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Team Project: Going Global & Inclusion Analysis

Team Leading by Example

College of Integrative Sciences and Arts, Arizona State University

OGL 355: Leading Organizational Innovation and Change

Dr. Brent Scholar

February 17th, 2022

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Team Project: Going Global & Inclusion Analysis

This paper will discuss how and why Recreational Equipment, Inc. should

internationally expand their business to Canada. Next, it will identify REI’s chosen mode

of entry, Canada’s potential political and economical issues for new businesses, key

cultural differences, specific actions for inclusion, and lastly the attitudes and/or activities

that will help foster trust between Canada and the United States.

Name of Expansion Country Goes Here

REI's choice of expansion outside of the United States will be with Canada as

there is currently a good standing relationship between this country and ours. Choosing to

import and export through Canada is actually quite easy when it comes to preventing

problems or delays with getting the product to the consumer. This is made possible

through the 1989 Canada-U.S. Free Trade Agreement and the 1994 North American Free

Trade Agreement, which dramatically increased trade and economic integration between

the U.S. and Canada (Noah, 2022). According to the CIA World Factbook, both the

United States and Canada have "the world's most comprehensive and highly balanced

bilateral trade and investment relationship," (Noah, 2022). Instead of expanding to an

unknown country and territory, REI will continue to build on the familiarity and current

harmonious relationship with Canada as the company looks to expand globally.

Mode of Entry

REI’s mode of entry into Canada will be primarily through exporting, which is the

process of making products domestically and selling them internationally. Exporting was
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chosen as the main mode of entry as it offers plenty of benefits, including more access to

customers and expands further than current business opportunities.

In fact, doing business in one country may actually limit the potential net profits

by missing out on opportunities that are given only through expanding worldwide (The

Hartford, 2022). Exporting through Canada will specifically aid REI in providing outdoor

equipment to active folks outside of the United States, which helps prove their rigorous

commitment to all current and new customers. This will provide the company with an

opportunity of a wider, diverse consumer base, as well as broadening the amount of

customers that shop at REI in general. This is achievable through various customer

incentives and “limited time” exclusive offers to join the co-op as loyal members. These

offers would be given only to newly joined members, providing them with multiple

discounts and free item(s) after a certain amount of money spent. This movement would

help the company build trust between customers and product satisfaction.

In general, diversifying market opportunities is beneficial as you may still have

other growing markets for your specific goods and services if the domestic economy

begins to falter (The Hartford, 2022). It’s also great for a business to expand

internationally if the domestic market seems saturated for the specific goods and services

that your company provides. Opening up international business can re-introduce the

goods and services to new markets in other parts of the world where it will continue to

thrive (The Hartford, 2022). Although there is relative risk involved with exporting, it’s

worth mentioning that there is potential financing assistance from U.S. government

agencies through loan guarantees that can help fund your exporting initiatives (The
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Hartford, 2022). Having extra security to protect the company during this venture is

excellent, as it takes off some of the stress of the risk.

In addition, REI should also consider looking at importing as a second mode of

entry. Importing, compared to exporting, involves acquiring products that are instead

made abroad and sold domestically (Coulter, 2013). Ideally it would be great if the

product could be imported at a lower price, while still maintaining the level and standard

of quality. Realistically, it’s much harder to achieve. However, both importing and

exporting usually entail minimal investment and risk, which is why many small

businesses often use these approaches to doing business globally (Coulter, 2013). REI has

many opportunities waiting for them if their products and membership were to be

expanded internationally.

Political and Economic Issues

Despite the many exciting posibilities that come with REI’s expansion to Canada,

it is crucial to be aware of all possible economical and political issues that this

organization may run into while first tapping into a global market.

In Canada, new businesses face unchartered territory economically. Up north,

they have complicated law and tax regulations, as well as high labor costs compared to

the United States. As such, there is a need to familiarize yourself with Canadian law

regulations before expanding to this country in particular. In fact, when these regulations

are not adhered to, “noncompliance can result in severe financial penalties and harm your

company’s reputation…[it’s] even more complicated when you consider that each

province has its own rules in addition to federal law” (Globalization Partners, 2021).
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There is a lot of fine-print to read beforehand, and REI should know to tread carefully

when expanding to Canada before they are fined and unintentionally go out of business.

Not only is there a financial burden if there is noncompliance, but there is also pushback

from consumers when a businesses reputation is damaged by not following law

regulations. As law regulations are important in Canada, keep in mind so are their taxes.

It is said to be so complex that, “the tax submissions process can take your company

hundreds of hours per year” (Globalization Partners, 2021). This is something that can be

done preemptively, and is good information to know beforehand. Lastly, while Canada

can boast about liveable wages for its citizens, unfortunately it can be detrimental to

expanding businesses as there are crazy expensive labor costs compared to the U.S. Not

only are Canadians receiving high minimum wages, but they are also entitled to free

health insurance (as per law), as well as full benefits such as paid time off and paid state

holidays (Globalization Partners, 2021). If REI would like to expand here, it’s important

that there’s a well-thought out budget plan for the entire company.

Next, political issues identified that new businesses may face in Canada result

directly from the pandemic, and current U.S. policies. Due to various lockdowns as a

result of Covid-19, there have been limited international commerce, overall lower profits,

layoffs, and an increase in unemployment (Globalization Partners, 2021). Aside from

Covid-19, depending on who’s in power in both the Canadian and U.S. government, it

has a direct impact on possible roadblocks to current and future business growth, as there

may be less favorable trade policies between the two countries at some point

(Globalization Partners, 2021). Current standing political issues actively impact Canada's
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general attitude and outlook towards the United States, which can be less than ideal for

expanding business globally.

Key Cultural Differences Between the U.S. and Canada

Although our Canadian friends are just up North, there are still key cultural

differences that set our countries apart. The concept of free health care nationwide, and

having two nationally accepted languages, for example, are unheard of in the United

States.

Canada’s commitment towards its citizens is outstanding, as they allow all who

require medical assistance to have free access to hospitals and any treatment that might

be necessary. Stated in the Commonwealth, the actual benefits and delivery approaches

for these instances vary. However, that being said, all citizens and permanent residents

receive medically necessary hospital and physician services free at the point of use

(Canada, 2020). This is completely new and unusual for Americans to hear as,

comparatively, in the U.S., many refrain from seeking health care and actually neglect

taking care of themselves in order to avoid bills and major expenses from the hospital. In

fact, “an estimated 9.6% of U.S. residents, or 31.1 million people lacked health insurance

when surveyed” AHA News (2021). Although I’m not sure if it’s entirely surprising once

these two countries are observed on more of a macro–scale. Canada leans collectivist as a

culture, compared to the United States where we embody individualism characteristics,

especially in the business world. Within collectivist cultures, members tend to care more

about the needs and goals of the group as a whole, over the needs and desires of each

individual.
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Even though Canada is an English dominant speaking country, they actively

recognize French as a secondary language, thus making them more diverse than the U.S.

There are various cultures and differences within Canada and their provinces to be aware

of and to participate in. For example, “Quebec, in particular, has significant cultural

differences where people are often more formal and reserved. Business cards should also

include both English and French translations, along with applicable academic titles and

degrees” (Corporation Staff, 2019). Noting these key differences, and adjusting body

language, communication styles, etc., to what’s acceptable, will show locals the amount

of respect you have for not only the country, but the individual provinces as well when

REI expands here.

Lastly, a fun key cultural difference to know is that Canadaians drink their milk

from a bag, rather than a cardboard carton as we do in the United States. According to

the CBC, “To sell milk in four-liter hard plastic jugs, a retailer or producer had to

implement a deposit or recycling system for those products and some stores, such as the

Becker Milk Company, did so.” CBC Radio. (2020). This would be quite uncommon for

Americans to see in their local grocery store, as this also shows that there is a lack of

effort regarding the recycling system in the U.S.

Actions for Inclusion

Inclusion is necessary to have in the workplace, and is something that REI is

working effortlessly to ensure is present in theirs. This table below will go over 4

Employee Do’s, and 4 Employee Don’ts, that specifically help REI act to foster inclusion
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at work. Past this table, we will go in further detail over each category and explain a total

of 4 examples on how these either do or do not create inclusion.

Employee Do’s Employee Don’ts

● Communicate in French and ● Excluding others intentionally

English. because of a language barrier

● Use both metric and imperial ● Disrespecting other employees

measuring systems. based on their culture

● Taking time off (including all ● Being hostile towards customers,

Canadian and religious holidays) other employees, and distributors

● Being open to diversity and ● Demanding to only speak one

multiculturalism language

Using both the English and French languages in communicating information to

both our customers and employees will help foster inclusion for both groups. According

to the Canadian 2016 Census, 85% of the population of Quebec speaks French, and only

a little under half (44%) of the population is bilingual (Statistics Canada, 2019). Not only

would this be necessary for customers, but also to communicate with distributors in the

Quebec province, where businesses commercial signage and materials are required to be

in French. In May 2021, there was also a proposed law in Canada to require businesses

with 25 to 49 employees to speak French in the workplace (Busque et al., 2021). This is

also important for company values, as it fosters bilingualism and multiculturalism, both

values important to Canadians (Global Affairs Canada, 2018).

Utilizing an open mind to multiculturalism is an important piece in creating

inclusion in the workplace. Especially since Canada is a cultural mosaic, in contrast to the

U.S. melting pot approach. In the 2016 Canadian Census, one in five Canadian residents
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is forgien born thanks to Canada's open immigration policy and a focus on creating a

multiculturalism policy (Griffith, 2019). As a company, REI cannot be parochialist and

refuse to see how others from different cultures work differently, and must approach a

geocentric attitude by helping employees understand cross cultural differences (Coulter,

2013). This will allow the company to increase its ability to export goods and services to

Canada, forming better relationships with distributors and understanding of the cultural

differences of customers as well. Embracing this value of multiculturalism will also help

U.S. operations, and create a bigger company and membership base filled with many

different experiences and work cultures.

In contrast, disrespecting and treating employees differently based on their culture

will not foster inclusion. Although a lot of this is up to leaders, it’s equally as important

for other employees to treat each team member with the same amount of respect you

would anybody. It would be detrimental to REI to restrict new perspectives, preventing

insight into capturing a new market in Canada through its exports. Research has found

that companies having 2-D diversity, that is leaders with at least three inherent and three

acquired diversity traits, are 70% more likely to report the company captured a new

market as reported by employees (Hewlett et. al, 2013). Assuming that REI employees do

not push others away as it expands operations into Canada, the results would be culturally

diverse voices sharing their ideas. It’s up to REI to empower them to make decisions.

These employees can then rise up in REI and further contribute to endorsing other

cultural diverse ideas, creating a positive feedback loop (Hewlett et. al, 2013).

Employees must also not be rude or inconsiderate with customers, other workers

and Canadian distributors, as it actively works against being inclusive. While politeness
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is a long standing value in customer service, common etiquette in Canada has most

nationals apologizing for others’ mistakes, being humble and asking for things in a

roundabout way (Manners and etiquette 2020). Emphasizing this to REI employees will

help prevent offending any partners or Canadian employees the company makes to help

with exporting our services to Canada. An extension of not being rude is also not being

late (Manners and etiquette 2020). Canadians stick to time schedules, so employees must

stick to the agreed time and delivery dates made with employees and distributors.

Attitudes or Activities for Trust

Trust enhances teamwork and productivity, as well as employee retention and

increases resilience during tough times. As Wai (2019) states, “solidifying trust is a

workplace challenge regardless of company type or management style.” In this table

below it displays activities and/or attitudes that create and do not create trust within a

work environment. Beneath the table, there will be discussion on 3 specific attitudes and

activities that REI should utilize to foster trust within the workplace in further detail.

Activities/Attitudes That Create Trust Activities/Attitudes That Do No Not Create Trust

Extend trust to others Be skeptical of everything people say

Inclusion of others and everyone Foster an environment of exclusivity

Explain your thought process Giving orders without explanation

Be vulnerable Being rude and withdrawn

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Monitor your reactions Say whatever comes to your mind

Once REI is able to make their entire customer base feel heard and included, the

level of trust between customers and the company would skyrocket. Overall, REI has a

reputation in the United States as a top tier organization. Carrying over the reputation

would not be an easy task for many organizations, however, because of REI’s attitude

and activities provided daily to customers and employees, their success would be almost

guaranteed. The first attitude that REI should display should be the inclusion of everyone

within the community. Since the opening of REI, in 1938, as stated by an REI Staff

member, “the idea was to awaken a lifelong love of the outdoors in more people '' (web).

This includes representing multicultural organizations such as Girltrek, lation outdoors,

and outdoor afro in the United States. REI also includes research towards veterans, as

well as ways to support marriage equality, and the LGBTQ community. These programs

will be well received in Canada, as the country has been active in endorsing inclusion and

diversity. According to the Canadian Center for Diversity and Inclusion, their leadership

“Came together from the corporate world and public institutions with a shared goal of

helping employers celebrate diversity” (web). This organization has events taking place

in the month of March, 2022. These events are in support of gender equality, and fighting

systemic racism. It’s predicted that they will be heavily attended by many supporting

organizations such as Sodexo and Husky Energy.

The second attitude that REI should adopt, would be to fully explain actions and

decisions made that are controversial in nature, in order to continue fostering trust. In

other words, committing to being a fully transparent organization with their consumers.
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REI has no hidden agenda within the organization, especially when it comes to making

profits and or varying away from their mission statement as a business. REI has been well

committed to their organizational values and explaining their stance within the

community. This company has been honest from the beginning, and they should continue

having an open line of communication to their customers. REI has been lucky, as it has

not had a major scandal, or much negative press. If/when that were to ever occur, REI

would have less to worry about should they make these changes and further their

commitment to customers. When there’s an established bond and high levels of trust

between customers and the company, most likely the business will not suffer as much.

The final attitude that will help to create trust, is the act of being vulnerable. This

goes hand in hand with the above paragraph. In order to be vulnerable, honesty is

required as well. As a company, being fully transparent and owning up to mistakes and

taking responsibility is all part of being vulnerable. This will help to create more trust, as

this will humanize the company. The goal would be to help customers understand that the

company REI is not above them, yet on their level. To reiterate, their mission is to help

the community, as they are also part of it. Identifying with the customer base as much as

possible will help foster stronger bonds and relationships. More pronounced bonds with

each other will promote customers to trust REI as a company and want to buy from this

brand again.

Conclusion

REI has a lot of material and research to do before expanding internationally to

Canada. After conducting the Global Analysis, I would say with the proper amount of

preparation, REI would be successful overseas once implemented and monitored for
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some time. Once deciding that exporting is the best mode of entry, REI should brief the

entire staff in Canada about the possible political and economical issues, as well as key

cultural differences to be mindful of. Not only should employees be made aware of these

possible tensions, but ways to correctly navigate the conversation should it go poorly.

Understanding how to foster inclusion in the workplace as well as developing trust

between customers and a business is a hard thing to do. Should REI implement the

suggestions made in this paper, or brainstorm further before they officially go

international, the final consensus is that REI is predicted to be well equipped and

relatively successful in Canada.

Each team member must update the name to the those on the team and provide

initials, confirming and agreeing to “SWOT” stated above.

APPROVAL: (sign off with initials by 12pm AZ time 3/24/2020) - plan to submit by 1-
2pm 3/24/2020

Elena - EJ Brandon- BJ Deedrah- DC Jenae - JF Candice-CG Zach- ZV

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