FISHER & FITZGERALD 1

Coming to Canada: A PESTLE Analysis of the Canadian Market

Lexie Fisher and Willa Fitzgerald

April 15, 2021

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Coming to Canada: A PESTLE Analysis of the Canadian Market

Introduction

Americans drive foreign cars, Europeans eat McDonald’s, and with the internet one can

buy almost anything from anywhere. As globalization continues to increase, products and

services that were once limited to their home country are now accessible throughout the world.

When businesses create a successful product, they often look for a new geographic market for

their product to continue to grow and thrive. In this continued analysis of the Peloton Original

Bike, it was time to select a new country for the Peloton. Canada is seemingly an obvious choice

because of its close proximity in location and culture to the United States. First, a proper analysis

of the new market would help to ensure that this country was the right fit for the product. This

paper is a PESTLE analysis of the Canadian market, including the political, economic,

sociocultural, technology, legal, and environmental factors of the market. 

Political

Before entering the Canadian market, it is important to analyze the political landscape.

Canada has a federal parliamentary democracy under a constitutional monarchy (Canada, 2021).

This means that they currently recognize the Queen of England as the head of state and the prime

minister as the head of government (Overview). The current prime minister is Justin Trudeau.

The government consists of a three-branch system with an executive, legislative, and judicial

branch (Overview). The Executive branch consists of the monarchy, the prime minister, and the

cabinet (Overview). This branch is considered the decision makers (Overview). The Legislative

branch consists of the appointed Senate and elected House of Commons (Overview). This branch
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writes the laws (Overview). Finally, the Judicial branch consists of the courts and judges the

laws (Overview). This three-branch system is like the structure of the US government. 

There are many political issues concerning the Canadian government. Currently, they

face challenges of trying to please public demands in improving the quality in the health care,

education, and social services systems (Canada, 2021). The government is also trying to increase

Canada’s economic competitiveness compared to the world (Canada, 2021). 

Canada has a very stable government. The Worldwide Governance Indicators project

ranked Canada in the 84th percentile of political stability and absence of violence and terrorism

(Canadian Economy). Generally, the people of this country are often perceived in a stereotype of

being very polite, so this number makes sense. The government was also ranked in the 97th

percentile for government effectiveness (Canadian Economy). 

One of the most important trade agreements Canada is a part of is the United States

Mexico Canada Agreement, or USMCA. The agreement replaced the North American Free

Trade Agreement and went into effect July 2020 (USMCA). The agreement promotes free trade

among the three countries and removes trade barriers (USMCA). 

Economic

Where a country lays within its economical standing can have huge impacts on what their

marketplace is like. Canada, like most other countries in the world, took an economic hit from

the Covid-19 pandemic. However, it seems that Canada is expecting to make a quick turn around

with their GDP to be able to reach 5% in 2021 (Langton, 2021). GDP is a measurement of the

economy of a certain country or state based on the amount of goods and or services they produce

in a year. Canada is actually also one of the top countries in the world fiscally, leading in

stimulus payments that could even continue for years (Langton, 2021). This is huge for a
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country’s economy as it encourages people to keep spending even during the pandemic. As for

employment rate Canada is currently at 59.40%, which actually is somewhat low, however it is

rising and was low most likely due to the pandemic and layoffs (Arora, 2021). Canada as of

March had a consumer confidence level of 50.25% which is quite good for a country coming off

of a global pandemic (Arora, 2021). This means that Canadas’s citizens feel mostly optimistic

about their financial status when it comes to spending, as their percentage is consistently

increasing. For their monetary policy, Canada adjusts their short-term interest rates in order to

maintain a stable rate of inflation (Bank of Canada, 2021). So overall Canada seems to be doing

all the right things to keep their economy and marketplace in a great standing with the rest of the

world.

Sociocultural

While there are a wide range of elements that define the sociocultural dynamic in

Canada, there are a few that have great significance for this market analysis. First, Canadian

culture has three strong influences. French and British influence have a historical background,

while the American influence is more modern (Morton, 2021). Regardless, Canada is composed

of a unique blend of French, British, and American culture while still possessing their own

individual cultural traits. Different geographic regions possess different influences. For example,

Quebec has a thriving Canadian French culture while those who live closer to the US border are

exposed to more American culture (Morton, 2021). Many individuals in Canada feel as if their

personal historical culture is eroding as American culture continues to become more and more

popular (Morton, 2021). Clothing trends, movies, music, and other lifestyle choices are all

heavily influenced by Americans.

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The performing arts are one factor that contribute to this erosion. Many performers leave

Canada to try and earn their fame in the United States. Celine Dion, Dwayne Johnson, Justin

Bieber, and countless other performers are all Canadian, but most people would view them as

American icons. 

Going off this cultural blend, Canada has two official languages: English and French

(Canada, 2021). 58.7% of the population are English speakers, and 22% of the population speak

French (Canada, 2021). The bilingual country represents how much French culture influences the

area. When analyzing the market, it is crucial to notice that many individuals will speak French,

a language that may not always be automatically identified with Canada. 

According to Statistics Canada, the average income of a Canadian in 2019 was $49,000

Canadian dollars (Income, 2021). The average income for females in 2019 was $41,400

Canadian dollars, and the average income for males in 2019 was $56,800 Canadian dollars

(Income, 2021). 

As a market, Canadians have a different cultural view on their health than Americans.

Canadians view their mental health as being the most important aspect of their health (Wong-Li,

2017). They are more likely to prioritize mental health over their physical health (Wong-Li,

2017). Canadians exercise less frequently than Americans do each week (Wong-Li, 2017).

Finally, they have a more modest view of their health (Wong-Li, 2017). This means that

Canadians are less likely to identify themselves as being very healthy when they are not very

healthy (Wong-Li, 2017). All of these, and many more, are elements that help to define the

important sociocultural factors in the Canadian market.

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Technology

Technologically Canada is ranked 8th compared to the whole world as of 2016, this

shows how much emphasis and effort the country must put into advancing as far as they possibly

can (Geebee, 2021). Where a country lies when it comes to how much they value advanced

technology really reflects on what its citizens care about with certain products. If a country tends

to not be as technologically advanced, chances are their citizens don’t consider it a priority when

deciding how to spend their money. With Canada having a high ranking for where they are

technologically this shows their citizens are more likely to buy products that also have a high

standard of tech. Canada's priority for advanced technology also helps their economy, Toronto

alone has been able to add over 65,000 jobs within the last five years all based in its tech sector

(Barreca, 2020). The government of Canada also recognizes how important advanced tech is by

creating multiple funds to encourage businesses to become more tech based (Barreca, 2020).

According to a survey done by Simplii Financial the vast majority of Canadians agree that

technology improves their lives and they rely on it heavily for things like banking, shopping, and

GPS systems (Kenter, 2019). This isn’t unusual for a technologically dependent country, it also

means that they value convenience which is also an important factor into understanding Canada's

marketplace.

Legal

It is crucial to understand the legal environment of a market, as it could have serious

implications on the business later. The legal system in Canada is a common law system (Canada,

2021). This means that law is based on precedent, such as court cases. However, it is important

to note Quebec uses a civil law legal system (Canada, 2021). Businesses need to understand
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these differences before entering the Canadian market, especially because in the US it is a

universal legal system across the country.

Additionally, an important tax in Canada is the Goods and Services tax. The Goods and

Services tax is a value added tax on most goods and services (Government, 2021). However,

exclusions of this tax do apply to some essentials, such as groceries (Government, 2021). The tax

is currently set at 5%, and has decreased over time (Government, 2021). If a business is bringing

a new product to Canada, they would want to be aware of this tax for pricing their products. 

Another aspect of the legal environment of Canada is their minimum wage. When

bringing a business to a new country, it would be important to know the minimum wage for any

employees working under the business. Canada has a federal minimum wage of $11.06 Canadian

dollars an hour (Minimum Wage, 2021). This translates to roughly $8.79 in American dollars.

Minimum wage varies from province to province, with it being as high as $16 Canadian dollars

in some areas (Minimum Wage, 2021). These are just a few key elements that make up the legal

environment of Canada that are valuable in understanding prior to entering the market.

Environmental

On the environmental side of things Canada seems to be on top of its game, its citizens

care about being ecofriendly and how business affects the world around them. Canada is the

fourth largest generator of all ecofriendly power as of 2016 (Healing, 2016). This is huge for

Canada as they do not even possess the same size or population as its competitors like China and

others. On the business side of things Canada does have many regulations put in place to keep

their environment the way it is. Some being restrictions on toxic substances, emissions as well as

specific ones that pertain to energy or mining sectors and how they affect climate change

(Northey, 2020). Canada also actually has many different laws and lawmakers trying to control
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their countries carbon footprint when it comes to business using federal environmental laws,

provincial environmental laws, municipal measures, and common/civil law as well (Northey,

2020). There are many penalties to going past environmental restrictions and laws in Canada the

most common being fines. Some things that Canada monitors when it comes to businesses are

pesticide use, water treatment, releases of contaminants, as well as the transportation of

dangerous substances (Northey, 2020). Canadians take environmental issues and climate change

very seriously, much more seriously than the U.S. According to a survey done by the Canadian

Nuclear Association (CNA), 86% of subjects believe that the government should continue

investing in clean technologies and 88% claim they have been somewhat affected by climate

change (Vitello, 2020). All these combined show how important it is to put the planet first when

doing business in Canada, for both legal and ethical reasons.

Conclusion 

Many things play into what type of market a country has, and why the attitudes of

consumers are a certain way. PESTLE is a great way to break down a country into why its

market is the way it is and using PESTLE actually helps significantly with out of country

businesses getting into that country’s market. Canada has a clear message of how they want to

present themselves as a country and what they prioritize, their citizens, the planet, and overall

well being. This is apparent in where they position themselves environmentally, technologically,

and many others. This directly affects the type of market and consumers Canada has, which in

their case has created a positive shift in their economy and contentedness with its citizens.

Overall, by using PESTLE the ability to narrow and define a country's market has never been

easier and more accurate. 

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References

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