Canada’s two largest and most important industries are logging and oil. The eight dimensions of business culture in Canada and the differences with US. Things to consider for US business retailers who wants to expand to Canada. How the free trade agreement between US and Canada started and settled into NONFAT. The investor wanted to invest in Canada can get benefit from NONFAT provisions.
Canada has bilateral trade agreements between, European Union and Asia. SOOT analysis of doing business in Canada Keywords: Business cultures, Canada, Trade Analysis, Import, Export, SOOT Analysis Global Business Cultural Analysis: Canada The breakthrough in technological advancement has made the world feel lot closer than before. The markets previously unreachable can be reached with an ease. The corporations are maximizing their profits from doing business around the globe. As per consumer, the products that are common on industrialized countries only, can be bought on the local market.
All these happened because of the international business. Canada is the 2nd largest country in the world. Canada is the 2nd largest country in the world with population over 30 million. According to MIFF and World Banks GAP ranking, Canada has the 10th largest economy in the world. Heritage Foundation ranks Canada 6th in terms of economic freedom. (Business vibes, 2012) Canada’s two largest and most important industries are logging and oil. Also, it has 8th largest commercial fishing and seafood market of the world.
Canada’s manufacturing sector heavily relies on production of automobile and aircrafts. But the service sector employs 75 percent of Canadians, which makes it most dominant. Other industries includes energy (vast natural resources) and agricultural. (Business vibes, 2012) This research project is aimed to help us understand the business cultures of Canada and Canada’s role in the world economy today. A. Introduction 1 Brier history Canada is the world’s 2nd largest nation in the world. It has diversified cultural heritage with over 30 million people.
British and French colonized the Canada but the wave of immigrants from Asia and other European countries have diversified the culture. Canada is officially bilingual country. English is the main language but you ill have to give equal recognizable to French speaking minorities. Canada has large number of immigrants coming from all over the world. So business managers have to consider meeting people from the different cultures than French and British. (Business vibes, 2012). 2. What are the major elements and dimensions of cultures in Canada?
On this section, I would be discussing the elements and dimensions of the cultures in Canada. The paradigm of culture can be broken into several categories: communication, religion, ethics, values and attitudes, manners and customs, social structure and education. The global manager should be knowledgeable of these dimensions and adapt accordingly. 3. 1 Communication: The global manager, in order to success in this fast paced world, he should have adequate knowledge of communicating with its counterpart. The people from different culture speak differently.
The high and low context of communication style of English speaking Canadian and French speaking Canadian. Canadian people tend to be very reserved. Both French and English Canadian use a firm handshake with eye contact when meeting and leaving. Usually male counterparts wait for female to extend their hands for a handshake. French Canadian will shake hands more frequently than English Canadian. Using person’s title are if they have are highly recommended if not Mr… , Mrs… , Miss and the surname are preferred. French Canadian uses their first name when talking on the phone but use their full name when meeting in person.
French Canadian prefers open conversation with body language and sign. But English Canadian prefer reserved conversation, they think it as a confident and credible. French Canadian stands very close to you while talking but give enough space. While dealing with French Canadian, all the business related trial should be printed in English and French. While talking, don’t say “we American”, it infers that we are including our Canadian host and they might feel it offensive. (Roberts and Taylor, “Canadian business etiquette”, 2012) 3. 2 Religion: Canada is culturally diversified country.
The religions are diversified as well. The predominant religions in Canada are Catholicism which represents 42 percent of its population and Christianity who represents 40 percent. The other religions are Muslims, Sikhs, Hindus, Buddhists and minor religions. The heavy concentrations of Catholics are in Quebec and most of them are French Canadian. This is because the 83 percent of the French people are Catholics. When settlers arrived from France and England, they tend to promote their religion and as a result the Canada has been diversified in religion.
English settler were mostly Christian, thus the Christianity became other predominant religion in Canada. And the floods of immigrants from Asia, Europe brought their religion to diversify Canadian culture are religions. (Roberts and Taylor, “Canadian business etiquette”, 2012) 3. 3 Ethics: Ethics are denned as the moral value. Deterrent people nave deterrent moral compass. Some people will do anything to success in business. They will use coercion, corruption or bribery to get the favorable outcome from their business venture.
These practices are widely accepted in developing countries. But it has been practiced by the business officers from the developed countries to get the positive result for doing business in the developing countries. Canada didn’t have regulatory governing bodies like US securities and Exchange commissions and foreign corrupt practice acts till 1996. Canada’s business ethics have been frame worked by broader socio-political and socio-economic factors. In order to satisfy the growing concerns from US and Europe, Canadian business ethics evolved.
It has been shaped by pressures from Canadian society, share ownership from churches, responsible institutions, ethical investors, self-interest of executives. Canadian citizens concern in health, conscience, the environment and the good corporate governance has helped to shape the business ethics. As Canada’s economy became dependent in global market, people became more aware of the ethics in business places. (Brooks, 1997). The ethical investors who wish to invest which reflect their value screen their investment portfolio to make sure they don’t violate environmental, health laws.
Brooks, 1997) The group like social audits by the United Church of Canada, Task Force on Churches and Corporate Responsibilities (TACT) and Fairest Securities Corporations are most significant ethical investing firms in Canada. Also the development of regulatory centers like Canadian Center for Ethics and Corporate Policy (SPEC) and the Centre for Corporate Social Performance and Ethics (SCOPE) has created the code of ethics by which the Canadian companies get the guidance to improve their ethical performance. (Brooks, 1997) Mr…
Colic Boyd, (Boyd, 1997) feels that in two areas where Canadian business ethics are varies with there countries. The social activist organization, like Greenback, attacks on business ethic on harvesting baby seal and fur-bearing animals. The other areas where Canadian business attitude differs from the other countries are in the issues like ageism, sexism and gender preference. (Boyd, 1997) 3. 4 Values and Attitude: Culture cannot be defined without defining values and attitude of its people. Culture is accumulation of values, rituals, norms and traditions that set apart the members of one society to other. Hygiene, 2011). The language, organization and technology are the most important elements of culture. Colleens and Dam, 2007) According to Colleens and Dam (2007) values are perceived as broader tendencies to prefer certain states of affairs over others. The values are basis of standard by which norms are developed. (Easterlies, 2009, p. 51) According to Easterlies (2009), attitude is what one thinks or feels about someone or something. Canadian business managers attitude are strict as they want you to be punctual for meeting and appointments.
French Canadian have relaxed attitude but you should be punctual even if they are not in time. Canada has the highest ranking individualism in Hypotheses ranking that earns Canada has society with individualistic attitude and doesn’t bond well with others. They look out for themselves and their families. They value their privacy as their cultural norm and wouldn’t share with someone outside their comfort zone. (Roberts and Taylor, “Canadian business etiquette”, 2012) Canadian people don’t like gender discrimination. Male and female works in the co-operative work environment Witt mutual respect to each other. 3. 5 Manners and Customs: Canadian people have their own manners and customs. The Canadian people prefer businessmen and women to wear dark colors business suit with tie, and quality either shoes. Classic clothes that are neat and clean are preferred than new fashionable clothes. While you are not in business or at work, you should wear casual dress considering the weather. If you are showing for victory’ sign your palm should be outward, sign in with your palm inward meaner insult. (Roberts and Taylor, “Canadian business etiquette”, 2012) Canadian business cultures are strict on their attitude towards time.
You are expected to be punctual for meetings and appointments. Mostly in French speaking areas like Quebec, time is far relaxed than other places. But you are expected to be punctual even your host is not on time. Canadian people are of reserved demeanor and they expect you to be as well. Canadian people don’t like people eating and walking on the public. The gift giving is not widely popular in Canadian culture but after finalizing the deal, a nice gift of wine or liquor for office is always appreciated. Canadian people rarely invite you to their home.
Canadian people don’t talk business during or after a meal. If you have extra ticket to sporting events, play or symphony, taking your Canadian counterparts is always a nice gesture. When you are in English speaking cities, don’t gesture by hand or move your body too much and there is rarely touching except handshakes. But in French speaking areas, people stand close and will touch and gesture frequently. (Roberts and Taylor, “Canadian business etiquette”, 2012) Both French and English Canadian use a firm handshake with eye contact when meeting and leaving.
Usually male counterparts wait for female to material should be printed in English and French. (Roberts and Taylor, “Canadian business etiquette”, 2012) 3. 6 Social structure and organization: Easterlies (2009) described social structure as the organization of its institutions, social group, statuses and roles. (Easterlies, 2009, p. 4) Canada doesn’t have distinctive social structure and it’s confirmed by Hypotheses Power distance dimensions. Power distance is determined by the how much the culture accepts the importance of position that separates people. Macomb and Worthily, 2007) Canada has low Power distance which meaner it is acceptable to address superiors with their name. Canada also has equally distribution of wealth and social programs. Canada has income equality, larger middle class and spends two third of their tax revenue in social programs. (Macomb and Worthily, 2007) Canada has low score of 39 comparing o world’s average of 55, which indicates that greater level of equality between social, government, organization and timeliest. However, French Canadians are more doormat, hierarchical than English Canadian. Cultural Insights, 2013) 3. 7 Education: The Canadian school systems are different from each province. They do not have federal department of education, all the policy making are done on provincial level. The ten provinces and three territories are responsible for organization, delivery and assessment of education in elementary, secondary, technical, vocational and post- secondary levels. The schooling is mandatory to the age of 16 in all provinces of Canada, except on New Brunswick and Ontario where the mandatory age is 18.
School usually starts on September of every year and end on June of next year. Both English and French medium for education are provided depending on the area where enough students are speaking the secondary language. According to the government report, each provincial are unique and so are the curriculum and assessment which expresses the geography, history, language, culture of that province. The child generally starts kindergarten at age five. Depending on the roving, the elementary school usually includes grade one to six, after that Junior high for seventh and eighth.
Some province doesn’t have Junior highs, so elementary school includes grade one to eighth. And after elementary or Junior high, high school are from nine to twelve. But in Quebec, high school ends in eleven and followed by a program that prepares student for university or technical field. After high school, people can go to vocational school, technical school or university. (Working in Canada, 2012) 3. How are these elements and dimensions integrated by locals in conducting business in Canada? Canadian businessmen/women are very proud of their culture.
The Canadian culture can co mingles with any other culture. Rushers explains that we are attracted to people whom we think have similar culture and we keep distance from we think are dissimilar to us. (Hygiene, 2011) Many researcher believe that difficulties, costs, conflicts, communications and risks dramatically increase when two culturally different people do business. (Hygiene, 2011) The research done by Mr… Hygiene (2011) shows that linguistic commonality has positive implications but the cultural distance and religion doesn’t seem to be significant to international trade.
Heritage Foundation ranks Canada 6th in economic freedom. (Business vibes, 2012) Canadian business cultures support the new entrants in their market. If you want to invest or expand your business in Canada, I would recommend all the documents to be in English and in French, as Canada is officially bilingual country. Lots of legislations are regulated by provincial government. To protect their culture from foreign invasion, Canada has placed certain foreign investment and antitrust laws. Canada has lower threshold when it comes to acquisition of sensitive sectors including cultural business.
Delaine and Para, 2009) Delano and Para (2009) defined cultural business as the publisher, distributor and sellers of books, magazines, newspapers, music, audio, film, video, music video recording and broadcastings. If it’s direct acquisition minimum threshold is C $5 million and if it’s indirect minimum threshold is C$ 50 million. (Delaine and Para,2009) Canada has distinctive laws regarding real estate acquisition. Some Canadian provincial jurisdiction, who regulates by local municipal government, challenges new entrants in the area to real estate assembly and zoning approvals.
Deletion and Para, 2 The consumer protection legislation falls under provincial government, which regulates sales to consumers, mandatory disclosure requirements of consumer agreements and limit the retailer’s ability to exclude statutory implied warranties. (Delano and Para, 2009) The Canadian provincial legislations are more favorable to trade unions. Delano and Para (2009) wrote that if retail employees are not unionized, provincial employment standards legislation provides protections.
The privacy laws, regulated by both provincial and federal level, dictate the retailer and there business connections with the collection, storage and use of the personal information of customers and employees. (Delano and Para, 2009) Canada has placed various investment restrictions like investment screening, domestic content, performance requirements and rules in interest of protecting Canadian culture. (Price and Christy, 1995) Not to mention, the immigration laws in Canada are getting tougher and tougher, to control the flows of immigrants from all over the world.
Finally the Canadian Federal Income Tax Act requires all non-resident person or corporation to pay income tax on its taxable income. Cavetti, 1991) Beside federal taxes and provincial taxes, there is an additional tax of goods and service tax which is imposed on purchasers of goods and services. (Cavetti, 1991) Canada wants to open their market to world and at the same time protects its rich culture and heritage. 4. How do both of the above items compare with US culture and business? Many people make the mistake of thinking Canada and USA has same culture, being next to each other.
But Canada is the independent country with its own rich heritage and culture. In this section, I will try to differentiate between the two countries. . 8 Cultural difference in US: USA and Canada share the border but their cultural heritages are different and so are the business cultures. 4. 1. 1 Communication: Communication wise English Canadian and American people are not so different. Both offer a firm handshake with eye contact upon greeting and leaving. If you meet your good friend, you hug briefly. The little difference in introduction style is that if there is title it’s same way, if using Mr… Ms. , Mrs… , Americans use full name not only surname. Americans exchanged business cards during introductions so as their Canadian counterparts. Roberts and Taylor, “United states of America”, 2012) Unlike Canada, America is not bilingual country. 4. 1. 2 Religion: Like Canada, USA is also the predominant Christian country, about fifty six percent of population and the Catholicism followers are twenty eight percent of population. The other religions that are on rise in America are Jews, Muslims, Hindus, Buddhist, Atheist and other minor religions. Roberts and Taylor, “United states of America”, 4. 1. 3 Ethics Ethics are important to Americans. There are regulatory bodies like US Securities and foreign Exchange, Foreign Corrupt practice acts which protects the individuals from read and unethical business practices. Boot Canada and USA NAS strong penalties and punishment for corporations or people using unethical business practices or fraud. (Boyd, 1997) 4. 1. 4 Values and Attitude Easterlies (2009) described values as an interpretation of culture by society members.
A successful business manager should take care in consideration of values and attitude of host culture. American business managers like their Canadian counterparts are strict on concept of time. American has the highest ranking individualism in Hypotheses dimension which meaner like Canada, American is also the society with individualistic attitude and look out for themselves and their families. American people don’t like any kind of discrimination of gender or race. (Roberts and Taylor, “United states of America”, 2012) 4. 1. 5 Customs and Manners American customs and manners are relatively similar to Canadian.
Like the Canadian people American businessmen and women prefer to wear dark colors business suit with tie. When doing business in rural area , men can come to business meeting without wearing a Jacket and or tie and women can wear dress, or skirt and blouse. Clean and neat clothes are preferred to fashionable and trendy one. Roberts and Taylor, “United states of America”, 2012) American people values time as money and are very strict on punctuality. Canadian people are of reserved demeanor and they expect you to be as well. Unlike Canadian people American people talks about business during meals.
The gift giving is not widely popular in American culture as well but after finalizing the deal, a nice gracious note is always appreciated. However, American people accept invitation to meal or accept modest gift which doesn’t appear as bribe. (Roberts and Taylor, “United states of America”, 2012) American like OTOH French and English Canadian use a firm handshake with eye contact when meeting and leaving. Using person’s title are if they have are highly recommended if not Mr… , Mrs… , Miss and the full name are preferred. When departing, usually business cards are exchanged.
In rural area, you will be greeted hello rather than hand shake. (Roberts and Taylor, “United states of America”, 2012) 4. 1. 6 Social Structure and Organization Like Canada, USA doesn’t have social structure. According to Hefted power distance, USA scores 40 in compare to world’s 55. The society has been equally integrated and there are no class systems. Hefted linked lower power distance with opportunities for benefiting from and access to social programs. (Macomb and Worthily, 2007) Canada has score of 38 which is pretty close to USA but the difference remains.
The Canadian health care system has effective safety net for the lower income population than US. That meaner poor Canadian has better health care than the poor American. (Macomb and Worthily, 2007) Also Canada shows more income equality and larger middle class than America. (Macomb and Worthily, 2007) 4. 1. 8 Education: Education system in America is decentralized, federal government reserves power for laity and assurance of education over states, city and local authorities whereas in Canada province control over the quality of education.
But they share similarities in schooling, kindergarten, followed by elementary and middle school, high school and then postsecondary education like vocational, technical or college. (Organization to US education, 2008) Beside the similarities and differences in dimensions of culture, I further researched into political culture in USA and Canada. The article by (Olsson, Morris and Bedevil, 1996) presents the Seymour Martin Ellipse’s theory that the orientation of two nations gave rise to two distinctly different cultures.
English Canadians supported royal crown and develop positive view of government and related institutions which resulted in values centering on particularistic, elitism and collectivism. But American rejects the crown rule and developed egalitarian and universal values. Furthermore Lipase stated that “America is country of revolution, Canada of the counter-revolution”. Destructive argued that Americans are individualistic and suspicious of institutions but Canadians are more collectivist and supportive of their institutions.
American people being individualistic attitude and pro-choice, forty five percent favors abortion but Canadian being collectivist attitude, only thirty two percent favors abortions (Olsson et al. , 1996) In the article by Mr… Robinson, Lipase and Melt, argues that Canada’s labor law is more union friendly, supports unions and their objectives creating higher union density level than Americans. In this same article, Ingather and his coauthors compares USA and Canada in two dimensions: first on the materialist/postmodernist spectrum and the second on attitude towards religion authority.
On the first spectrum, Canada and USA re identically on the axis but in second spectrum the difference is higher. (Robinson, 2006) The USA and Canada are quite much alike in social diversity but there are differences when it comes to work related issues. The research by (All, Falconer and Zamia, 1995) showed that American displays more education to work and have less interest in leisure activities than Canadian. (All et al. , 1995) This article compares USA and Canada on Hypotheses dimensions of culture.
Hypotheses dimension of culture includes four theories: Individualism, Power Distance, Masculinity and Uncertainty Avoidance. (Easterlies, 2009, p. 56, 57) The article by Macomb and Worthily (2007) compared the cultural closeness of USA and Canada on three dimension; individualism, power distance and uncertainty avoidance. (Macomb and Worthily, 2007) Hefted ranked the USA and Canada close on all dimensions of culture. Then they are grouped in categories of cultural clusters based on their scores on uncertainty avoidance (low), power distance (low) and individualism (high).
Bowman observed that there are significant difference in linguistic orientation within the political system, public policy and national culture. This led to 2nd hypothesis by Macomb and Worthily (2007) that the Canadian sample will demonstrate lower uncertainty avoidance than US sample. However this hypothesis was supported by the findings of significant difference in uncertainty avoidance. Canadian sample has lower level of uncertainty avoidance than the US sample. (Macomb and Worthily,2007) (iii) Individualism defines as the individual nature where people take care of them and those near to them.
It has been correlated to western free market economies. Both US and Canada ranks in top twenty economies. Individualism can be linked to freedom of press. (Macomb and Worthily, 2007) In the recent study of 194 nations, the US and Canada tied for the ranking on freedom of press which shows that both countries have similar individualistic characteristic. Thus Macomb and Worthily (2007) proposed third hypothesis that Canadian and US samples will have similar propensities for individualism. As predicted, there is no significant difference on culture of individualism in both countries. Macomb and Worthily,2007) (iv) Masculinity determines how much the society care for the traditional masculine work role model of male achievement, power and control. (Easterlies, 2009, p. 57) Both Canada and the US have higher ranks on masculinity dimensions which mean the higher degree of gender differentiation of roles. Roberts and Taylor, “United states of America”, 2012) 5. What are the implications for US businesses that wish to conduct business in that region? After satisfying the local needs, any profit oriented firm looks forward to expand to next market. It could be next city, state or country.
So, when US business retailer looks to expand to new market, it targets Canada because of its similar business culture and its long border with US. Also, except some part of Canada, like in Quebec, everyone speaks English. However, businesses managers are highly recommended to learn French in case you have to deal with business manager from such part. In this part of research paper I am going to talk about important things to remember when doing business in Canada.
The province of Quebec imposes their own French language relating to labeling signage and advertising. (Delano and Para, 2009) The consumer protection acts, which are governed by province, regulate sales to consumers, establish mandatory disclosure requirements and limit the retailer’s ability to exclude statutorily implied warranties. (Delano and Para, 2009) The employment legislations are regulated by roving and tend to be more favorable to trade unions. The entitlements of vacation time, exemptions from overtime are firmly established.
If you fired someone, it will cost more than in US, there is no at-will employment is not recognized. .(Delaine and Para, 2009) The privacy law are regulated by both federal and provincial government. The Canadian privacy legislation prohibits retailer from collection, storage and use of the personal information of customers and employees. (Delano and Para, 2009) The Canada’s intellectual property laws are regulated by federal government, it is advised that act swiftly to get domain name even before announcing the intention of expansion. Delano and Para, 2009) If you decide to send some of your employees to Canada, you need to arrange proper visas or work permits in advance to avoid delays and complications. (Delano and Para, 2009) Canada has a 5 percent national value added tax known as Goods and Service Tax (SST) which is in addition to provincial sales tax (SST). (Delano and Para, 2009) Finally I want to talk about tax implication of doing business in Canada. If US retailer opens up permanent establishment in Canada, the profit earned will be subjected to Canadian federal income tax. Cavetti, 1991) If US retailer does business in Canada through the use of sales person, it is considered as nonresident and has to file Canadian federal income tax under The Canadian Federal Income Tax Act. (Cavetti, 1991) If US retailer wants to open a Canadian branch, the taxation on those branches is determined as if it was a separate entity. The branch is subjected to branch tax in addition to federal income and capital taxes. The income or loss on Canadian branches is included in US income tax return as foreign tax credit. (Cavetti, 1991)
When US Corporations opens Canadian corporations as their subsidiary, it will be taxed as a foreign branch. The dividends and interest paid by such subsidiary to its parent companies are subject to Canadian non-resident withholding tax. Those dividends and interest received are included in income the gross amount and is allowed foreign tax credit for 1 5 percent Canadian nonresident withholding tax when filing in US tax return. (Cavetti, 1991) For the employees, the federal law dictates the employer to withhold wages and remit income tax; Canadian pension plan contributions and unemployment insurance contributions and it also require