International Market evalution

International Market Evaluation

Political and Legal Environment Comparison: Canada vs. Australia

Both Canada and Australia are reported to have a 'Country Risk Tier (CRT)' that reflects "A.M. Best's assessment of three categories of risk: Economic, Political and Financial System Risk stated in the case of Canada and Australia to be CRT-1 classification which is characterized by "very low levels of economic, political and financial system risk." (AMB Country Risk Report, 2010) The economic risk in Canada is reported to be 'very low' and the political risk in Canada is also stated at very low since Canada is a "high income country with significant natural resources and an established legal system." (AMB Country Risk Report, 2010) The economy of Canada is directly impacted by the U.S. financial system. The budget of Canada is reported to have moved "into deficit as the government has used fiscal policy to help stimulate the economy." (AMB Country Risk Report, 2010) The Risk in Canada's Financial System is reported as being 'very low" as: (1) Insurance companies in Canada can be licensed at a national and/or provincial level; (2) Federal companies are registered under the Insurance Companies Act of Canada and are regulated by the Office of the Superintendent of Financial Institutions of Canada." (Country Risk Report, 2010) The country of Australia is reported to reflect, as does Canada, "…A.M. Best's assessment of three categories of risk: Economic, Political and Financial System Risk. Australia is a CRT-1 country with very low levels of economic, political and financial system risk." (AMB Country Risk Report, 2010) The economy of Australia has experienced expansion that has not been interrupted in 18 years The Australian economy was not however "…immune to the current global economic slowdown, its strong economic position before the turmoil began, coupled with aggressive monetary and fiscal policy, combined to make the slowdown relatively mild." (AMB Country Risk Report, 2010) It is reported that the Australian economy is dominated by it accounting for approximately 70% of GDP with the largest of all components being those of: (1) Finance; (2) Property; and (3) Business services. (AMB Country Risk Report, 2010) Primary exports for Australia include the following the exports primarily stated as: (1) Ores and metals, wool, food, live animals, fuels as well as transport machinery and equipment; (2) The economy of Australia was one of the first to recover from the global slowdown and to tighten monetary policy. (AMB Country Risk Report, 2010) It is reported that economic risk in Australia is very low and the legal system of Australia is very strong and stable and contains only minimal corruption." (AMB Country Risk Report, 2010) The World Bank reports that the business environment in Australia is reported to be "…among the world's top ten." (AMB Country Risk Report, 2010) The regulatory authorities for the Australian insurance industry in Australia are those of: (1) The Australia Prudential Regulation Authority (ARPA); and (2) The Australian Securities and Investment Commission (ASIC). The entire financial services industry in Australia is said to be regulated by ARPA. (AMB Country Risk Report, 2010)

II. Maple Leaf Foods, Inc. -- SWOT Analysis

Strengths

Maple Leaf Foods, Inc. has been in business over ten years.

Maple Leaf Foods, Inc. is the largest food processor in Canada producing "fresh and processed pork and poultry products for retail and wholesale sales, as well as pet and livestock foods." (The Canadian Press, 2010)

Maple Leaf Foods is making the largest effort toward reduction in cost in its history.

Cost reduction efforts are projected to raise the profit margins of Maple Leaf Foods, Inc. By 75% over the next five years.

Weaknesses

The current network of Maple Leaf Foods Inc. is reported to be "fragmented, small scale and low-technology." (The Canadian Press, 2010)

Opportunities

Breaking in to the Australian marketplace which is similar to the Canadian marketplace which are both defined as CRT-1 characterized by a "predictable and transparent legal environment, legal system and business infrastructure; sophisticated system regulation with deep capital markets; mature insurance industry framework." (AMB Country Risk Report, 2010)

Threats

Threats for Maples Leaf Foods, Inc. include the following:

The food product recalls in 2008 after the deaths of approximately 28 people is likely to haunt Maple Leaf Foods Inc. In the near future. (Howell and Miller, 2010, paraphrased) The social and political economy of Australia is very much like that of Canada, therefore there should be no serious challenge in this consideration of expansion on the part of the company.

It is reported that a breakdown in communications at Maple Leaf Foods, Inc. was to blame for the food products that were recalled following the death of 28 individuals. Maple Leaf Foods, Inc. network is fragmented and this is likely due to the failure to communicate during the food processing process effectively.(Howell and Miller, 2010, paraphrased)