The new dynamics at play in the global environment of business have made competition more intense than ever. As if Canadian manufacturers didn’t have enough to be concerned about. These authors, who have consulted widely for global companies, describe tactics that Canadian manufacturers can put into practice to get back in the game.

“On the global front, we are being outpaced by our competitors: not just by fast-growing emerging economies like China and India, but also by our more traditional competitors such as the U.S. and Europe, who are aggressively pursuing international policies to strengthen their competitive advantage. Rather than rest on current success, Canada must take on this challenge and plan for what lies ahead.”
– The Hon. D. Emerson, Former Minister of International Trade
Canada’s State of Trade – 2007

Canada’s economic prosperity is highly dependant on Canada Inc.’s ability to effectively compete in an increasingly integrated, competitive global economy. Unfortunately, as indicated by the former minister’s comments, we are being outpaced by our competitors on this front.

The weight of these words carries a particularly harsh punch in Canada’s manufacturing sector, which is, as Jean-Michel Laurin, Vice President Global Business Policy at the CME puts it,1 currently living The Perfect Storm:

  • The Canadian dollar has appreciated 60 percent against the USD since 2002
  • Energy and commodity costs have escalated over the past few years
  • Stronger international competition in manufacturing is putting downward pressure on prices, creating a cost squeeze
  • While the U.S. is not technically in a recession, certain key industries – housing and automotive, among others – are
  • Credit conditions are tighter in both Canada and the U.S.

A look at the graph below provides a sobering picture of the effect these factors have had on manufacturing employment since 2005.

Graph 1: The Perfect Storm
(Source: Canadian Manufacturers & Exporters)

For 2007 as a whole, employment fell by an estimated 55,300 job in the sector – a 3 percent decrease from 2006 – and total hours worked declined 2.9 percent.2 And while price increases for petroleum and coal products and primary metals, and a 1.9% increase in labour productivity helped manufacturers squeeze out a 0.4% increase in sales year over year, real gross domestic product (GDP) in the sector fell by 1.1%.3

Graph 2: Manufacturing Shipments in Canada

Source: Canadian Manufacturers & Exporters

So, the hard question is, what can the Canadian manufacturing sector do to improve its commercial plight and overall competitiveness?

There is obviously no one simple solution to this matter, but one thing is for certain – the status quo won’t do. Canada and other Western industrialized nations are witnessing a steady decline in their share of world GDP to the BRIC (Brazil, Russia, India and China) countries and other emerging economies, as shown in Graph 3.

Graph 3: Share of World GDP
(Source: Canadian Manufacturers & Exporters)

As if that is not enough to worry about, there is the reality that Canada Inc. is in an increasingly competitive battle for deal flow around the world, including in the United States – the largest global market and, by far and away, the country that our manufacturing sector relies on the most for export sales. While Canada is still the United States’ leading trading partner – total bilateral trade of goods and services reached $711.9 billion in 20074 – China has now eclipsed Canada as the number one supplier to the United States. And since NAFTA came into effect in 1994, Mexico has been gaining ground on us (see Graph 4).

Graph 4: Share of U.S. Imports by Major Trading Partner

Source: Canadian Manufacturers & Exporters

Finally, as the drivers of globalization remove barriers that traditionally segmented the competitive environments of small and large firms, firms of all sizes are beginning to share the same competitive space.5

Given these dynamics, Canadian manufacturers – with particular emphasis on the approximately 65,000 small and medium-sized enterprises (SMEs)6 that, for the most part, strictly serve the Canadian market – must obtain a solid understanding of the forces that are shaping their respective industries today, in Canada and abroad. They must then formulate and implement strategic/business plans that will enable them to respond to these forces in a way that will allow them to not only survive, but to thrive in the global economy. The objective: to become globally competitive enterprises.

The challenge for the vast majority of these companies is a formidable one: to develop a global mindset and to understand how to best leverage trade – as an exporter, importer, or direct investor abroad – in a world in which trade liberalization, global value chains, enhanced international transportation systems, the democratization of technology, and improved access to capital across the globe have led to significant changes across the 21 industries that comprise the manufacturing sector. In essence, we are talking about the creation of a nation of traders – not just companies that may export or source products internationally on an as-needed or opportunistic basis, or manufacturers that have grown very comfortable in their role as a local vendor in the domestic supply chain of an OEM or larger manufacturer (such as Bombardier or Magna). By “traders” we mean enterprises that have embraced globalization and utilize the levers of international trade to grow and compete.

It is in this context that, AMAXIS, a Montreal-headquartered international business development services firm, developed the 9 C’s of International Business – an innovative, practical and proven business model used to help companies – goods and service producing sectors, in Canada and abroad – compete at the global level. Over the past 15 years, AMAXIS has had the unique opportunity of working with, competing against, and analyzing hundreds of Canadian and foreign enterprises that are active in international trade and investment environment. AMAXIS’ 9 C’s of International Business, which this article will describe, represents a synthesis of those key elements that a company or organization must address as they internationalize, if their efforts are to be rewarded by sustained and profitable sales.

Prior to discussing each C of the 9 C’s model in detail, though, let’s first take a look at some of the leading thinking in management circles about firm competitiveness.

Competitiveness at 50,000 feet

When we talk about business competitiveness today, the discussion invariably turns to two key topics – productivity and innovation. True competitiveness, as defined by Harvard Business School Professor Michael Porter, is measured by productivity, which allows a nation to support high wages, a strong currency, and attractive returns to capital – and with them, a high standard of living. Innovation, as defined by the Conference Board of Canada, is the ability to turn knowledge into new and improved goods and services. It has become integral to sustaining and improving living standards and quality of life. Innovation, in effect, is a key driver in creating productivity.

The productivity of a country is ultimately set by the productivity of its companies, and the relative ability for these companies to create wealth is based on three interrelated areas:

  1. The sophistication and capabilities with which domestic companies or foreign subsidiaries compete;
  2. The quality of the microeconomic business environment in which they operate; and
  3. The state of development of clusters that provide benefits through the proximity of related companies and institutions.

Through its Business Competitive Index Rankings (Global Competitiveness Report), the World Economic Forum provides us with a country-by-country ranking across the first two of these elements.

Table 1: The Business Competitiveness Index Rankings

  2007 2006 2005 2007 2006 2005 2007 2006 2005
U.S.A. 1 1 1 1 1 1 1 1 2
Germany 2 2 3 2 3 3 2 2 1
Finland 3 3 2 3 2 2 9 9 8
Sweden 4 9 9 4 10 10 3 4 4
Denmark 5 4 4 5 4 4 5 6 9
Japan 10 8 7 12 8 9 6 3 3
U.K. 11 7 5 11 7 5 11 7 5
Canada 14 15 16 14 15 16 17 18 16
France 17 13 11 18 16 12 12 11 10
Australia 18 16 12 15 13 11 24 23 20

Source: The Global Competitiveness Report 2007-2008, World Economic Forum

As highlighted in Table 1, Canada ranked 14th and 17th, respectively, in the areas of Quality of National Business Environment and Company Operations and Strategy in 2007. While it important to note that these rankings are not absolute, they do provide us with insight into Canada’s microeconomic (i.e. company) competitiveness relative to other nations. Bottom line? While the quality of our business environment is good, and our companies operate at a relatively sophisticated level, we are not as productive as several other industrialized countries

These findings are consistent with the results of the Conference Board’s 2008 Report Card on Canada. It provides an assessment of Canada’s performance across six key socio-economic categories – the economy, innovation, the environment, education, health, and society – and their impact on Canada’s quality of life, relative to 16 of the wealthiest countries in the world. On the economy and innovation, Canada’s ranking was 11th and 13th, respectively, reflecting its underperformance on several important economic indicators, including productivity. The result is that Canada’s level of income per capita is now at 83 percent that of the U.S. level.

While interesting, these broad economic rankings are not relevant for the average Canadian manufacturer, concerned as he or she is, with competition from China, a strong Canadian dollar or the availability of skilled and experienced personnel. Bottom line? We need to take the discussion down to the shop-floor level and provide our companies with the knowledge and tools to build globally competitive enterprises.

The purpose of AMAXIS’ 9 C’s of International Business is exactly that. In a nation in which less than 20 percent of our employer businesses in the goods-producing sector export,7 and the largest 4 percent of exporting establishments account for a disproportionate 84 percent of the total value of merchandise exports (and over 25 percent of this figure is accounted for by affiliates of U.S. companies exporting product back to its parent in the U.S.),8 industry and government must change the way they think about and approach business in a globalized economy. That is, if we expect our manufacturers to weather the Perfect Storm and compete with China Inc., India Inc., Brazil Inc, Russia Inc. . . . going forward.

Table 2: Number of Exporters by Industry Grouping (NAICS)

  2002 2003 2004 2005 2006
Industry Number of Merchandise Exporters (Establishments)
Agriculture, Forestry, Fishing and Hunting 2,523 2,307 2,263 2,145 1,954
Mining, Oil and Gas Extraction 476 515 489 514 513
Utilities 69 59 66 68 68
Construction 1,356 1,365 1,425 1,401 1,282
Manufacturing 21,450 21,647 21,685 21,640 21,004
Wholesale Trade 10,785 10,938 10,938 10,865 10,297
Retail Trade 2,585 2,326 2,358 2,252 1,961
Transportation and Warehousing 1,533 1,468 1,644 1,641 1,514
Information and Cultural Industries 568 576 600 596 511
Finance / Insurance 1,144 1,157 1,257 1,286 1,215
Business Service 3,516 3,656 3,812 3,883 3,683
Other 1,493 1,559 1,721 1,776 1,639
TOTAL 47,498 47,573 48,258 48,067 45,641

Source: Statistics Canada: The Daily, March 11, 2008

AMAXIS’ 9 C’s of International Business

Building on the competitiveness concepts presented above, AMAXIS’ 9 C’s of International Business is about transforming the way our companies compete in the global economy. The fuel for globally competitive enterprises in this case is innovation, but it goes beyond “the ability of companies/organizations to turn knowledge into new and improved goods and services” (Conference Board of Canada). Innovation in the 9 C’s world is about knowledge itself:

  • Knowledge of how and where to export your products and services
  • Knowledge of how and where to source products and services internationally
  • Knowledge of how to develop and implement a global supply chain strategy
  • Knowledge of how and where to expand your business internationally
  • Knowledge of how to manage the risks of international trade
  • Knowledge of how to stay one step ahead of your competition
  • Knowledge of how to grow a company in the global economy

Diagram 1: AMAXIS’ 9 C’s of International Business

As illustrated in Diagram 1, there are 9 key elements that, together, enable firms to realize sustainable and profitable sales as they endeavour to grow their enterprises. The optimal environment for growth is realized when all 9 C’s are at levels that meet industry benchmarks at a global standard.

The specifics of each C are as follows:

1. Competitive products and services

Price, quality, technical specifications, commercial and delivery terms, customer service support – the list goes on – are all components of a buying decision in the manufacturing sector. Whether a company is selling goods or services domestically or to clients abroad, they must have a clearly defined value proposition that meets or exceeds their customer’s requirements.

Key management considerations:

  • What is the company’s core product or service? Is it well-defined?
  • What differentiates the company’s product or service from its competition in Canada? Globally?
  • What are the key selling features of the company’s offering?
  • How do the key selling feature compare to key competitors in Canada? Other targeted markets?

Even for our national champions in the manufacturing sector, getting to “Yes” with existing or prospective clients requires significant effort. Take the narrow-body segment of the business jet industry, for example. In this market, Bombardier is going head-to-head with Cessna, Gulfstream, Hawker Beechcraft, and Embraer – all world-class aerospace manufacturers. All five companies are essentially targeting the same buyers across the globe, so Bombardier must determine how to put the most competitive offer on the table if it expects its prospective customer to buy one of its Learjets over other compelling options.

Table 3: Key Players in the Narrow-Body Segment of the Business Jet Industry

Very Light Light Super Light Midsize
Bombardier   L40XR L45XR L60XR
Cessna Mustang CJ3 XLS/+ Sovereign
Gulfstream       G150
Hawker Beechcraft Premier 1A HP400XP H750 H850/900XP
Embraer Phe100 Phe300 Phe400 Phe500

Sources: Bombardier, Company Reports

2. Critical mass

Canada is a nation of small and medium-sized enterprises. The manufacturing sector is no exception to this reality. Of the approximately 250,000 business establishments we have in the goods-producing sector, only 700 of those have 500 employees or more.9

Graph 5: Breakdown of Canadian Business by Number of Employees, 2007

Source: Statistics Canada, Business Register, December 2007

The issue of critical mass becomes particularly significant as a company engages in trade initiatives. Over the years, AMAXIS has observed that new entrants in the global arena highly underestimate the time, effort and resources it takes to successfully internationalize. On the export front, for example, it takes at least two years of dedicated business development effort before a company can expect to realize any material deal flow from a new market. For your average Tier 2 or 3 auto parts manufacturer in Southern Ontario or precision machining company in St-Laurent, Quebec, there are real limitations on their capacity and willingness to spend the $50,000 to $100,000 per year that it takes to build a new market.

Key management considerations:

  • Does the company have enough manufacturing capacity to meet its domestic and international obligations, now and into the future?
  • Does the company have sufficient human and financial resources to carry out its internationalization objectives?

In Canada, with its predominance of SMEs, we have to be smart about how we overcome the challenges associated with critical mass if we are to build globally competitive enterprises. This is where the Connected C (Number 5 below) comes into play. Our companies have to seek out partnering relationships and tap into business networks – both traditional (e.g. the bilateral Canadian chambers of commerce spread across the Americas) and virtual (e.g. the Virtual Trade Commissioner Service) – in an effort to realize economies in their business development efforts. In any one industry, in any one particular market, our companies will invariably face competition from both local and foreign enterprises – many of which will be larger, with deeper financial pockets. As a result, they must be as efficient as possible with their marketing and sales or scoping or due diligence dollars if sustainable commercial success is to be realized.

3. Commitment

In this case, commitment refers to the demonstrated commitment by management and employees in planning for and implementing trade activities. If the Director of Business Development in Company X, for example, is spending more time selling the benefits of Market Y to his/her superiors versus selling the company’s products or services to prospective clients in the Market Y, the chances of Company X succeeding in Market Y are limited.

As highlighted in the previous two C’s, the time, energy and resources required to build a globally competitive enterprise cannot be underestimated. Battling the BRICs (Brazil, Russia, India and China), Mexico, the U.S., the EU, and other manufacturing nations/regions requires continuous and relentless effort.

Key management considerations:

  • What financial and human resources has the company committed to the internationalization process, and for what period of time?
  • What is the company’s existing level of knowledge of international markets?
  • What feedback/measurement system does the company have to evaluate the progress of trade activities?

4. Capital

The availability of, and access to, capital is a critical element in building a healthy and viable enterprise. Not surprisingly, it is one of the main areas that always cited by SMEs – innovators, manufacturers and exporters – as being a particular challenge.10 This challenge will impede business growth domestically and internationally.

In Critical Mass above, we indicated that it takes a good two years of dedicated business development effort for an exporter to realize any material deal flow from a new market. The time frame for planning and implementing successful international sourcing or investment initiatives is similar. Again, there will be variations on this number depending on the complexity of the product and service and target country. If a manufacturer does not have sufficient capital resources to manage through this development cycle, it should postpone any internationalization initiatives until it does.

Key management considerations:

  • What is the company’s past, present and expected financial position?
  • Is there a budget in place that is specific to the internationalization process, and for what period of time?

5. Connected

Connected in this case has two component parts:

  1. Business connections/networks
  2. IT readiness or “connectedness”

Building a globally competitive enterprise requires both of the above.

As was highlighted in Critical Mass, our companies have to determine how to best leverage partnerships, connections, and business networks – private and public, in Canada and abroad – in order to create what AMAXIS refers to as virtual mass. Essentially, we are talking about virtually “bulking up” companies so they have the capacity to compete at a global level.

With respect to IT “connectedness”, the logic is similar. In the Information Age, smaller enterprises now have the capacity to access the world in a way that only multinational enterprises did less than 15 years ago. Proactive utilization of information technology can help propel a company to the global stage without having to assume exorbitant costs. AMAXIS’ experience on this front helps illustrate the point. In December 2006, the firm was in New Delhi, India, working on an export development project for a leading Mexican tannery interested in supplying the Indian footwear industry. While there, and with laptops in hand, firm personnel were able to maintain regular communication, via Skype – an internet P2P telephony company – with clients in Mexico and the team in Canada about project coordination matters in real time. The cost to AMAXIS: $0.

Key management considerations:

  • What business connections/networks does the company have in the industry and internationally that can be accessed and/or leveraged?
  • What are the key agencies/industry associations/organizations that the company can utilize to help grow the business?
  • What is the company’s IT profile?
  • Is the company utilizing the internet/technology to create competitive advantage?

6. Country acumen

As an exporter, importer or direct investor, it is important to have more than a superficial understanding of the country that your company is doing business with or in. Successful management of business risks and the ability to effectively penetrate a particular market requires in-depth knowledge and appreciation of the country’s history, culture, political and economic structure and direction, industrial profile etc.

In Mexico, for example, what is the impact of the sexenio cycle (the change in presidency every six years) on infrastructure projects that companies like TransCanada Pipelines or SNC-Lavalin are pursuing? Or, how do Canadian manufacturers that would potentially supply these companies prepare for these political cycles? Or, in the case of China, what is the significance of guanxi and its relevance to building effective business networks? These are complex questions that require sophisticated thinking and responses.

Key management considerations:

  • What are the company’s target markets (for exporting, sourcing or investing)?
  • How did the company choose these markets?
  • Does the company already have business in/with the markets? If so, what?
  • What is the company’s business knowledge of each target market?

7. Company plan

Building a globally competitive enterprise does not happen by chance. The plan is the foundation on which the company will grow. It will also vary, depending on what the specific internationalization objectives and goals are of a particular enterprise. Key components of an effective plan include:

  • Business objectives
  • Market research and analysis
  • Competitive intelligence
  • Risk assessment
  • Marketing and sales plan or sourcing plan
  • Logistics plan
  • Administration plan
  • Budget / financial plan
  • Legal / tax plan

For each new market that a company is planning to export to, source from, or invest in, a country-specific plan should be developed.

8. Continuous innovation

As indicated in the section, Competitiveness at 50,000 Feet, innovation is a key driver in creating productivity. In the case of AMAXIS’ 9 C’s of International Business, this translates in to sustained and profitable sales. In the global economy, the speed at which business is being conducted is accelerating, so Canadian manufacturers must keep the wheels of innovation rolling if they hope to remain competitive.

To help illustrate this point, let’s take a look a recent article published in the Globe and Mail announcing that Nortel Networks won a contract with Bell Canada for its 40 gigabits per second optical gear.11 The equipment allows networks to run at a rate four times faster than what the current, “state-of-the-art” equipment permits.

Without a doubt, it is encouraging to see Nortel take these steps forward. But as the article also highlighted, Nortel faces stiff competition from rivals. Up to 2000, Nortel led the market in optical products. Now it must contend with companies like Alcatel-Lucent and China’s Huawei Technologies. What is particularly noteworthy about Huawei, though, is that China Telecom made an announcement last month indicating that it had selected Huawei to build the country’s first 40-gigabit network. Make no mistake about it, the Middle Kingdom is moving up the value chain, and moving up fast.

9. Confidence

In building a globally competitive enterprise, the management and employees of the company must have an unwavering belief in the company’s ability to compete at a world class level. As was the case during the Beijing Olympics, personal best or Canadian best may not be good enough to win. In the global economy, there is only one standard, and that’s the global standard – and that applies to small, medium and large-sized enterprises across industry.

This belief is not based on blind faith. It is confidence that is created as a result of the 8 other C’s coming together. While a particular manufacturer may have limited to no international trade experience, it can create the winning conditions for commercial success.

Getting Started: AMAXIS 9 C’s Global Readiness Assessment

When a company, be it a manufacturer or not, makes the decision to engage in trade, the company should first carry out an internal diagnostic across all 9 C’s to ensure it is adequately prepared. Once a company’s global readiness is assessed, a series of actions can then be defined for each C that is considered deficient and that requires special attention. It is unrealistic to think that any company – even our large, well-established and globally savvy companies like McCain Foods Limited or rising stars like Keilhauer – will be operating at an optimal level across all C’s, all the time. The objective is to continuously strive to meet or beat industry leading benchmarks across each C.

“This is an exciting time for Canada, and an exciting time to be Canadian. The world is not standing still, and working together – as one – Canadians have the energy, the ambition, the skills and the tools to succeed in a global competitive marketplace.”
– The Honourable James M. Flaherty
Minister of Finance
Foreward, Advantage Canada

The Canadian manufacturing sector is a key component of Canada’s economic profile. It is the single largest business sector in the country. It accounts for 16 percent of Canada’s GDP, employs 2 million Canadians, accounts for two-thirds of Canada’s exports, and represents 75 percent of private sector R&D.12 A number of factors – appreciation of the dollar, higher energy and commodity costs, stronger international competition, a recession in key U.S. markets, and credit market problems – have unfortunately put excessive strain on the sector. Today, manufacturers are looking for answers on how to move forward in these turbulent times.

While there are no quick fixes for any company operating in such a challenging environment, one thing is for certain. In today’s globalized economy, Canadian manufacturers must adopt solutions that enable them to compete in a world in which trade liberalization, global value chains, enhanced international transportation systems, the democratization of technology, and improved access to capital across the globe are reshaping the competitive dynamics of the 21 industries that comprise the manufacturing sector.

The model we describe in this article is not meant to be a panacea. But it is one key element that can help our companies become globally savvy and competitive enterprises.


  1. As presented by Mr. Laurin in a lecture given to William Polushin’s North America: Global Markets class at the Desautels Faculty of Management on July 29, 2008
  2. Statistics Canada, The Daily, April 29, 2008
  3. Ibid
  4. Canada’s State of Trade – 2008, DFAIT
  5. Etemad, H., Wright, R. W., and Dana, L. P. (2001). “Symbiotic International Business Networks: Collaboration between Small and Large Firms”, Thunderbird International Business Review, Jul/Aug, pp. 418-499.
  6. SME Financing Data Initiative – 2004, Government of Canada
  7. Statistics Canada, Business Register, June 2007
  8. Statistics Canada, Profile of Canadian Exporters: 1996 to 2006, March 11, 2008; Canada’s State of Trade – 2008, DFAIT
  9. Statistics Canada, Business Register, June 2007
  10. BDC’s Entrepreneurial Insight, February 2008
  11. Avery, S. “BCE buys Nortel high-speed optical gear”, The Globe and Mail, September 4, 2008
  12. Canadian Manufacturers & Exporters, 2008

About the Author

Karl Moore, is an Associate Professor at the Desautels Faculty of Management, McGill University and an Associate Fellow at Green Templeton College, Oxford University. 

About the Author

William Polushin is President, AMAXIS Inc., and Founding Director, Program for International Competitiveness, Desautels Faculty of Management, McGill University.

About the Author

William Polushin is President, AMAXIS Inc., and Founding Director, Program for International Competitiveness, Desautels Faculty of Management, McGill University.