Global Business Cultural Analysis Canada

Running head: GLOBAL BUSINESS CULTURAL ANALYSIS
Global Business Cultural Analysis: Canada

Subin Panta
Liberty University
GLOBAL BUSINESS CULTURAL ANALYSIS
Abstract
Canada is Canada is the 2nd largest country in the world with population over 30 million.
Canadas 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 NAFTA. The investor wanted to invest in Canada can get benefit from
NAFTA provisions. Canada has bilateral trade agreements between, European Union and Asia.
SWOT analysis of doing business in Canada
Keywords: Business cultures, Canada, Trade Analysis, Import, Export, SWOT 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 IMF and World Banks GDP ranking,
Canada has the 10the largest economy in the world. Heritage Foundation ranks Canada 6th in
terms of economic freedom. (Business vibes, 2012)
Canadas two largest and most important industries are logging and oil. Also, it has 8th
largest commercial fishing and seafood market of the world. Canadas 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
Canadas role in the world economy today.
A. Introduction
1. Brief history
Canada is the worlds 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 will have to give equal
recognizance 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.
2.1 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 persons 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 material should be printed in English and French. While talking, dont 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)
2.2 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)
2.3 Ethics:
Ethics are defined as the moral value. Different people have different 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 didnt have regulatory governing bodies like US securities and Exchange
commissions and foreign corrupt practice acts till 1996. Canadas 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
Canadas 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 dont violate environmental, health
laws. (Brooks, 1997) The group like social audits by the United Church of Canada, Task Force
on Churches and Corporate Responsibilities (TCCR) and Fairvest Securities Corporations are
most significant ethical investing firms in Canada. Also the development of regulatory centers
like Canadian Center for Ethics and Corporate Policy (CCECP) and the Centre for Corporate
Social Performance and Ethics (CCSPE) has created the code of ethics by which the Canadian
companies get the guidance to improve their ethical performance. (Brooks, 1997) Mr. Colin
Boyd, (Boyd, 1997) feels that in two areas where Canadian business ethics are varies with other
countries. The social activist organization, like Greenpeace, 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)
2.4 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. (Yeganeh, 2011). The language, organization and technology are the most important
elements of culture. (Scholtens and Dam, 2007) According to Scholtens 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. (Satterlee, 2009, p.51) According to Satterlee
(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 Hofstedes ranking that means Canada has
society with individualistic attitude and doesnt bond well with others. They look out for
themselves and their families. They value their privacy as their cultural norm and wouldnt share
with someone outside their comfort zone. (Roberts and Taylor, Canadian business etiquette,
2012) Canadian people dont like gender discrimination. Male and female works in the cooperative work environment with mutual respect to each other. (Boyd, 1997)
2.5 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 leather 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 V for victory sign your palm should be outward, V sign in with your palm inward
means 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
dont 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 dont 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, dont 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 extend their hands for a handshake.
French Canadian will shake hands more frequently than English Canadian. Using persons 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 material should be printed in English and French.
(Roberts and Taylor, Canadian business etiquette, 2012)
2.6 Social structure and organization:

Satterlee (2009) described social structure as the organization of its institutions, social
group, statuses and roles. (Satterlee, 2009, p.54) Canada doesnt have distinctive social structure
and its confirmed by Hofstedes Power distance dimensions. Power distance is determined by
the how much the culture accepts the importance of position that separates people. (MacNab and
Worthley, 2007) Canada has low Power distance which means 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.(MacNab and Worthley, 2007) Canada has low score of 39 comparing to
worlds average of 55, which indicates that greater level of equality between social, government,
organization and families. However, French Canadians are more formal, hierarchical than
English Canadian. (Cultural Insights, 2013)
2.7 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
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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 province, the elementary school usually includes grade one to six,
after that junior high for seventh and eighth. Some province doesnt 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. Rushton explains that we are attracted to people whom we
think have similar culture and we keep distance from we think are dissimilar to us. (Yeganeh,
2011) Many researcher believe that difficulties, costs, conflicts, communications and risks
dramatically increase when two culturally different people do business.(Yeganeh, 2011) The
research done by Mr. Yeganeh (2011) shows that linguistic commonality has positive
implications but the cultural distance and religion doesnt 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
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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.(Delfino and Paura, 2009) Delfino and Paura (2009)
defined cultural business as the publisher, distributor and sellers of books, magazines,
newspapers, music, audio, film, video, music video recording and broadcastings. If its direct
acquisition minimum threshold is C $5 million and if its indirect minimum threshold is C$ 50
million.(Delfino and Paura, 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 of real estate assembly and zoning approvals. (Delfino and Paura, 2009)
The consumer protection legislation falls under provincial government, which regulates sales to
consumers, mandatory disclosure requirements of consumer agreements and limit the retailers
ability to exclude statutory implied warranties. (Delfino and Paura, 2009) The Canadian
provincial legislations are more favorable to trade unions. Delfino and Paura (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 other business connections with the collection, storage and use of the personal information
of customers and employees. (Delfino and Paura, 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. (Chiavetta, 1991) Beside federal
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taxes and provincial taxes, there is an additional tax of goods and service tax which is imposed
on purchasers of goods and services. (Chiavetta, 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.
4.1 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 its 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:
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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, 2012)
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 fraud and
unethical business practices. Both Canada and USA has strong penalties and punishment for
corporations or people using unethical business practices or fraud. (Boyd, 1997)
4.1.4 Values and Attitude
Satterlee (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 Hofstedes dimension which means like
Canada, American is also the society with individualistic attitude and look out for themselves
and their families. American people dont 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.
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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 doesnt appear
as bribe. (Roberts and Taylor, United states of America, 2012)
American like both French and English Canadian use a firm handshake with eye contact
when meeting and leaving. Using persons 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 doesnt have social structure. According to Hofstede power distance,
USA scores 40 in compare to worlds 55. The society has been equally integrated and there are
no class systems. Hofstede linked lower power distance with opportunities for benefitting from
and access to social programs. (MacNab and Worthley, 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 means poor Canadian has better health
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care than the poor American. (MacNab and Worthley, 2007) Also Canada shows more income
equality and larger middle class than America. (MacNab and Worthley, 2007)
4.1.8 Education:
Education system in America is decentralized, federal government reserves power for

quality 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 of 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 (Alston, Morris and Vedlitz, 1996) presents
the Seymour Martin Lipsets theory that the formation 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 particularism, elitism
and collectivism. But American rejects the crown rule and developed egalitarian and universal
values. Furthermore Lipset stated that America is country of revolution, Canada of the counterrevolution. Tocqueville argued that Americans are individualistic and suspicious of institutions
but Canadians are more collectivistic and supportive of their institutions. American people being
individualistic attitude and pro-choice, forty five percent favors abortion but Canadian being
collectivistic attitude, only thirty two percent favors abortions (Alston et al., 1996) In the article
by Mr. Robinson, Lipset and Meltz, argues that Canadas labor law is more union friendly,
supports unions and their objectives creating higher union density level than Americans. In this
same article, Inglehart and his coauthors compares USA and Canada in two dimensions: first on
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the materialist/postmaterlist spectrum and the second on attitude towards religion authority. On
the first spectrum, Canada and USA are 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 (Ali,
Falcone and Azim, 1995) showed that American displays more dedication to work and have less
interest in leisure activities than Canadian. (Ali et al., 1995)
This article compares USA and Canada on Hofstedes dimensions of culture. Hofstedes
dimension of culture includes four theories: Individualism, Power Distance, Masculinity and
Uncertainty Avoidance. (Satterlee, 2009, p. 56, 57) The article by MacNab and Worthley (2007)
compared the cultural closeness of USA and Canada on three dimension; individualism, power
distance and uncertainty avoidance. (MacNab and Worthley, 2007) Hofstede 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). (MacNab and Worthley, 2007)
(i)
Power distance is determined by the how much the culture accepts the importance
of position that separates people. (MacNab and Worthley, 2007) Both USA and
Canada are low in power distance, meaning that both countries benefits from
some kind of social program, incomes are equally distributed and has much larger
middle classes. (MacNab and Worthley, 2007) The hypothesis proposed by
MacNab and Worthley for their empirical test that the Canadian sample will
demonstrate lower level of power distance than US sample was not supported
because there was no significant difference. (MacNab and Worthley, 2007)

(ii)
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Uncertainty Avoidance is the degree to which extent the culture has accepted that
future can never be known. Both Canada and USA are low in the uncertainty
avoidance score, which means the greater tolerance. But still there remain the
differences. MacNab and Worthley (2007) described the presence of linguistic
group in country, national policy towards them and official positions to
bilingualism are culture. Canada share some linguistic with US, but Canada is
official bilingual country. 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 MacNab and Worthley (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.(MacNab and Worthley, 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. (MacNab and Worthley, 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 MacNab and
Worthley (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.(MacNab and Worthley,
2007)

(iv)
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Masculinity determines how much the society care for the traditional masculine
work role model of male achievement, power and control. (Satterlee, 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 main attractions for US retailer to expand in Canada are the similarity in business
culture, geographical fit and familiar legal landscape. (Delfino and Paura, 2009) To avoid
confusion, it is recommended that you involve Canadian legal, tax, accounting advisor from
beginning. The nature of issues that arise varies from the scope of investment, particular retail
sector, to regions. Canada has broad foreign investment and antitrust laws, and distinctive
employment consumer protection, privacy laws. (Delfino and Paura, 2009)
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Since US and Canada signed free trade agreement in 1988, and North American Free
trade agreement (NAFTA) in 1994, there is substantial growth of US retail investments in
Canada. (Delfino and Paura, 2009) Even though trade barriers are down, foreign investment and
antitrust law applies to US and other foreign investments in Canada, when a firm wants to extend
through acquisition of existing Canadian business. Under Investment Canada Act, it takes 45 to
75 days after application was filed for foreign investment authorities to make decision whether
the investment is beneficial to Canada. (Delfino and Paura, 2009)
If US retailer who intends to expand by building entity from the zero find practical and
legal challenges in the area of real estate assembly and zoning approvals, which are largely
regulated by local government. .(Delfino and Paura, 2009) All laws relating to real estate
acquisition, leasing and development are similar in most Canadian provinces but US retailer who
wants to expand to Quebec, needs to find proper counsel in Quebec, whose civil code are similar
to Europe. (Delfino and Paura, 2009)
One of the many aspects that surprises US retailer is the relatively large degree of
authority granted to provincial government under Canadas federal constitution. The provincial
governments dominate several laws which directly affect the retail expansion, which includes
environmental, privacy, consumer protection, employment standards and labor law. The province
of Quebec imposes their own French language relating to labeling signage and advertising.
(Delfino and Paura, 2009) The consumer protection acts, which are governed by province,
regulate sales to consumers, establish mandatory disclosure requirements and limit the retailers
ability to exclude statutorily implied warranties. (Delfino and Paura, 2009) The employment
legislations are regulated by province and tend to be more favorable to trade unions. The
entitlements of vacation time, exemptions from overtime are firmly established. If you fired
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someone, it will cost more than in US, there is no at-will employment is not recognized.
.(Delfino and Paura, 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. (Delfino and Paura, 2009) The
Canadas 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. (Delfino and
Paura, 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. (Delfino and Paura,
2009) Canada has a 5 percent national value added tax known as Goods and Service Tax (GST)
which is in addition to provincial sales tax (PST). (Delfino and Paura, 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. (Chiavetta, 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. (Chiavetta, 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. (Chiavetta,
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 15 percent Canadian
nonresident withholding tax when filing in US tax return. (Chiavetta, 1991) For the employees,
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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 employer
contribution for pension plan and unemployment insurance. (Chiavetta, 1991) If US retailer
sends US individual to work in Canada and if the earning is more than 10,000 Canadian dollars,
its subject to Canadian income tax and need filing Canadian personal income tax return.
(Chiavetta, 1991)
All these tax laws should be taken into consideration when expanding your business to
Canada. Since the laws are changing from time to time, its always best to consult Canadian
business lawyers, accountants to get up to date information to save precious time.
B. Additional Questions:
1. Trade agreements between US, Europe and rest of the world.
1.1 NAFTA:
Talking about NAFTA and US Canada trade relationships, it appears that the Free Trade
Agreement (FTA) is of much greater importance to Canada that to the US.(Swanson, 1990). This
is because the FTA provides Canadian producers with a consumer market of over 265 million
people, 90 percent of whom are US citizens. (Swanson, 1990) According to the estimates of the
Canadian government, increased trade led by FTA will add 120000 new jobs to the Canadian
economy and will increase nations income 2 to 3 percent (Swanson, 1990)
President Obamas administration wanted to renegotiate NAFTA and change the way
trade is conducted. (Long, 2009) Many people argue that the member reaped the benefits from
NAFTA. Hart (2004) on his article shared the six lessons he learned from free trade agreements.
The free trade agreements need unique partnership of political leader and policy entrepreneur.
They need support from business group and civil societies. He ascertain that economist were
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generally right about the benefits of trade but didnt provide best way to achieve them.(Hart,
2004) The political scientist were general wrong about the threat of free trade, but they will
contribute for full benefit and the involvement of lawyers.(Hart, 2004) Even though the benefits
are high from free trade agreements, some Canadian artists voice their problem performing in
USA because of Immigration Act of 1990.(Zemans, 1994) Canadian artists argued that even
though there is project in place to facilitate a constant traffic of artists between US and Canada,
the collaboration didnt get support it deserved.(Zemans, 1994)
1.2 EUROPEAN UNION:
Likewise, Canada should also consider a comprehensive trade and economic agreements
(CETA) with the European Union (EU). Schwanen (2011) in his study states that Canadas
agreement with the EU is good opportunity to diversify the market for its high value added goods
and to increase the attractiveness of its economy to the investors. Just like most investors have
reaped the benefits from the NAFTA agreement, the CETA would provide similar advantages.
(Schwanen, 2011)
1.3 ASIA:
Canada now has more active involvement in trade with Asia in recent times. Experts are
now exchanging ideas to enhance Canadas trade with Asian countries. Scholars admit that
Canada has lagged far behind in identifying and pursuing economic activities in the Asia Pacific
region. In order to receive optimum benefits and reap full advantage, Canada must promote free
trade agreement with Asian countries like Malaysia, Singapore, Brunei, Thailand and Indonesia.
(Boosting trade with Asia, 1993)
2. Import and Export and its effect on global market:
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Import and export are essential part of international trade. Adoption of import export
policies by many countries have led to significant positive changes. Akram, Khan, Atif and
Shafique (2011) in their paper assessed the effect of export on economic growth of Canada and
concluded that there is a significant positive relationship between export and economic growth.
Economic growth most of the time is accompanied by increased exports. Export not only
enhances labor skills but also increases productivity in local as well as international markets
(Akram, Khan, Atif and Shafique, 2011). Exports of any developed country will constitute a
significant share in the GDP. For instance, Canadas exports contribute up to 30% of its GDP
(Akram et al., 2011). It was the North American Free Trade Agreement (NAFTA) and removal
of trade barriers that led to growth in Canadas exports. Therefore, there is a general agreement
among scholars that exports are essential for economic growth and exports lead to
industrialization.
There are many instances where reduction in exports has led to economic turmoil in
many countries. It is also vital to determine the developmental level of country to see what effect
export has on it. This is because there is a relationship between countrys developmental level
and the effect of export on that country. The more developed a country is the stronger is the
impact of export on that country. In less developed countries exports do not have a significant
impact on economic growth (Akram et al., 2011). Since Canada is a developed nation, export
plays a major role in its growth. Canada is the 19th largest exporter country in the world.
Exports leads to long term growth not just by improving the finances but also by human
capital formation, reduction in unemployment, and by infrastructure development. While export
constitutes a strong determinant of growth and development so is import as it brings progress and
prosperity. Bloskie (2004) in his article highlights Canadas import relations with other nations.
24
Canada imports a wide variety of products from many parts of the world and US has been the
biggest trading partner (Bloskie, 2004).
3. Investment flow in Canadian market:

Rise of globalization in this era is characterized by capital market integration and
increasing cross-border investments. These trends can be observed in the strategic
implementations of both developing and develop nations. Business interests and fixed assets
mostly contribute to all the cash that flows into a nation which is classified as investment flows.
This occurs as a result of buying and selling of the business interests and assets. Canada has been
seeing an increase in direct inward investment flows since 2009. (Dang, 2010) Canadas
productivity and foreign direct investments are increasing as a result of Canada participating in
the global value chains. All countries in the world have their own investment flow policies and
strategies that help them increase their flow chains in the global economic market. Investment
flows in Canada have been determined by a variety of policies and thus, these experimentations
have helped the country to examine the effects of various types of investment flow strategies
both in national and sectorial level. The three main financial sectors of Canada can be said to be
manufacture, finance and the petroleum business. (Shapiro and Globerman, 2003) The
understanding of sectorial inflows and investments in these three sectors can be a useful tool in
identifying the status of investment flows in the country and its various sectors. (Shapiro and
Globerman, 2003) Inbound flows are usually directed by foreign investment policies but firms
dont always tend to invest inbound. Of the many foreign direct investment strategies that
Canada has applied, Foreign Investment Review Act was one of the acts that monitored the
capital and investments that the nation was making. (Shapiro and Globerman, 2003) The act
25
would allow investments to make the investments profitable by levying undertakings from the
investors. There are various liberalization provisions of the trade agreements that Canada has
done in the past. (Shapiro and Globerman, 2003) The FTA-NAFTA provisions of liberalization
have helped Canada in increasing the inward FDI flow. The various integrations that
multinational companies use while doing business can also be modified to complement the trade
process and increase the flow of investment. Horizontal and vertical integrations can be used in
order to increase the investment flow by decreasing the costs of intra-firm relations. The
countries that promote their free-trade agreements and large tariff free markets gain a better hand
at increasing their inward FDI flow.(Shapiro and Globerman, 2003) It is one of the processes by
which tariff free large markets lures nations into making relationship within the large network. A
high GDP also function in the increasing investment flow in the country. If Canada as the host
nation has a higher GDP compared to other countries then, the investments in the country are
considered to be profitable. Also, domestic funds for investment are largely available and it is a
plus for inward investment flow. For finance, the GDP of a cross border country does not highly
matter. IN the case of Canada, the increasing or decreasing GDP of U.S. would not affect the
financial services sector of Canada and its effects on the investment inflow. However the GDP of
Canada and the exchange rate in the US largely and positively affects the FDI inflows in this
sector. Surprisingly the provision of the FTA-NAFTA did not significantly help in increasing
flows into the country.(Shapiro and Globerman, 2002) Canada is also working in bilateral
investment treaties with US and the rest of the world which protects the investors to seek
monetary damages from a foreign government. (Boscariol et al., 2009) The businesses who want
to invest in North America are protected by NAFTA provisions. (Price and Christy, 1995) They
provide investor with four basic guarantees of nondiscrimination, prohibition of performance
26
requirement, freedom to transfer earnings and international law standards on expropriation and
compensation. (Price and Christy, 1995)
Over the past decade emerging economies have integrated with advanced economies in
financial aspects and broadened the economic horizons of international markets. Capital flows
from advanced to emerging economies have surged unlike ever in history and the reverse has
also come to manifest itself in the global market place. Increased flows of capital in Canadian
economy have brought about policy changes and the country has faced some financial stability
challenges in the past few years. There are both macroeconomic and financial implications of
increased investment flows into any economy. These implications should be handled by further
strengthening the national policies and making the exchange rate system more flexible and
supporting sterilization.
4. Global Implication of worlds 11th largest economy:
Globalization is helping the economies of the world join hands together to increase trade
and capital unaccountably. World Trade Organization and International Monetary Fund have
been corresponding with China and Russia, two very large economies of the world, to get into
becoming a part of the trade organization. (Macmillan and Grady, 1999) Involvement of strong
economies into the trading and marketing environment is going to help the world economy see
arrays of progress and increment. International marketing and trade environment is affected by
the increase/decrease in countries GDPs and the stability of their economies. Canada has played
a good enough part in sustaining the world economy because of this large trade, business chains
around the world. Since Canada remains in the middle range of powerful economies, it has had
enough say in the World Trade Organization treaties and processes. Canadian economy has been
focusing on reducing unnecessary nuisance tariffs, restricting trade barriers, and addressing non-
27
tariff barriers. It would all help in stabilizing the Canadian economy and increasing its trade with
countries around the world. (Macmillan and Grady, 1999) Kiggundu and Uruthirapathy (2010)
come up with several points which will help change the policy to make more favorable for
Canada to compete with other countries. They pointed out to strengthen the national alliance for
competitiveness, raising the profile of competition policy, taking climate change as an
opportunity for enhancing competitiveness and need for clear framework. (Kiggundu and
Uruthirapathy, 2010)
The Canadian economy has seen a recovery in exports in the last few years. The figures
are definitely an encouraging push for the Canadian economy. The economy did not go through
good times after the encouragement, although the factors were more of the outside than inside.
The weakening U.S. economy and global market disruption stemming from East Asia and the
natural disasters had affected the growth and productivity of Canadas economy. Since the
economy highly relies on commodity prices increase in commodity prices increases investments
into various sectors in the country. Although increase in commodity prices does have negative
effects, the economy is strengthened by its long term benefits. (Roy, 2006)
The countrys GDP is highly reliant on trade and increasing trade leads to an increase in
GDP. Trade is an important factor because a large fraction of the GDP is reliant on the exports of
the country. AN increase in trade will help in increasing the GDP of the country. The Canadian
economy not only depends on the economic performance of U.S. but also the European
countries. A huge financial blow from their side can be a negative in the economic conditions of
Canada. The exchange rate of Canadian and U.S. currency has been stagnant over time and thus,
Canadas economy is favorable to the U.S. economy in many prospects. The country is seeing
good progress in terms of a growing economy because after the U.S. recession, Canada
28
outperformed U.S. in trade and economic growth. Weak U.S. commodity markets lead to
decrease in Canadian trade. Canadian involvement in bilateral treaties with strong economies
like China have helped increase Canadas global presence. Increasing bonds, treaties and
decreasing trade deficits have helped in the increase of Canadian economy and its power in the
world. (Roy, 2006)
The Canadian economy should keep on focusing on trade liberalization policies. The
Millennium rounds that are coming up are highly dependent on how the global economy treats
the developing countries.(Macmillan and Grady, 1999) Increasing trade liberalizations and
making the developing countries a part of the trade negotiations will help the world economy to
sustain and grow. Canadas support in trade liberalization though tariff reductions and limiting
trade barrier or restrictions will help the developing countries become a part of the world
economy and will get to enjoy their share in the worlds economy. Canada as an important part
of the world economy should work on strengthening the global market. For this, Canada should
work with other strong economies to commit into making strong policy foundations for
organizations like WTO and IMF and the World Bank. (Macmillan and Grady, 1999) Also,
strong economies which impact the world economy should give greater attention to poor
economies and the third world nations. Financially capable nations should work on making their
national financial institutions the strongest of all and increasing their trade insights into the larger
world. Next, capital liberalization should be looked upon with importance because safe
liberalizations can help the developing nations to be guided into the path financial growth and
productivity. Formation of an organization which would serve the same purpose as private sector
investors would also be a good way to provide provisions to the international trade system. They
would be helpful as they would be responsible in forming mechanisms to reduce financial crisis.
29
Canadas economy definitely influences the international trade market and it should work
on implementing safe capital liberalizations and open trade agreements which would benefit the
world economy.
5. Business cultures in Canada:
Finally I want to talk about SWOT analysis of business culture in Canada. Canada has
been the largest trade partners with USA. The US retailer has great benefits and protection under
NAFTA if they want to expand to Canadian market. Strength of Canadian business culture is that
it has similar culture and geography with USA. Weakness would be the different foreign antitrust
acts, real estate acquisition, privacy law, consumer laws etc. Opportunities are the vast untapped
reserve of the oil industries, no trade barriers, and benefits and protection from NAFTA. Threats
are the Canadas free trade agreements with Europe and Asia which can open door to the flow of
investments.
C. Conclusion
Canada is the 2nd largest country in the world with 10th largest economy. Canada has its own rich
cultural heritage. It is also largest trade partner of the USA. The retailers from around the world
want to do expand their business in Canada because of its economic freedom. This research
paper will give you the glimpse of its rich culture, political nature, laws, trade agreements,
import and exports and economic freedom.
30
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Running head: GLOBAL BUSINESS CULTURAL ANALYSIS

Global Business Cultural Analysis: Canada

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

Global Business Cultural Analysis: Canada

GLOBAL BUSINESS CULTURAL ANALYSIS

2. What are the major elements and dimensions of cultures in Canada?

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

2.5 Manners and Customs:

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

2.6 Social structure and organization:

GLOBAL BUSINESS CULTURAL ANALYSIS

3. How are these elements and dimensions integrated by locals in

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

4.1 Cultural difference in US:

GLOBAL BUSINESS CULTURAL ANALYSIS

4.1.4 Values and Attitude

Satterlee (2009) described values as an interpretation of culture by society members. A

4.1.5 Customs and Manners

GLOBAL BUSINESS CULTURAL ANALYSIS

4.1.6 Social Structure and Organization

GLOBAL BUSINESS CULTURAL ANALYSIS

Education system in America is decentralized, federal government reserves power for

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

2. Import and Export and its effect on global market:

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

3. Investment flow in Canadian market:

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

Brooks, L. J. (1997). Business ethics in Canada: Distinctiveness and directions. Journal of

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

GLOBAL BUSINESS CULTURAL ANALYSIS

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