada has an extremely low level of corruption, ranking 9th in a least corrupt nation
study (Trading Economics 2019).
Both Australian and the Canadian legal systems are based on the English common
law which makes it easy for Australian businesses to adapt to since both countries
have similar laws. The only exception in Canada is the State of Quebec which based
their laws on the French Civil Code (Bullock, 2016).
The high similarity of legal systems for both countries makes it convenient to conduct
business in Canada.
3.2 Labour laws
Labour laws in both countries are slightly different, with the maximum number of
working hours for a week being 48 hours in Canada (Government of Canada 2017) and
38 hours in Australia (Fair Work 2019). However, both countries have relatively high
minimum wages – ranging from $11.00 to $15.00 depending on the province in
Canada (RCC 2019), which is comparable to the $18.93 of Australia (Fair Work 2019).
Both countries signed an agreement also known as ‘’the 1957 agreement’’ to avoid
double taxation and use similar systems like dividend imputation to do so (IBFB
2008).
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3.3 Analysis
The legal environment poses as an opportunity since both countries have similar
laws, it makes it convenient for Puawei Pty Ltd to do business in Canada as they do
not have to adapt too much, making it easier to conduct business in Canada.
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4.0 Economic Environment
4.1 Currency exchange rate ($)
Figure 3: AUD to CAD Chart
Source: Figure reproduced from XE (2019).
As of 31th March, the currency conversion rate of 1 AUD equals to 0.95 CAD (XE
2019). Based on the graph above, the currency rate for both countries can be
considered stable. Currency stability is very important because it will affect the
financial status of companies.
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Figure 4: USD to CAD Chart
Source: Figure reproduced from XE (2019).
The exchange rate for 1 USD is 1.34CAD (XE 2019). According to the graph above,
the highest and lowest points of the graph fluctuate within 0.4. Thus, indicates that
Canada’s currency is stable even when pitted against the strong US dollar.
4.2 Economic forecasts
Table 1: Canada Economic Forecasts
Overview Actual Q2 Q3 Q4 Q1 2020
GDP Growth Rate (%) 0.1 0.5 0.6 0.2 0.5 0.6
Unemployment Rate (%) 5.8 5.8 5.8 5.8 6.3 6.7
Inflation Rate (%) 1.5 1.4 1.7 1.9 2.1 2.2
Source: Table reproduced from Trading Economics (2019).
Canada has a low GDP growth rate which indicates that the economic situation of Canada is
weak. Increasing unemployment rate may be great for the company as the new operation
needs labor. The inflation rate will then affect the purchasing power of the Canadian dollar
(Trading Economics 2019). These negative indicators indicate that Canada’s economy
is experiencing recession.
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4.3 Analysis
Overall, even though the currency exchange rates are stable, the indicators in the
economic forecasts shows negative impacts on business. Thus, the economic
environment can be concluded as a threat to future business operations.
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5.0 Socio-cultural Environment
5.1 Hofstede’s Cultural Dimensions
Figure 5: Hoftstede’s Dimension Comparison
Source: Figure reproduced from Hofstede Insights (2019).
Hofstede’s Cultural Dimensions
Australia Canada Implications
Collectivism vs Individualism
Individualism Individualism Canadians answer only to themselves and have a high sense of self- reliance.
Power Distance Low PD Low PD Canadians are less formal with regards to workplace hierarchy and communicate openly
Uncertainty Avoidance Moderate uncertainty avoidance
Moderate uncertainty avoidance
Canadians embrace the unknown and are willing to try something different
Time Orientation Short time orientation
Short time orientation
Canadians focus on instant gratification rather than deferred gratification.
Femininity vs Masculinity Moderate Masculinity
Moderate Masculinity
Canadians prefer a balance between work and life
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51
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61
80
39
48
36
52
0
10
20
30
40
50
60
70
80
90
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Individualism Power Distance Uncertainty Avoidance
Time Orientation Masculinity
Australia
Canada
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5.2 Analysis
According to the chart above, there are many similarities between Australia and
Canada with regards to the Hofstede’s dimensions. Socio-cultural environment
poses as an opportunity as Puawei does not need to make much changes with it
managerial style and functions as what works in Australia should work in Canada.
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6.0 Technological Environment
6.1 Technological infrastructure
In terms of technology and innovation, Canada has slipped from 9th to 12th placing in
recent years. Countries like Australia and Japan are continuing to improve while
Canada lacks behind (The Conference Board of Canada 2018). In spite of the Canada’s
efforts to enhance its unenlightened commercial innovation performance, the
situation continues to exasperate (Toronto 2015). This may affect labour productivity
and cause manufacturing processes not to operate at their maximum potential due to
the lack of technological infrastructure.
In Puawei’s situation, being a smartphone company means that it needs a high level
of innovation because the smartphone technology moves at a very fast pace. Setting
up a business in Canada may be detrimental to the company’s R&D sector.
6.2 Communication networks
Figure 6: Smartphone Penetration Rate in Canada 2014-2013
Source: Figure reproduced from Statista (2019).
Since Puawei is in the smartphone business, it is also important to look at Canada’s
smartphone user penetration. According to the chart above, Canada has a high
percentage of smartphone penetration and this already high figure is expected to
increase in the next few years.
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Figure 7: Number of internet users 2000-2016
Source: Figure reproduced from Statista (2019).
Smartphones are complemented with internet service and in 2016, online services
reached 81.19% of the entire population (Statista 2019). The graph above shows that
the time Canadians spent online are increasing gradually every year. This shows that
the online service market is huge and will grow bigger.
Figure 8: Fixed broadbrand Internet prices
Source: Figure reproduced from Dobby (2016).
The chart above shows that the prices of internet services in Canada are approximately
the top of numerous developed countries.
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6.3 Analysis
Even though the high-level penetration of internet users present itself as an
opportunity, the low level of innovation and high prices for internet services in
Canada presents as a threat to the business. Therefore, we conclude that Canada’s
lack of innovation with regards to it technological infrastructure will affect Puawei
which relies on innovation in the smartphone industry to keep a competitive age will
suffer.
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7.0 SWOT Analysis
Strengths Puawei Pty Ltd has:
Profuse financial capitals
Long history in manufacturing business
Striking smartphone design
Good company image
Weaknesses Puawei Pty Ltd has:
No experience in expanding overseas
Deficient knowledge about international business
Weak marketing capability
Insufficient manpower resources
Opportunities Canada has: Political Environment
Stable and safe environment
Friendly relationships with neighbouring countries Legal Environment
Low level of corruption
Similar legal systems with home country Economic Environment
Stable currency Socio-cultural Environment
Similar cultures with home country Technological Environment
High number of internet users
High number of smartphone users
Threats Canada has: Economic Environment
Higher currency
Bad economic forecast Technological Environment
Low level of innovation
High prices of internet services
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8.0 Conclusion
According to the results of the research, the external environment which includes
political, legal, and socio-cultural environment presents itself as opportunities while
economic and technological environment presents itself as threats. Overall, the
strengths and opportunities outweigh the weaknesses and threats. It can be
concluded that a promising future presents positive business prospects for Puawei
Pty Ltd.
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9.0 Recommendations
According to the results od the report, it is advisable that Puawei Pty Ltd expand
their operations into Canada by following recommendations:
Expand only manufacturing department to Canada
Retain Research and Development departments in Australia
Train a Canadian manger to oversee the process due to similar cultures
Invest in a manufacturing plant that has lower minimum wage
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Reference List
Bullock, Lara. 2016. “Northern Exposure.” Lawyers Weekly. https://www.lawyersweekly.com.au/features/18625-northern-exposure
Canada – Economic Forecasts – 2019-2021 Outlook. n.d. Trading Economics. 01/04/2019.
https://tradingeconomics.com/canada/forecast
Canada Corruption Rank. n.d. Trading Economics, 01/04/2019
https://tradingeconomics.com/canada/corruption-rank
Canada Corruption Rank. n.d. Trading Economics, 31/03/2019.
https://tradingeconomics.com/canada/corruption-rank
Canada Falls in Conference Board’s Innovation Rankings, As Weaknesses Persist. n.d. The
Conference Board of Canada, 01/04/2019.
https://www.conferenceboard.ca/press/newsrelease/2018/05/14/canada-falls-in-
conference-board-s-innovation-rankings-as-weaknesses-persist
Canadian Economy and Political Stability. 2019. Edunova, 01/04/2019. https://studynovascotia.ca/canadian-economy-political-stability/
Country Comparison. n.d. Hofstede Insights, 28/03/2019. https://www.hofstede-
insights.com/country-comparison/australia,canada/
Dobby, Christine. 2019. “How Canada’s Internet, wireless rates compare with international
prices.” https://www.theglobeandmail.com/report-on-business/how-canadas-internet-
wireless-rates-compare-with-international-prices/article31379589/
Ease of Doing Business in Canada. n.d. Trading Economics, 03/04/2019.
https://tradingeconomics.com/canada/ease-of-doing-business
Export Markets – Canada. n.d. Austrade, 31/03/2019/ https://www.austrade.gov.au/Australian/Export/Export-
markets/Countries/Canada/Doing-business
Ferris, J Stephen and Derek E. H. Olmstead. 2017. “Fixed versus flexible election terms:
explaining innovation in the timing of Canada’s election cycle.” Constitutional Political
Economy 28 (4): 117-141. https://search-proquest-
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tid=1038
Hours of Work. n.d. Government of Canada, 28/03/2019.
https://www.canada.ca/en/employment-social-development/programs/employment-
standards/federal-standards/work-hours.html
IBFD. 2008. “Convention Between Canada and Australia for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on
income.” Australia – Canada Income Treaty.
https://commonlaw.uottawa.ca/15/index.php?option=com_docman&task=doc_
download&gid=1990
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Minimum Wage by Province. n.d. Retail Council of Canada, 01/01/2019.
https://www.retailcouncil.org/resources/quick-facts/minimum-wage-by-
province/
Statista. 2019. Smartphone Penetration Rate as Share of the population 2014-2023.
https://www.statista.com/statistics/472054/smartphone-user-penetration-in-canada/
Toronto, Marketwired. 2015. “Science, Technology and Innovation Council: Canada’s
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E0PQ/4?accountid=10382
XE Currency Charts: AUD to CAD. n.d. XE, 31/03/2019.
https://www.xe.com/currencycharts/?from=AUD&to=CAD&view=5Y
XE Currency Charts: USD to AUD. n.d. XE, 04/04/2019.
https://www.xe.com/currencycharts/?from=USD&to=CAD&view=5Y
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https://www.theglobaleconomy.com/Canada/wb_political_stability/