Examples of Lessons
Created for the February 14,2011
issue of Canadian Business Magazine
Course Applications:Introduction to Business: Trade / Politics and Commerce
Difficulty Level:Level 1
Article:“A tense passage”, p. 54
Article Summary:This issue’s the “Big Picture” feature focuses on how the political unrest in Egypt has affected the world of commerce, because of the Egypt-controlled Suez Canal. Since the unrest in Egypt unfolded, the price of oil has gone up, and investors around the world are keeping a close eye on the developments in the region.
Outcomes
To learn about the effect of the political unrest in Egypt on global commerce
To consider the historical significance of the Suez Canal
To understand the correlation between geo-politics and the world of commerce
Terminology & Concepts
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the Suez Canal: an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea; opened in November 1869, it allows water transportation between Europe and Asia without navigation around Africa
stability: dependability; steadiness
commodity: some good for which there is demand; any good or service produced by human labour and offered as a product for general sale on the market; examples are petroleum, notebook paper, milk or copper, etc.
investors: individuals or organizations who invest money in order to make a profit; investors can invest directly into a business or they can buy shares (units of ownership) of companies listed on the stock market
commerce: business
cargo: goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck
trade: the buying and selling on domestic or international markets of goods and services
contingency plan: a plan devised for a specific situation when things could go wrong; contingency plans are often devised by governments or businesses who want to be prepared for anything that could happen
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Comprehension
1)a)What effect has the political unrest in Egypt had on the business world?
b)What is at the root of this effect?
2)How many ships pass through the Suez Canada each day? What would happen if the Suez Canal was closed because of the political unrest in Egypt?
3)What percentage of the world’s shipping traffic passes through the Suez Canal? Of that cargo share, what percentage is oil?
4)When was the Suez Canal built? What did the canal enable, and what effect did it have on geo-politics of that time?
5)What is the connection between the Suez Canal and Canada’s former prime minister, Lester B. Pearson?
Analysis/Assignments
1)Explain why the price of oil in particular went up since the unrest in Egypt unfolded. What was the process of this development?
2)How did the building of the Suez Canal in 1869 change the world?
3)Why are business investors worldwide paying close attention to what is happening in Egypt?
4)Why does Egypt play a crucial role in global commerce?
5)Speculate how the closing of the Suez Canal would affect global commerce.
6)Research and write a report on the building of the Suez Canal, concentrating on how and why the canal was built, and what effect it has had on global commerce and geo-politics since its construction.
7)The unrest in Egypt is one example of how politics and commerce are closely connected. Can you cite other global political developments that impacted or changed the world of commerce?
Answers to Comprehension Questions
1)a)The price of oil went up.
b)Investors worldwide became concerned that the political unrest might interrupt shipping of oil across the Suez Canal, which Egypt controls.
2)50 ships. Closing the canal would block the shortest route from the Red Sea to the Mediterranean, and add almost two weeks of extra travel time for ships forced to voyage around the south of Africa instead.
3)8%; 16%
4)It facilitated trade between the Indian and Atlantic oceans, but it also spurred many disputes with Europe over its control.
5)Egypt has had many disputes with Europe over control of the canal. The worst was the Suez Crisis in the mid-1950s, but was solved by the proposal of Canadian prime minister Lester B. Pearson for the first United Nations peacekeeping force that would put an end to Israel’s invasion of Egypt, and Britain and France’s dreams of Suez control. He won a Nobel Peace Prize for his efforts
Tutorials
Canadian Business Educational Focus, February 28, 2011 Issue
Course Applications: / Retail Management, Competition StrategiesDifficulty Level: / Level 2
Article: / “Who will Target Canada next?”, p. 26
Article Summary: / This feature story reports on the rise of U.S. retailers expanding into Canada—which may be good news for Canadian shoppers, but not necessarily good news for Canadian retailers who are girding up for intense American competition. Victoria’s Secret and Crate and Barrel have already opened flagship stores in Canadian malls. This January, TJX Cos., owner of the discount clothing store Marshalls, and Tanger both announced northern expansion plans, and most recently Target announced its purchase of 220 Zellers stores in a $1.8-billion deal with the American owner of the Hudson’s Bay Co. Analysts predict that J. Crew, Macy’s, Nordstrom, Kohl’s and JC Penny are also on their way. The stagnant U.S. economy, American retailers’ need to expand globally, Canada’s stable economy and its still underserved retail consumer market are the major reasons for this trend.
Comprehension / Discussion
1)Why are so many American retailers expanding into Canada?
As U.S. retailers search for markets outside of their own stagnant economy, they’ve set their sights on Canada.
Canada’s comparatively strong economy makes a move north of the border all the more lucrative.
Many U.S. retailers tapped out their market at home, and to continue the growth, they need to see expansion opportunities. For these retailers, Canada is the perfect test market for a first foray into international expansion: there is a mainly English-speaking population, Canada’s close to existing supply chains, and its consumers
already know U.S brands.
The risk in expanding into Canada is low for the U.S. retailers— if they do have to leave the market, a big chunk of sales will probably just slide back to their U.S. stores. Also reducing the risk for American retailers is the fact that Canadian consumers already recognize U.S. brands.
Canada’s relatively small market is an excellent test for American companies that are looking to globalize operations. “They have to practise going to a foreign country, and this is a consumer-friendly foreign country where they are known,” says retail consultant John C. Williams. If business is good in Canada, then it’s on to the really big markets: Brazil and South America, India, China or the EU—locations where greater cultural and regulatory differences are challenging, but huge population bases provide greater potential for profits.
Canadian shoppers are still underserved when compared to those in the U.S. There are 13 to 15 square feet of shopping space per capita in Canada, and more than 20 square feet per capita in the U.S. With numbers like this, Canada is far from its saturation point.
2)For who in Canada is this increased competition from foreign retailers good news? Who is this bad news for? Why?
While this increased foreign competition is good news for Canadian shoppers and shopping centers, it also means some Canadian retailers will struggle to remain competitive.
3)What should Canadian retailers do to deal with the increased competition from foreign retailers entering the Canadian market? Which one Canadian retailer effectively dealt its with American competition?
Canadian retailers have to make sure their product is the best it can be, it’s merchandised well and that they have great customer service.
The retail pie is only so big, and it’s going to be the firms that are much more successful in identifying and servicing customer needs that will be successful, and that tends to be the bigger chains.
Retail consultant John C. Williams does not expect much of this competitiveness to be based on deep price cuts, since Walmart already dominates that market on both sides of the border. Instead, the companies
that survive will be the ones who offer reasonable prices while upping their service level, ensuring they have the best products on the market and conducting more consumer research than they have in the past.
Costco is one Canadian retailer that managed to beat its direct competition form Sam’s Club, the Walmart-owned warehouse retailer. Sam’s Club had a five-year foray into Canada, but it closed its Canadian stores 2009, due to tough competition from Costco. When Costco saw the Sam’s Club move coming, it ramped up its Canadian efforts, opening even more stores to serve its already loyal customer base. As soon as Sam’s Club came, they began to pick up the pace of store openings. Canadians continue to love Costco. Today, it’s about 50% bigger in Canada than it is in the U.S. on a per capita basis.
4)Which one Canadian brand is well positioned to weather Target’s expansion to Canada? What is its strategy?
If there is a Canadian brand well positioned to weather Target’s northernmarch, it’s likely Joe Fresh, the clothing and makeup label owned by Loblaws. In October 2010, Loblaws opened its first stand-alone Joe Fresh store in downtown Vancouver. With a store on popular Granville Street, where its neighbours include H&M, Holt Renfrew and Aritzia, Joe Fresh is declaring itself as a fashion brand unto itself, not just a purveyor of cheap polo shirts to be bought alongside kitty litter and oranges. The store opened with much fanfare; the company
closed off the entire street for a rock concert with headliners Marianas Trench and Divine Brown. The location, and the opening party, reflects the company’s desire to reach a new, younger demographic with the 20 stand-alone Joe Fresh stores that are slated to open across Canada in the coming years. Vancouver is the epicentre of this demographic, with “an amazing number of condo dwellers and fashionistas,” says Craig Hutchison, senior vice-president of marketing for Joe Fresh and PC Home. Next up for the company: four more standalone stores opening in Ontario and Alberta in 2011, and new combination Loblaws– Joe Fresh stores at high-profile downtown Toronto locations on Queen Street West and in the refurbished Maple Leafs Gardens.
Analysis / Assignments
1)Toronto-based retail consultant Wendy Evans predicts that 70% of the Canadian retail landscape will be foreign controlled by 2015, up from the about 50% that is foreign controlled today. Is this a positive trend or a negative trend for Canada?
2)The first proliferation of U.S. retailers really took off after NAFTA in 1994. Why?
3)Which retailers in the discount-brand market have come, or are planning to come, to Canada?
4)Canadian real estate investor RioCan announced a $1-billion deal with American Tanger Outlets that will bring 10 to 15 Tanger Outlet Centers to Canada. Why is this good news for Canada shopping mall proprietors?
5)Which U.S. retailers have been very successful in Canada? Which Canadian retailers should be concerned about the increase in foreign-owned retailers expansion into Canada?
6)How is the entrance strategy of middle- and high-end retailers into Canada different from that of big box stores or discount brands?
adian Business Educational Focus, November 8, 2010
Course Application: / MarketingDifficulty Level: / Level 2
Article: / “When Peter Puck meets the X-Man”, p. 20
Article Summary: / The article discusses the recent marketing gambit of the NHL: the creation of 30 comic superheroes, one for each of the 30 NHL teams, known as the Guardian Project. These superheroes (the Guardians) and their stories will appear in a number of media, such as the NHL’s website, a graphic novel, games, etc., and this marketing ploy is aimed at tween girls and boys. With the Guardian Project, the NHL is expecting “to start a dialogue with fans that may not be playing hockey as active participants, to help build and engage with the next generation of NHL fans.”
Comprehension / Discussion
1)What is the Guardian Project?
The Guardian Project is the creation of a joint venture between the NHL and SLG Entertainment, the company behind the likes of Spider-Man and various other comics. The venture is called Guardian Media Entertainment and it has developed comic superheroes (Guardians) for all 30 NHL teams. The Guardian Project includes a graphic novel, gaming, sponsorship, merchandise and more.
2)What is the marketing strategy behind the Guardian Project?
The Guardian Project is NHL’s strategy to give kids a different way to connect with the league and sport. It is
targeted at tween boys and girls.
3)What potential weakness does the article point out about the Guardian Project as an effective marketing vehicle for the NHL?
“Far from Pro Stars redux, this cod pieced collection is Peter Puck–meets–X-Men on amphetamines and has almost nothing to do with the game of hockey.”
4)How was the Guardian Project launched and promoted?
The Guardian Project made its official debut at last month’s NHL All-Star Game, and will roll out to individual cities throughout March and April. The league and its partner, Guardian Media Entertainment (GME) introduced each hero on a daily basis in January via Facebook fan voting.
5)What are the early signs of the effectiveness of this marketing strategy?
The introduction of the heroes via Facebook fan voting tallied more than 1.2 million votes.
According to Brian Jennings, NHL vice-president of marketing, “The Guardian segment on NHL.com was the second-most-viewed part of the site in January.
Analysis / Assignments
1)Why do you think the NHL is targeting young people in their marketing? What is the goal of the Guardian Project marketing campaign? What are the creators of the Guardian Project expectations?
2)“It remains to be seen if the Guardian Project will strike a chord with audiences and reach its creators’ expectations or suffer a costly but quick death, mocked into obscurity.” Why is the writer of the article skeptical about this latest NHL marketing strategy? What risk/downsides does he feel this strategy has?
3)NHL vice-president of marketing says that the Guardian Project represents the league’s desire to be more creative. “We want to get away from being risk-averse and have a bigger appetite for calculated
risk that can help change the business,” he said. “This project is important in its potential
to start a dialogue with fans that may not be playing hockey as active participants, to help build
and engage with the next generation of NHL fans.”
Visit NHL.com and access the Guardian Project site. Review the site, and write an evaluation of this venture as an effective marketing strategy to “start a dialogue with fans that may not be playing hockey as active participants, to help build and engage with the next generation of NHL fans.”
4)The NHL offers an exciting product—fun sports to watch, passionate crowds, constant action—yet the league is not as popular as other major pro sports leagues. The NHL should be more popular. In small groups brainstorm a list of things the NHL should be doing to market its sport
Course Applications: / Economics, Public PolicyDifficulty Level: / Level 3
Article: / “Why the West is flailing”, p. 38
Article Summary: / This article is an interview with Oxford-educated economist Ambisa Moyo, whose latest book, How the West Was Lost, argues that the recent financial crisis and the current decline in the Western living standard is a consequence of what has been 50 years of misguided policy by the West, particularly the United States. She attributes the misguided policies to West’s democratic process in which leaders’ and policy-makers’ time in office is fairly brief before the next election, so their decisions are guided by short-term gains and political scores rather than long-term benefits for economies and societies. Moyo’s main recommendation for the recovery of the West is the de-politicization of the democratic process, governments educating their people about the right priorities and their implementation of incentives to encourage a focus on those priorities (i.e., education, health-care, technology, environment, and innovation).
Comprehension / Discussion
1)What is the thesis of Dambisa Moyo’s book, How the West Was Lost?
She accuses the West of 50 years of misguided policy, particularly in the United States, arguing that the housing bubble which caused the recent financial crisis is one of the consequences of its misguided policy. The broader consequence of these misguided policies is that the West today finds itself in decline, being rapidly overtaken by the more agile and focused economies of China and India.