THE IMPACT OF BUSINESS ENVIRONMENTS ON INTERNATIONAL

BUSINESS
THE SIX ENVIRONMENTS
Compiled by: D.David Winster
"Don't ship Canadian beef, Japan to tell U.S."

"TOKYO—Japanese Agriculture Minister Yukio Hattori will ask the

United States to ban the exportation of Canadian beef bound for Japan via
the United States, citing continued concerns over mad cow disease,
according to media sources in the Japanese capital. The Japanese
request comes in response to the American intention to start importing
veal from Canada early next year....According to the sources, the
Japanese Ministry of Agriculture, Forestry and Fisheries will be requesting
that the U.S. start certifying the origin of all its beef products intended for
export to ensure that nothing has come from Canada. Both the United
States and Japan closed their borders to Canadian cattle and beef
products after a single animal was diagnosed with mad cow disease
in Alberta last May. The U.S. and Canadian cattle industries were highly
integrated up until the mad cow scare. Canada has traditionally sold
more than 70 per cent of its live cattle to the United States.

As a result of losing export sales to U.S. processors, Canadian Beef

(because of limitations in exporting to Japan), Canadian to Japan
cattle producers may be challenged by beef exporters - affected by
the
from Argentina and Australia - two other countries
which are international competitors in beef exports. Japanese declines in
importing beef may affect the competitiveness of other Canadian meat
product exports such as pork or chicken since meat importers usually
handle all three of those products. This is a good reminder that
sometimes your ability to do business internationally can be effected by
the success or failure of other companies in your business sector who are
selling slightly different products.

Laws and regulations are a consequence of what the

Canadian Beef government wants to control, which is a consequence of
to Japan
- affected by politics - meaning what is the government doing, or not
the doing, to maintain the confidence of the people and get
Political /
re-elected. The Political Environment in this situation is
influencing the Canadian Beef exporters through the new regulations that
the Japanese government has established. These Japanese regulations
(which are a consequence of the Sociocultural Environment - people in
Japan fear Mad Cow) will mean that U.S. beef producers cannot send beef
products to Japan if some of that beef came from cattle they imported
from Canada. Example - frozen hamburger patties manufactured in the
U.S. for export to the McDonald's outlets in Japan.

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As a result of losing export sales to U.S. Canadian Beef to Japan
processors, Canadian cattle producers will be - affected by the
Economic environment
economically constrained and this will have a
negative effect on the economic environment in the province of Alberta
and Saskatchewan. The high value of the Canadian dollar from Q2 of
2003 through to Q3 in 2004 will make it further challenging for Canadian
beef exporters to sell their product at a competitive price since importers
will have to pay more.

Canadian Beef to Japan - affected Distance - Canada is much farther way

by the Geographic Environment from the markets in Tokyo and Osaka
- distance to travel - weather - than Australia. Australia's close distance
temperature
to Japan gives it an advantage in quoting
prices because their shipping costs will be lower and the time the product
is "in transit" is less than a Canadian export. If the time "in transit" is less,
then the product is more fresh. Canadian exporters are at a disadvantage
when the distance to the customer is farther than another source in
Australia or New Zealand. Canada is a northern country. We have
winter!! American cattle producers have less weather extremes to
contend with than Canadian cattle producers, therefore it is more costly
for Canadian cattle producers to feed their herds. Because it is colder in
Canada, you have to feed the cattle more grain because these animals
burn more calories in colder weather. Overall, it costs more to bring
animals to market due to the challenges of the weather and our colder
climate.

Agriculture products (a consequence of the

Technological
richness Geographic environment) are effected Environment
by developments in bio-sciences such as - bio-science - hormone
hormones which make animals mature faster supplements
and gain muscle mass. Technological developments also produce
variations in breeding that allow for animals and plants to grow faster and
more quickly with varying nutrients. For example: - Canadians have used
bio-technology to develop strains of grains that will grow in colder soil
and mature in a shorter growing season. Future developments in bio-
sciences may mean an end to BSE - bovine spongiform encephalopathy
[Mad Cow disease] and therefore we might see the removal of restrictions
on beef exports since there would no longer be fear of this disease
effecting humans.

Despite great marketing efforts by the Canadian

Sociocultural Environm government and the CBEF - Canada Beef Export
ent
- languages - lifestyles -
Federation, Japanese people still do not eat a lot
of beef as part of their diet. While the younger
generation in Japan eat western style fast foods - the per capita
consumption of beef is not as large as in North America and Europe.
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Japanese protein sources are mostly from the marine products (fish,
squid, whale meat, seaweed), pork and poultry they eat. This is a part of
Japanese culture which is hundreds of years old and unlikely to change in
a short time. Raising cattle in the grasslands of Alberta is also part our
Canadian sociocultural environment. If this lifestyle is lost due to
problems exporting beef, it will be a big problem to the thousands of
families in Western Canada who are 2nd and 3rd generation cattle
farmers. These people are not easily converted into website designers or
other new millennium workers and it would be heartless to expect them
to make such a sacrifice.