• Internal Code :
  • Subject Code : JNB251
  • University : University of Tasmania
  • Subject Name :

Market Attractiveness

Table of Contents

Introduction

Organisational background

Canada’s market attractiveness regarding the international business environment and cultural concept

Trade practices and policies considering the competitive environment within Canada

Conclusion

References

Introduction

Market expansion is arguable one of the major concerns for the business that operates in the modern era. While the benefits of expansion certainly correlate with an increase in the overall outreach for brands along with the aspects of profitability and operational scale, the process can be difficult to facilitate without adequate market research. Gauging the attractiveness of the market system is of paramount importance in this regard. The current study focuses on the organisation of Brew Dog, a Scotland based multinational brewery in the context of expanding into Canada.

Organisational Background

Brew Dog has been in operations for several years with pubs all around the world in countries like Finland, Japan, Brazil, Spain and several others. Based in Ellon, Scotland, Brew Dog seeks to further expand its operations into Canada to progressively increase its international presence over time. The organisation offers several products including ale, stout, India pale ale, lager and several others. The expansion into Canada based on the attractiveness of the market would be aimed at increasing the profitability of the brand in the long run.

Canada’s Market Attractiveness Regarding the International Business Environment and Cultural Concept

Canada is among the most stable economies when compared globally, and this has largely been due to the government’s targeted emphasis on international business. The Canadian business ecosystem is also heavily reliant on domestic as well as international small-scale enterprises that contribute immensely to the development of the economy. Roughly 97% of the businesses within the country, both international and domestic, were classified as small establishments (ig.gc.ca, 2020). The ease of business formation within the country is also driven by the relatively relaxes taxation system and the immigration policies, both of which are conducive towards international business development.

Furthermore, Canada is also one of the leading countries within the G20, which makes it all the more appealing towards foreign investors such as Brew Dog owing to the rising popularity of the country in the international domain. The Canadian economy is also relatively large and well developed, comprised of an immense network of distribution networks and supplier chains. It is also a neighbour of America, the world’s largest economy in terms of consumption and spending power. Naturally, investing in Canada would also automatically open the doors for companies like Brew Dog to further expand into America.

Based on international rankings conducted by the World Economic Forum, Canada was identified to be the world’s 14th most competitive economy (weforum.org, 2020). Additionally, it also comprises of one of the most skilled and educated workforces globally both in terms of the local as well as the international populations. In terms of innovation, the country has always been one of the global leaders and it becomes all the easier for international businesses like Brew Dog as Canada also has one of the lowest corporate tax rates in the world.

Cumulatively, all of these factors certainly increase the attractiveness of the Canadian market system when viewed from an international perspective. The country also comprises of several tax deductions and incentives for investors seeking to expand their operations into Canada (Bjorklund et al., 2018). The Foreign-Trade Zones Marketing programs are one of the most popular in this regard, and could be immensely beneficial for Brew Dog when entering into the country (canadacompanyformation.com, 2020). Ranging from financial programs to relaxed company laws, Canada is certainly the global leader in terms of an international market. Companies that accommodate the culture and engage in targeted marketing strategies are more than likely to succeed within the market in the long run.

Regarding the cultural concept, Canada is also acknowledged around the world in terms of how multiculturalism is institutionalised within the very core of the country’s principles. Based on a report published by the House of Commons in 2016, it was estimated that approximately one in five Canadians were foreign-born and over two in five Canadian citizens had a background of immigration (ourcommons.ca, 2016). It has inherently led to a massive internationalised nature of development within the business ecosystem in the country, largely relying on individuals and consumer trends that are diverse and varied.

Intergovernmental cooperation has also increased to a large extent, as Canada is considered to be one of the friendliest nations in the international domain. Furthermore, aspects such as an inclusive business ecosystem and diversity in terms of gender and ethnicity only add to the appeal of the country as an international point of investment in the context of culture and its influence on the business activities (Foster and Jacobs, 2017). The continued focus on developing a multicultural society has led to Canada becoming one of the most inclusive societal systems in the world, which inherently translates into a wide and diverse consumer base for companies like Brew Dog looking to expand their operations into Canada.

pie chart shows Immigrant owned businesses in Canada

Figure 1: Immigrant owned businesses in Canada

(Source: ourcommons.ca, 2016)

Another important aspect that further increases the attractiveness of the market system within Canada in terms of investment and international expansion is the low degree of corruption. Comprised of one of the soundest and most robust financial and banking institutions globally, the country is certainly one of the leaders when it comes to market attractiveness for foreign investors. It has also been ranked as the best country to carry out business several times, which has led to the development of an ecosystem that is highly conducive towards international trade (Dubé et al., 2016).

Ranging from education to trade protection, Canada has always maintained a holistic approach, which makes it a very viable market for Brew Dog in terms of expansion as compared to Malaysia and China. It is also one of the most influential economies globally and also comprises of one of the world’s largest oil reserves. In aggregate, these factors would certainly enhance the market attractiveness of the country for Brew Dog, especially considering how it is already a multinational seeking to further expand its operations.

It would also be appropriate to look at the alcoholic beverage industry within the country since Brew Dog predominantly caters to the market. Governed by provincial liquor boards, the alcohol industry within Canada is certainly booming. Beer and light alcoholic beverages make up the largest portion of the alcohol industry within Canada in terms of consumption, roughly ranging around 2.3 million litres in terms of sales (spiritscanada.ca, 2020). It would only increase the attractiveness of the market for Brew Dog, as the international brewery predominantly produces light alcoholic beverages, which are the most in-demand form of alcohol within the country.

graph shows Revenue growth in Canada’s alcohol industry

Figure 2: Revenue growth in Canada’s alcohol industry

(Source: statista.com, 2019)

The revenue projections have also been projected to grow further in the coming years, as depicted in the picture above. Naturally, the Canadian market would certainly be a suitable choice for Brew Dog to expand its operations and grow its profitability to a considerably large extent. The international business environment along with the multicultural aspect of the consensus would only add to the attractiveness, as Brew Dog would be able to engage in a variety of marketing strategies to ensure a large consumer base is generated over time.

Trade Practices and Policies Considering the Competitive Environment Within Canada

The trade policies within Canada in terms of the competition within the market places and the overall business environment of the country are also relatively favourable for international organisations like Brew Dog. When entering the country, international businesses need to factor in several practises and policies related to the Canadian business ecosystem. One of the foremost in this regard relates to the international trade agreements in place along with the governmental procurement policies and investment treaties.

Canada was one of the founding members of the World Trade Organisation, and this inherently translates into several fair dealing policies and protocols for businesses that seek to expand into the country (fasken.com 2019). Some of the most prominent trade agreements that govern international business within the country include the Comprehensive Economic and Trade Agreement or CETA, the Canadian Free Trade Agreement or CFTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or the CPTPP (Rodrik, 2018). Cumulatively, the factors have been instrumental towards creating an inclusive business ecosystem within the country along with a highly targeted emphasis on non-discrimination and equitable treatment for international businesses.

Additionally, a large number of investment treaties within the country would also be favourable towards Brew Dog’s entry into the Canadian alcohol marketplace. Predominantly operating as standalone agreements, the investment treaties seek to offer a non-discriminatory business place for international investors. Dispute settlement processes and ease of formation form the crux of these treaties and would be certainly beneficial for Brew Dog as they seek to expand their operations into the North Pacific country. Investor protection is also a key area of consideration within the trade practises currently existent within the Canadian business environment. The country is also host to several economic sanctions that are primarily aimed at improving the aspect of a free market system. Naturally, it would benefit Brew Dog in terms of catering to a large consumer base that inherently includes diverse needs and a wide array of demands.

Anti-corruption laws within the country are also one of the most well developed when compared to other economies of a similar scale. One of the most important statutes in this regard is the “Corruption of Foreign Public Officials Act” that strictly prohibits the payment of bribes to officials in the context of a business advantage (laws-lois.justice.gc.ca, 2020). Furthermore, the country is also home to an extensive Criminal Code that outright criminalises any sort of anti-competition measures engaged in by businesses, and is widely considered to be far more comprehensive in terms of the areas covered as compared other developed economies in the West.

The business culture within the country has naturally adapted to the compliance requirements, thus facilitating an environment that is extremely conducive towards international trade and commerce. Aspects such as punctuality and diligence are extremely valued in Canada, and it only reflects on the country’s approach towards conducting business while maintaining the highest standard of professionalism and work ethics.

The growth potential within the country is also extensive by all means, largely driven by its robust anti-competitive laws and policies. Deceptive business practises are strictly prohibited within the country, further increasing its attractiveness as an international market place for foreign organisations like Brew Dog. Furthermore, the country relies heavily on international businesses that operate out of its urban hubs, and this has translated into a highly targeted emphasis on the government’s part to maintain and support the businesses.

While Brew Dog’s entry would be faced with the stiff competition due to the developed nature of the economy, it would also be subject to a potentially massive scope for growth given the nature of the Canadian business culture. The Competition Bureau of Canada is also one of the most acknowledged agencies globally in terms of inducing fairness and transparency within market systems, and it would certainly benefit Brew Dog in terms of setting up their operations and limit the scope for marginalisation by larger and more established players (competitionbureau.gc.ca, 2018). The trade practises and the business orientations are extremely holistic and the existence of a large number of agreements and investment treaties only go on to solidify the same.

Conclusion

In conclusion, the market attractiveness of Canada as the country of expansion for Brew Dog was found to be rather extensive due to the ease of international investment, the multicultural societal system and the relaxed trade and taxation policies. The study identified that Canada was also one of the leading influences within the international domain and could be immensely profitable for Brew Dog’s operations in the long run. The alcohol industry was also found to be rather profitable within the country, which further increased the attractiveness of the Canadian market for Brew Dog.

References

Bjorklund, A., Kryvoi, Y. and Marcoux, J.M., 2018. Investment Promotion and Protection in the Canada-UK Trade Relationship. Available at SSRN 3312617.

canadacompanyformation.com, 2020. Why Is Canada an Attractive Country for Investors? Available at: https://www.canadacompanyformation.com/why-is-canada-an-attractive-country-for-investors (Accessed: 18 May 2020).

competitionbureau.gc.ca, 2018, Questions and complaints - Competition Bureau Canada, Competitionbureau.gc.ca. Available at: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00019.html (Accessed: 18 May 2020).

Dubé, J., Brunelle, C. and Legros, D., 2016. Location theories and business location decision: A micro-spatial investigation in Canada. The Review of Regional Studies, 46(2), pp.143-170.

fasken.com, 2019. International Trade Law | Download now, Fasken.com. Available at: https://www.fasken.com/en/knowledge/doing-business-canada/2019/06/international-trade-law/ (Accessed: 18 May 2020).

Foster, L. and Jacobs, L., 2017. Inclusive Workplace Practice in Canada: Competing Equalities in an Industrial-Mobile Society.

ic.gc.ca, 2020. Key Small Business Statistics - January 2019 - SME research and statistics, Ic.gc.ca. Available at: https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03090.html (Accessed: 18 May 2020).

laws-lois.justice.gc.ca, 2020. Corruption of Foreign Public Officials Act. Available at: https://laws-lois.justice.gc.ca/eng/acts/c-45.2/ (Accessed: 18 May 2020).

Rodrik, D., 2018. What do trade agreements really do? Journal of economic perspectives, 32(2), pp.73-90.

spiritscanada.ca, 2020. Industry Stats | Spirits Canada. Available at: https://www.spiritscanada.ca/industry-stats/ (Accessed: 18 May 2020).

statista.com, 2019. Alcoholic Drinks - Canada | Statista Market Forecast. Available at: https://www.statista.com/outlook/10000000/108/alcoholic-drinks/canada#market-revenue (Accessed: 18 May 2020).

weforum.org, 2020. The Global Competitiveness Report 2019. Available at: http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf (Accessed: 18 May 2020).

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