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1.How is corporate social responsibility (CSR) an issue in this case? In your answer, consider the four levels of CSR.

2.Why should Joe Fresh be expected to act in accordance with societal expectations?

3.What kinds of obligations should companies like Joe Fresh have toward the people in other countries who make its products?

The Context of Business Understanding the Canadian

Business Environment

Len Karakowsky York University

Natalie Guriel York University

Toronto

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Library and Archives Canada Cataloguing in Publication

Karakowsky, Len, author The context of business: understanding the Canadian business environment/Len Karakowsky, York University, Natalie Guriel, York University.

Includes bibliographical references and index. ISBN 978-0-13-291300-3 (pbk.)

1. Canada–Economic conditions–21st century–Textbooks. 2. Canada–Economic policy–Textbooks. 3. Business enterprises– Canada–Textbooks. 4. International business enterprises– Textbooks. I. Guriel, Natalie, author II. Title.

HC115.K342 2013 338.971 C2013-907169-5

ISBN 978-0-13-291300-3

www.pearsoncanada.ca
Brief Contents

Part 1 A Framework for Study 1 Chapter 1 EXPLORING CANADIAN BUSINESS

A CRITICAL APPROACH: What are the Major Challenges Facing Business? 1

Part 2 The Internal Challenges 40 Chapter 2 THE EMPLOYEE–EMPLOYER

RELATIONSHIP: What Responsibilities Do Bosses Have to Their Employees? 40

Chapter 3 MANAGING THE WORKFORCE: How Can Business Leaders Best Manage Their Employees? 77

Chapter 4 ESTABLISHING THE STRUCTURE OF A BUSINESS: What Does Organizational Design Have to Do with Business Success? 116

Chapter 5 BUSINESS STRATEGY: How Do Businesses Generate a Successful Strategy? 159

Part 3 The External Challenges 193 Chapter 6 ECONOMIC FORCES: Oh Canada,

What Is Your Economy Like? 193

Chapter 7 COMPETITIVE AND TECHNOLOGICAL FORCES: How Do Industries Evolve over Time? 234

Chapter 8 GLOBAL FORCES: How Is Canada Faring in the Global Village? 268

Chapter 9 POLITICAL FORCES: Where Would Canadian Business Be without Our Government? 309

Chapter 10 SOCIETAL FORCES: Can Corporations Be Socially Responsible to All Stakeholders? 353

Part 4 Adaptation and Change 404 Chapter 11 THE CHALLENGE OF SUSTAINABILITY:

Why Does Business Need to Focus on Sustainability? 404

Chapter 12 CONFRONTING CHANGE: How Do Businesses Address the Challenge of Change? 448

iii

iv

Contents

Preface xii

Acknowledgements xvii

About the Authors xviii

Part 1 A Framework for Study 1

1 Exploring Canadian Business: A Critical Approach What Are the Major Challenges Facing Business? 1

Learning Objectives 1

THE BUSINESS WORLD: CAN CANADIAN TIRE FLOURISH IN A RAPIDLY CHANGING BUSINESS CONTEXT? 2

The Internal Context of Business 4 The Employment Relationship: Responsibilities Toward Labour 5 Leadership and Effectively Managing People 5 Developing a Suitable Organizational Structure 6

TALKING BUSINESS 1.1 Changing GM’s Organizational Structure 6

Generating a Winning Business Strategy 7

The External Context of Business 7 Specific or Task Environment 7 General Environment 8 Sustainability 11 The Challenge of Change 12

The Canadian Context: How’s Business in Canada, Eh? 12

Economic Forces in Canada 13 Competitive Forces in Canada 16 Technological Forces in Canada 18

TALKING BUSINESS 1.2 Growth in Provincial Labour Productivity: A Problem from Coast to Coast 20

Global Forces in Canada 22 Political Forces in Canada 25

TALKING BUSINESS 1.3 Jobs, Productivity, and Innovation: How Health Care Drives the Economy 25

Societal Forces in Canada 28

CHAPTER SUMMARY 29

CHAPTER LEARNING TOOLS 35 Key Terms 35 Multiple-Choice Questions 35 Discussion Questions 36

CONCEPT APPLICATION: FACEBOOK: WHEN YOUR FRIENDS ARE WORTH A BILLION! 36

Part 2 The Internal Challenges 40

2 The Employee–Employer Relationship What Responsibilities Do Bosses Have to Their Employees? 40

Learning Objectives 40

THE BUSINESS WORLD: IS WORKING FOR FREE ILLEGAL? 41

The Labour Environment and Canadian Society 43 Distinguishing Work and Employment 44

TALKING BUSINESS 2.1 Are Unpaid Interns “Employees”? 45

What Is an Employee? 46 From Standard to Nonstandard Employment Relationships 47 Perspectives on Work and Government Policy 48

The Labour Context in Canada: Where Are We Now? 52

TALKING BUSINESS 2.2 The State of Canadian Unions—Down but Not Out 53

TALKING BUSINESS 2.3 Are Unions Relevant in Canada Today? 55

Dismissing Employees 55 Common Law Rules Requiring Notice of Termination 56

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Statutory Minimum Notice of Termination 57 Unemployment Insurance Programs 58

Current Issues in the Workplace: Managing Workforce Diversity 58

Protecting Diversity and Guarding Against Discrimination in Canadian Law 58

TALKING BUSINESS 2.4 Organizations Seeing the Light about Faith at Work 61

TALKING BUSINESS 2.5 He Says, She Says: Gender Gap Persists in Attitudes Toward Women’s Advancement in the Workplace 63

TALKING BUSINESS 2.6 Aboriginal Workers: Integral to Canada’s Ongoing Competitiveness and Performance 65

TALKING BUSINESS 2.7 Ontario Employers Have a New Tool to Improve Accessibility for People with Disabilities 67

The Model of the Employment Equity Act 68 TALKING BUSINESS 2.8 Employment Equity Resources 70

TALKING BUSINESS 2.9 Immigrants Make Significant Contributions to Innovation 70

CHAPTER SUMMARY 72

CHAPTER LEARNING TOOLS 72 Key Terms 72 Multiple-Choice Questions 72 Discussion Questions 73

CONCEPT APPLICATION: IMMIGRANTS ARE SOMETIMES UNSURE ABOUT THEIR LABOUR RIGHTS 74

3 Managing the Workforce How Can Business Leaders Best Manage their Employees? 77

Learning Objectives 77

THE BUSINESS WORLD: LEARNING HOW TO BE AN EFFECTIVE LEADER: LESSONS FROM THE EXECUTIVE ROUNDTABLE 78

Why Study Management Thought? 80 What Do Managers Do ? 81

The Roles Managers Play in Organizations 81

TALKING BUSINESS 3.1 The Visionary Leader: Steve Jobs 84

TALKING BUSINESS 3.2 Conflict Management: The Toxic Employee 85

Management Philosophies 88 Classical Approaches to Management 88

The Social Context 88 Scientific Management 89 Administrative Management 92 Bureaucratic Management 92

TALKING BUSINESS 3.3 Leading Teams in a New Direction 93

The Classical Approaches in Perspective 96 TALKING BUSINESS 3.4 Is Weber Alive and Well? 96

Behavioural Approaches to Management 98

TALKING BUSINESS 3.5 The High Costs of Workplace Harassment 99

The Human Relations Movement 100 Mary Parker Follett (1868–1933) 100 Chester Barnard (1886–1961) 101 Modern Behavioural Science and Motivation-Based Perspectives 102

The Best Management Philosophy? Contingency Approach 102

TALKING BUSINESS 3.6 The Myths and Realities of Motivation 103

The Critical Importance of Trust in the Workplace 106

TALKING BUSINESS 3.7 How One Canadian Company Earns Trust 107

Trust, Teamwork, and Citizenship 108 TALKING BUSINESS 3.8 How Teams Learn at Teleflex Canada 109

CHAPTER SUMMARY 111

CHAPTER LEARNING TOOLS 111 Key Terms 111 Multiple-Choice Questions 111 Discussion Questions 112

CONCEPT APPLICATION: KICKING HORSE COFFEE 112

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4 Establishing the Structure of a Business What Does Organizational Design Have to Do with Business Success? 116

Learning Objectives 116

THE BUSINESS WORLD: HOW GOOGLE DESIGNED ITSELF FOR SUCCESS 117

The Changing Nature of Organizations 119 Flat Organizations 120 Fluid Organizations 120 Integrated Organizations 121

TALKING BUSINESS 4.1 Atlantic Canada’s Overseas Playground? 122

Global Organizations 123 Thinking About Organizations 123

What Is an Organization? 123 Using Metaphors to Describe Organizations 124

The Anatomy of an Organization 127 What Constitutes an Organization’s Structure? 127

What Determines Organizational Structure? A Rational Perspective 131

Strategy 131 Organizational Size 132 Technology 132 Environment 132

TALKING BUSINESS 4.2 Canada’s Trade in a Digital World 134

Reengineering 136

TALKING BUSINESS 4.3 The Credit Agency 137

TALKING BUSINESS 4.4 Former Outsourcer Describes How Job Destruction Works 139

Toward a Virtual Organization 140 Outsourcing 140

TALKING BUSINESS 4.5 Out-of-Control Outsourcing Ruined Boeing’s Beautiful Dreamliner 142

Networking 143 Shedding Noncore Functions 143

Downsizing 145

TALKING BUSINESS 4.6 Loblaw Cuts 700 Head Office Jobs 146

Methods of Downsizing 147 Consequences of Downsizing 148

TALKING BUSINESS 4.7 What Every Leader Should Know About Survivor Syndrome 150

Why Has Downsizing Failed to Achieve Anticipated Results? 150 Downsizing as a Nonrational Approach to Organizational Structure 152

CHAPTER SUMMARY 155

CHAPTER LEARNING TOOLS 155 Key Terms 155 Multiple-Choice Questions 155 Discussion Questions 156

CONCEPT APPLICATION: PIXAR: NO MICKEY MOUSE ORGANIZATION! 157

5 Business Strategy How Do Businesses Generate a Successful Strategy? 159

Learning Objectives 159

THE BUSINESS WORLD: TIM HORTONS: IS ITS STRATEGY “ALWAYS FRESH”? 160

What Is Strategic Management? 162 Analyzing the External Environment 163

The Five-Forces Model 163 TALKING BUSINESS 5.1 Changes in Global Food Sector Call for Canadian Food Strategy 165

TALKING BUSINESS 5.2 Foresight and Innovation: Today’s Science Fiction, Tomorrow’s Reality? 169

Analyzing the Internal Environment 169 The VRIO Model 170

TALKING BUSINESS 5.3 Groupon 171

SWOT Analysis 172 Different Levels of Strategies 173

Business-Level Strategy 173 TALKING BUSINESS 5.4 Dollarama Cashing in on Penny-Pinching Canadians 175

TALKING BUSINESS 5.5 FROGBOX: a sustainable franchising success 177

Corporate-Level Strategy 179 TALKING BUSINESS 5.6 American Airlines Merges with US Airways 180

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TALKING BUSINESS 5.7 Loblaw Gets into the Mobile Phone Market 183

TALKING BUSINESS 5.8 Starbucks Buys Its First Coffee Farm in Costa Rica 184

TALKING BUSINESS 5.9 Understanding the Deal: Shoppers Drug Mart and Loblaw 186

CHAPTER SUMMARY 187

CHAPTER LEARNING TOOLS 188 Key Terms 188 Multiple-Choice Questions 188 Discussion Questions 189

CONCEPT APPLICATION: LULULEMON: FOR THE LOVE OF YOGA 189

Part 3 The External Challenges 193

6 Economic Forces Oh Canada, What Is Your Economy Like? 193

Learning Objectives 193

THE BUSINESS WORLD: CANADIANS ON THE MOVE 194

The Economic Environment 197 Individuals 197 Businesses 197

TALKING BUSINESS 6.1 Canada’s People Advantage 199

Government 200 Analyzing the Economy: Two Approaches 200

TALKING BUSINESS 6.2 Growing Gap of Truck Drivers Will Be Costly to Canadian Economy 201

Types of Economic Systems 201 Market Economy 202 Communism 202 Socialism 203 Mixed Economy 203

Competition and the Economy 204 Types of Competition in Free Markets 204

TALKING BUSINESS 6.3 Better Farm Management Separates the Wheat from the Chaff 205

TALKING BUSINESS 6.4 Don’t Blame Professional Athletes for High Ticket Prices 207

Goals of Canada’s Economic System 210

Economic Growth 210 TALKING BUSINESS 6.5 The US Subprime Mortgage Crisis and Recession 212

TALKING BUSINESS 6.6 Canada’s World-Class Economy 213

TALKING BUSINESS 6.7 Canada’s Productivity Challenge 216

TALKING BUSINESS 6.8 Canada’s Growing but “Invisible” Trade: Services 217

Economic Stability 223 Employment 226

TALKING BUSINESS 6.9 Today’s High Youth Unemployment: A Solution for Skill Shortages? 227

CHAPTER SUMMARY 229

CHAPTER LEARNING TOOLS 229 Key Terms 229 Multiple-Choice Questions 229 Discussion Questions 230

CONCEPT APPLICATION: SASKATOON: CANADA’S FASTEST-GROWING ECONOMY 231

7 Competitive and Technological Forces How Do Industries Evolve Over Time? 234

Learning Objectives 234

THE BUSINESS WORLD: FROM PERSONAL COMPUTERS TO NEWSPAPERS: TECHNOLOGY AND CREATIVE DESTRUCTION 235

The Industry Life-Cycle Model 236 The Introduction Phase: Industry Emergence and Creation 238

TALKING BUSINESS 7.1 The Birth of Biotech 239

TALKING BUSINESS 7.2 The Early Years of the Automobile Industry 240

TALKING BUSINESS 7.3 The Anti-Aging Industry 242

TALKING BUSINESS 7.4 Gray Goo and the Promising Future of the Nanotechnology Industry 243

The Growth Phase: Dominant Designs and Shakeouts 245

viii C o n t e n t s

TALKING BUSINESS 7.5 The Smartphone Industry 246

The Maturity Phase: A Critical Transition 248

TALKING BUSINESS 7.6 The Aging Personal Computer Industry 250

The Decline Phase: Difficult Choices 251

TALKING BUSINESS 7.7 Are Mobile Devices Killing The Video Game Console Industry? 252

Innovation and Technology 254 Types of Innovation 254

TALKING BUSINESS 7.8 Is Canada on the Leading Edge? 255

TALKING BUSINESS 7.9 The Linked World: How ICT Is Transforming Societies, Cultures, and Economies 256

The Evolution of Technology 258

TALKING BUSINESS 7.10 Embracing Disruption: Lessons from Building the First Quantum Computer 258

Technological Forecasting 260 Technology and the Changing Workplace 261

TALKING BUSINESS 7.11 Will Technology Replace Middle-Class Jobs? 262

CHAPTER SUMMARY 263

CHAPTER LEARNING TOOLS 263 Key Terms 263 Multiple-Choice Questions 264 Discussion Questions 264

CONCEPT APPLICATION: HAS SODA LOST ITS FIZZ? 265

8 Global Forces How Is Canada Faring in the Global Village? 268

Learning Objectives 268

THE BUSINESS WORLD: FOREIGN OUTSOURCING AND RBC 269

What Is Globalization? 271 Sources Encouraging Global Business Activity 271

Pull Factors 272 Push Factors 272

TALKING BUSINESS 8.1 Canada’s Dairy Industry Under Pressure 273

Channels of Global Business Activity 274 Exporting and Importing 274

TALKING BUSINESS 8.2 Canada’s Exports to China: Still Hewers of Wood and Drawers of Water 277

TALKING BUSINESS 8.3 What are Canada’s New Export Strengths? 279

Outsourcing/Offshoring 280 Licensing and Franchising Arrangements 280 Direct Investment in Foreign Operations 281

TALKING BUSINESS 8.4 What Helps a Country Obtain Foreign Direct Investment? 282

Joint Ventures and Strategic Alliances 284 Mergers and Acquisitions 284

TALKING BUSINESS 8.5 Is Canada Being “Hollowed Out” by Foreign Takeovers? Putting Mergers and Acquisitions in Historical Perspective 285

Establishment of Subsidiaries 286 The Multinational Corporation 286

The Borderless Corporation 287

TALKING BUSINESS 8.6 What’s the Third World? 287

TALKING BUSINESS 8.7 Think Global, Act Local 288

International Trade 290 The Logic of Trade 290 Mercantilism 290 Trade Protectionism 291

TALKING BUSINESS 8.8 Made in Canada: How Globalization Has Hit the Canadian Apparel Industry 292

TALKING BUSINESS 8.9 The Futility of Protectionism 294

Promoting International Trade 294 Facilitating Global Business: Regional Economic Integration 295

European Union (EU) 296 Asian Trading Bloc 297 North American Trading Bloc and NAFTA 298 Where Is Canada Headed? 303

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CHAPTER SUMMARY 304

CHAPTER LEARNING TOOLS 304 Key Terms 304 Multiple-Choice Questions 305 Discussion Questions 305

CONCEPT APPLICATION: BEIJING AND THE CALGARY OIL SANDS 306

9 Political Forces Where Would Canadian Business Be Without Our Government? 309

Learning Objectives 309

THE BUSINESS WORLD: JAPAN’S TOYOTA AND CANADA’S SUBSIDIES 310

The Canadian Business Enterprise System: Fundamental Features 312 Canadian Government Structure and Roles 313

Levels of Government 314 Federal Government Structure 316

Government as Guardian of Society 317 The Tax Collector Role 317

TALKING BUSINESS 9.1 Should Pop Drinkers Pay More? 319

The Business Owner Role: Crown Corporations 320

TALKING BUSINESS 9.2 Canada Post Faces Billion–Dollar Operating Loss by 2020 321

TALKING BUSINESS 9.3 Should the LCBO Be Privatized? 324

The Regulator Role 325 Government as Guardian of the Private Business Sector 328

Government Assistance to Private Business 328 TALKING BUSINESS 9.4 Auto Bailouts: Good or Bad Idea? 330

Government as Guardian of Business in the Global Context 332

Why Should Government Play the Role of Guardian of Business in the Global Context? 333

TALKING BUSINESS 9.5 More Cheese, Please 335

Why Government Should Not Play the Role of Guardian of Business 337

Should Government “Mind Its Own Business”? 339 Deregulation 339

TALKING BUSINESS 9.6 The Dangers of Deregulation 343

Privatization 344

CHAPTER SUMMARY 348

CHAPTER LEARNING TOOLS 348 Key Terms 348 Multiple-Choice Questions 349 Discussion Questions 349

CONCEPT APPLICATION: THE WIRELESS SERVICE INDUSTRY IN CANADA 350

10 Societal Forces Can Corporations Be Socially Responsible to All Stakeholders? 353

Learning Objectives 353

THE BUSINESS WORLD: THE NEW BLOOD DIAMOND: CELLPHONES 354

Defining Business Ethics 356

TALKING BUSINESS 10.1 High-Level Barriers to Public Trust in Organizations 357

Ethical Behaviour as a Social Phenomenon 358 Business Ethics as Managing Stakeholder Interests 359

TALKING BUSINESS 10.2 Lac-Mégantic: Disaster in Quebec 359

Models for Judging the Ethics of Decisions 360 End-Point Ethics 361 Rule Ethics 363 Applying the Models: A Scenario 364

TALKING BUSINESS 10.3 The Business of Bribery 366

Do Organizations Make Us Unethical? 367 Unethical Behaviour as a Consequence of Corporate Culture 368 Unethical Behaviour as a Consequence of Decoupling 371 Unethical Behaviour as a Consequence of Work Routinization 372

TALKING BUSINESS 10.4 The Global Pharmaceutical Industry and Human Guinea Pigs 374

Unethical Behaviour as a Consequence of Organizational Identity 375

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Unethical Behaviour as a Consequence of Organizational Roles 377 Judging the Ethics of Organizations 378

Business and Society 380 Managing the Forces of Business and the Stakeholders of Business 381 Managing the Challenges of the Societal Force 383

Corporate Social Responsibility 383 The CSR Debate 385

TALKING BUSINESS 10.5 Dragons’ Den 386

TALKING BUSINESS 10.6 IBM and Nazi Germany 388

TALKING BUSINESS 10.7 Corporate Strategy and Long-Term Well Being: Crime Doesn’t Pay 392

TALKING BUSINESS 10.8 Should These Corporate Behaviours Be Mandated? 394

Is Corporate Social Responsibility on the Rise? 395

TALKING BUSINESS 10.9 Social Media Gives Power to Customers 395

CHAPTER SUMMARY 399

CHAPTER LEARNING TOOLS 399 Key Terms 399 Multiple-Choice Questions 399 Discussion Questions 400

CONCEPT APPLICATION: JOE FRESH AND THE BANGLADESH TRAGEDY 400

Part 4 Adaptation and Change 404

11 The Challenge of Sustainability Why Does Business Need to Focus on Sustainability? 404

Learning Objectives 404

THE BUSINESS WORLD: CAN CANADIAN BUSINESSES AFFORD TO IGNORE CLIMATE CHANGE? 405

What Is Sustainability? 408 Economic Factors 410

TALKING BUSINESS 11.1 Cree Village Eco lodge, a Sustainable Travel Destination 411

Social Factors 411 Environmental Factors 412

TALKING BUSINESS 11.2 How Sustainable Is Canada’s Water? 414

TALKING BUSINESS 11.3 Fracking Fracas: Pros and Cons of Controversial Gas Extraction Process 416

Benefits and Limitations of the Triple Bottom Line Framework 418

Benefits of the TBL Approach 418 Limitations of the TBL Approach 419

Measuring Sustainability 420 Living Planet Index 420 Ecological Footprint 422 Index of Sustainable Economic Welfare 424 Genuine Progress Indicator 425

The Business Case for Implementing Sustainable Practices 426

Reducing Costs 426 Reducing Risk 428 Improving Public Relations 429 Obstacles to Change 430

TALKING BUSINESS 11.4 Canada Isn’t Cleaning Up on Green Technology Exports 431

Implementing Sustainable Practices 433 Raw Materials 433 Manufacturing 434

TALKING BUSINESS 11.5 Leading Change in the Food Sector 435

Distribution 437 Retailing 437 Marketing 438

TALKING BUSINESS 11.6 Convenience versus Sustainability: The Plastic and Paper Bag Debate 439

Consumer Use/Consumption 440 End-of-Life/Disposal 441

CHAPTER SUMMARY 443

CHAPTER LEARNING TOOLS 443 Key Terms 443 Multiple-Choice Questions 443 Discussion Questions 444

CONCEPT APPLICATION: IS LOCAL FOOD SUSTAINABLE? 444

xiC o n t e n t s

12 Confronting Change How Do Businesses Address the Challenge of Change? 448

Learning Objectives 448

THE BUSINESS WORLD: INDIGO: WRITING THE NEXT CHAPTER IN CANADA’S BOOK INDUSTRY 449

Change and the Environment of Business 451 Forces for Change 451

TALKING BUSINESS 12.1 Making Skills Work in Ontario 453

TALKING BUSINESS 12.2 Yes, There Is a Future for Manufacturing in Canada 454

TALKING BUSINESS 12.3 Digital Health: More Than Just Health and Technology 456

TALKING BUSINESS 12.4 Pro Sports and Globalization 457

TALKING BUSINESS 12.5 How Canada Welcomed Bangladeshi Clothing Imports 459

TALKING BUSINESS 12.6 Slow-Motion Demographic Tsunami About to Hit Canada’s Economy 460

Types of Change 461 Developmental Change 461 Transitional Change 462 Transformational Change 462

TALKING BUSINESS 12.7 Transformational Change: Starbucks Risks Core Business for New Unknown Ventures 463

Methods of Change: Theory E and Theory O Change 464

The Process of Transformational Change: An Illustration 467

Understanding the Forces for Change 467 The Change Vision and Implementation 467

Creating a Learning Organization 471

TALKING BUSINESS 12.8 The Learning Manager 473

Double-Loop Learning and Shifting Paradigms 474 Do Organizations Encourage or Discourage Learning and Change? 475

TALKING BUSINESS 12.9 Facebook’s Culture Promotes Learning and Change 476

Implementing Change Through Tipping Point Leadership 479

What Is the Tipping Point? 479 Three Rules of the Tipping Point 479 Applying the Tipping Point to Organizational Change 481

CHAPTER SUMMARY 482

CHAPTER LEARNING TOOLS 483 Key Terms 483 Multiple-Choice Questions 483 Discussion Questions 484

CONCEPT APPLICATION: WHEN GOOD COMPANIES GO BAD: THE CASE OF KODAK 484

Appendix: Answers to Multiple-Choice Questions 487

Glossary 488

Index 503

xii

Preface

There is much to be proud of with regard to the Canadian business sector. According to many observers, Canada is poised to earn a distinguished reputation on the world scene. In fact, Canada has been consistently cited in the media as “one of the best countries to do business in.” Recently Forbes ranked Canada fifth overall in the world for business, based on such factors as low corporate tax rates and one of the most stable banking systems.

Beyond its economic stability, Canada is also reputed for its world-class university system, which is much more affordable than most privately funded colleges in the United States. In turn, Canada is known for its ability to attract and retain a highly educated workforce. Our strong business reputation is also based on having among the highest investment rates in education as a percentage of its GDP. Its enviable status is also based on comparatively low poverty and crime rates.

The positive climate for business has also made this country a popular location for entrepreneurs. Based on a study conducted by management consulting firm Ernst & Young, Canada was ranked among the top five places in the world to start a business, given its strong entrepreneurial culture. The Ernst & Young report considered such factors as small business tax burden, access to financing, and intangibles such as the value placed on research and innovation as well as attitudes toward entrepreneurs in the business community.

There is no doubt that Canada is fast becoming a major player on the global scene. However, at the same time significant challenges exist. The past two decades have witnessed tremendous change and turmoil across our organizational landscape—from numerous bankruptcies of once-great Canadian companies to massive reductions in the workforce of many others to the growth in foreign ownership across corporate Canada. Is all this cause for concern or just the natural evolution of business? Are we headed for the best of times or the worst of times?

Indeed, what lies ahead for Canadian business? To address that question, we need to systematically examine the context of business and the factors that shape our business environment. To do so we must look both “inside” and “outside” of the corporate walls. That is, we need to consider key challenges and opportunities that exist within the bound- aries of the organization, as well in the organization’s external environment.

The aim of this book is to help facilitate the following learning goals for students:

1. To examine the context within which all businesses operate. Specifi cally, we consider the internal context and the external context of business and the range of unique challenges and opportunities each possesses.

2. To obtain a deeper understanding of the nature of the Canadian business environment. What differentiates Canada from other business environments? What are the major strengths and weaknesses of Canada as a place to do business? What does the future hold for Canadian business?

3. To encourage critical thinking regarding the nature of business and its environment. This text presents a range of ideas, perspectives, and conceptual frameworks for identifying and analyzing key issues in the business environment.

xiiiP r e f a c e

4. To gain exposure to major voices and leading thinkers in the fi eld of business and organizational studies. This book draws upon many ideas from a wide range of business scholars, experts, and practitioners.

The study of business is really about the study of society. It is an obvious fact that we are a society of organizations—from our hospitals to our schools to our multinational organizations, it is hard to imagine life without organizations. And, for better or worse, those very institutions and organizations that we have grown up with are continuing to undergo dramatic change. We need to understand where change is coming from and how organization’s can best respond to the changing business context.

The Context of Business takes the reader on a journey that explores the environment within which business operates—both within the Canadian context and within the global context. The reader will be introduced to a variety of perspectives, theories, and concepts that shed light on real business issues. While this text does introduce the reader to many fundamentally important business terms and concepts, our emphasis is on helping students develop analytical thinking skills. Our aim is to present ideas, frameworks for discussion, and concepts that students can use as tools to help analyze “what is going on out there” in the “real” business world.

We hope that The Context of Business takes you on an enriching journey into the environment of business. There is much to learn about Canadian business and, as you will see, there is also much to be proud of. As a current or prospective member of the Canadian workforce, you have every reason to be interested in what the future holds for Canadian business. We hope this book helps you think more critically and thoughtfully about what lies ahead.

Enjoy the journey!

Len Karakowsky

Natalie Guriel

STRENGTHS AND FEATURES OF THIS TEXT This text differs in a number of significant ways from the typical introductory business textbook. There are at least three key areas of emphasis that distinguish this text, as outlined below.

1. Emphasis on Critical Thinking Skills The Context of Business will be the foundation for an introductory course in business that first introduces students to the business environment—both internal and external. The aim of this text is to provide a critical examination of the nature of business organizations and the fundamental challenges that they face within the Canadian context. The central objective is to provide insight into the business environment in Canada while encouraging students to think critically about how organizations are managed and how business leaders confront current challenges. This emphasis on critical thinking skills may be what largely differentiates this book from many other introductory business textbooks.

xiv P r e f a c e

Consequently, while we clearly set out descriptions necessary to understand the “mechanics” of business issues, ranging from the economic context to the political con- text, our aim is to engage students in a way that will stimulate them to think critically about these contexts. Students will be inspired to ask questions about how business operates and how the environment impacts business. We ask questions central to under- standing what is “going on out there” in the Canadian business world, including: What kind of competition exists in Canada in different industries? How has the number of telecommunications companies impacted the consumer? Do government subsidies to business impact competitiveness in Canada? What did the tragedy at Lac-Mégantic teach us about corporate social responsibility? These kinds of questions demand more than simply memorizing business jargon.

We believe that our approach in this text will help students better understand and appreciate the purpose behind their further studies in specific functional areas of business while also nurturing the skills they need to succeed in later courses.

2. Emphasis on Concept Application Each chapter sets out clearly the learning objectives for that chapter. We believe that we have set challenging but achievable learning objectives for each chapter, and we have ensured our chapters provide all the information students require to engage in a thought- ful and informed analysis of each of the topics. Our fundamental aim is to get students to take business ideas, concepts, and frameworks and use them to make sense of business events and challenges.

In writing this book, we endeavoured to make fundamental business concepts “come alive” through the application of these concepts to important, real-world situations. This text includes a wealth of current business cases drawn from the popular press to help clarify ideas presented within each chapter. Specifically, each chapter begins with The Business World case, which reports on important, current, real-life business issues and themes that are explored within the chapter. The chapters are also filled with real-life business illustra- tions summarized within the Talking Business boxes. Interspersed throughout the text, these features often present current business news or situations that further explore the concepts discussed in the chapter in a real, applied way. These are ideal for class discussion and also offer media accounts that may differ from the authors’ perspectives of business happenings. Instructors may wish to use some of these as mini-cases for class discussion on a daily basis when a lengthier, end-of-chapter case is not assigned.

Each chapter also contains an end-of-chapter Case Application with questions . These cases are also drawn from the Canadian popular press and are intended to give stu- dents an opportunity to apply chapter concepts to real business contexts. We have used these kinds of cases in our own classes with much success. The cases are of relatively short length. While the cases are intended to focus on the material in the accompanying chap- ter, many of the cases in this book carry ramifications that spill over into several areas. However, we have found that the ability to integrate different concepts from different chapters takes time. Consequently, our focus was on building this skill by keeping the cases relatively focused, though certainly many of these cases could be revisited from dif- ferent chapter perspectives. The Instructor’s Resource Manual provides suggestions and possible discussions relating to each of these cases.

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3. Emphasis on “Real” Canadian Business Context In addition to offering frameworks and principles central to an understanding of the con- text of business in general, we have endeavoured to provide an interesting and up-to-date presentation of relevant business events and business cases. We have made every effort to infuse this text with “real-life” illustrations. References are made to major business stories from across the globe. However, we are particularly interested in the Canadian context. Consequently, we focus on Canadian stories and give ample attention to current Canadian business policies and practices for the topics covered throughout this book. The end-of- chapter cases are drawn from both Canadian and global contexts. And this text was authored by Canadian scholars—it is not a Canadian adaptation of a US text.