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American companies Vs Canadian companies

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Introduction

American companies Vs Canadian companies Ivy Cheng Eco 4A Mrs. Abrams March 10th, 2000 Canada and the United States have been close neighbours for over two hundred years. Recently, with the NAFTA agreement and the auto pact, our relationship become intertwined and connected. American companies take advantage of the weak Canadian dollar and begin to expand in Canada. Although Canadian consumers benefit from the cheaper prices, one must also realize that American companies are stealing market shares from Canadian based businesses. Over the past fifty years, American companies such as Sears Roebuck, Wal-Mart, and the Gap have marched into Canada. Within a five year span, these companies have grabbed a hold of Canada's economy. Their rapid success is mainly due to their low prices and size of the company. Against these strong competitors, Canadian companies such as Eaton's and Club Monaco are affected. In Canada, American companies can sell their products at a reasonably lower price than Canadian based companies. Firstly, with our dollar as low as $0.65, it will cost less for Sears and Wal-Mart to export their goods. This will decrease their production cost. ...read more.

Middle

(McQueen.) Last year, Sears topped "five billion dollars in sales while Eaton's stayed at their 1.5 billion levels." (McQueen) All of Eaton's stores are closed down since last November. At Old Navy, a part of Gap, most of their clothes are "under $25 US and this appeals to a lot of parents and teenagers." (White) In comparison, it took "Gap nearly eighteen years to reach one billion dollars in annual sales whereas it only took Old Navy four years." (White) Although profit is very important to a business, their future opportunities and expansions in the global market are also essential. This depends on the size of the company. In the United States, the market is much bigger than Canada. They have approximately ten times our population. (Atlas) Therefore, it is not surprising they have larger corporations compare to ours. As the world becomes more globally connected, companies must expand in size in order to compete. Wal-Mart, Sears and the Gap have large outlets in accessible locations which "[leads] to higher sales volumes, higher inventory turnover rates and lower real estate costs." ...read more.

Conclusion

This eventually can lead to a problem if we rely too much on the United States. If the United States' economy collapses, Canada will definitely follow the fall. Even if just one company, Wal-Mart for an example, goes bankrupted, all of the Canadian employees will lose their jobs, thus raising our unemployment rate. Lastly, if most of the big Canadian companies are bought by American companies or go bankrupt, Canadian entrepreneurs will lose confidence in their business and be discouraged to think of new innovations. In order to prevent American takeover economically, the Canadian government should aid Canadian based companies financially. Canada, a mixed economy, is entitled to giving partial support to companies in the need of help. The banks should give lower interest rates to Canadian entrepreneurs who are willing to start a business. By doing so, it will make it more lucrative and attractive for Canadians to start a business. This will boost up confidence of Canadians too. Lastly, we, as consumers, should support Canadian based companies and their products. Even though it proves to be marginally expensive, it will ensure that Canadian ventures will stay in business without the possibility of American intervention. ...read more.

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