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 I I

I I I I I
3-6 Evaluating Economic Performance: What's
Working? 47
3-6a Gross Domestic Product 47 3-6b Employment Level 4&
3-6c The Business Cycle 48 3-6d Price Levels 49
3-6e Productivity 50
5-4 Corporations: The Advantages and Disadvantages
of Being an Artificial Person 72
5-4a Forming a Corporation 72 5-4b Ownership of a
Corporation 73 5-4c The Role of the Board of Directors 74
5-4d Advantages of Corporations 74 5-4e Disadvantages
of Corporations 75 5-4f Corporate Restructuring 75

The World Marketplace:
Business Without Borders 52
4-1 An Unprecedented Opportunity ... 52
4-2 Key Reasons For and Against International
Trade 54
4-2a Competitive Advantage 55
4-3 Global Trade: Taking Measure 56
4-3a Balance of Trade 57 4-3b Balance of Payments 57
4-3c Exchange Rates 57 4-3d Countertrade 57
4-4 Seizing the Opportunity: Strategies for Reaching
Global Markets 58
4-4a Foreign Outsourcing and Importing 58
4-4b Exporting 59 4-4c Foreign Licensing and Foreign
Franchising 59 4-4d Foreign Direct Investment 59
4-5 Barriers to International Trade 60
4-5a Sociocultural Differences 60 4-5b Economic
Differences 61 4-5c Political and Legal Differences 62
4-6 Free Trade: The Movement Gains Momentum 64
4-6a GATT and the World Trade Organization (WTO) 64
4-6b The World Bank 64 4-6c The International Monetary
Fund (IMF) 64 4-6d Trading Blocs and Common Markets 65
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Business Formation:
Choosing the Form That Fits 68
5-1 Business Ownership Options: The Big Three 68
5-2 Advantages and Disadvantages of Sole
Proprietorships 69
5-2a Advantages 69 5-2b Disadvantages 70
5-3 Partnerships: Two Heads (and Bankrolls) Can Be
Better Than One 70
5-3a Formation of General Partnerships 70
5-3b Advantages of General Partnerships 71
5-3c Disadvantages of General Partnerships 71
5-3d Limited Partnerships 71 5-3e Limited Liability
Partnerships 71
5-5 Other Types of Corporations: Same but Different 78
5-5a Cooperatives 78 5-5b Not-for-Profit (or Non-profit)
Corporations 78 5-5c Crown Corporations 78
5-6 Franchising: Proven Methods for a Price 79
5-6a Franchising in Today's Economy 79 5-6b Advantages
of Franchising so 5-6c Disadvantages of Franchising so
5-6d Entering into a Franchise Agreement 11
Small Business and
Entrepreneurship: Economic
Rocket Fuel 84
6-1 Launching a New Venture: What's in It for Me? 84
6-7 a Greater Financial Success 84 6-7 b Independence 85
6-7 c Flexibility 85 6-7 d Challenge 85 6-7 eSurvival s&
6-2 The Entrepreneur: A Distinctive Profile 86
6-2a The Entrepreneurial Mindset: A Matter ofAttitude 86
6-2b Entrepreneurial Characteristics 86
6-3 Finding the Money: Funding Options for Small
Business 89
6-3a Personal Resources 89 6-3b Loans 89
6-3c Angel Investors 90 6-3d Venture Capital 9o
6-4 Opportunities and Threats for Small Business:
A Two-Sided Coin 90
6-4a Small Business Opportunities 90 6-4b Small Business
Threats 92
6-5 Launch Options: Reviewing the Pros and Cons 92
6-5a Making It Happen: Tools for Business Success 93
6-6 Small Business and the Economy: An Outsized
Impact 95
6-6a Entrepreneurship Around the World 96
Accounting: Decision Making
by the Numbers 98
7-1 Accounting: Who Needs It-and Who Does It? 98
7-7 a Accounting: Who Does It? 99
7-2 Financial Accounting: Intended for Those on the
Outside Looking In 100
7-2a Role of the Accounting Principles 100 7-2b Ethics in
Accounting 100
7-3 Financial Statements: Read All about Us 101
7-3a The Balance Sheet: What We Own and How We
Got lt 101 7-3b The Income Statement: How Did We Do? 104

NEL Contents v
 7-3c Statement ofCash Flows: Show Me the Money 105
7-3d Other Statements 106
7-4 Interpreting Financial Statements: Digging
Beneath the Surface 106
7-4a The Independent Auditor's Report: A Necessary Stamp
ofApproval 101 7-4b Notes to Financial Statements:
Reading the Fine Print 108 7-4c Comparative Statements:
Trendy Analysis 110
7-5 Inside Intelligence: The Role of Managerial
Accounting 110
7-Sa Cost Concepts: A Cost for All Reasons 111 7-SbAssigning
Costs to Products: As (Not So) Simple as ABC? 111
7-6 Evaluating Performance: Where Do We Stand? 112
7-6a Using Ratio Analysis to Identify Current Strengths and
Weaknesses 112
• Finance: Acquiring and
• Using Funds to Maximize Value 116
8-1 What Motivates Financial Decisions? 116
8-1 a Shareholder Value and Social Responsibility: Does
Good Behaviour Pay Off? 111 8-1 b Risk and Return:
A Fundamental Tradeoff in Financial Management 118
8-2 Budgeting: Planning for Accountability 118
8-2a Preparing the Budget: Top Down or Bottom Up? 118
8-2b Developing the Key Budget Components: One Step
at a Time 119 8-2c Being Flexible: Clearing Up Problems
with Static 120 8-2d Planning Tools: Creating a Road Map
for the Future 120 8-2e Basic Planning Tools: Budgeted
Financial Statements and the Cash Budget 121
8-3 Finding Funds: What Are the Options? 122
8-3a Sources ofShort-Term Financing: Meeting Needs for
Cash 122 8-3b Sources of Long-Term Funds: Providing a
Strong Financial Base 124
8-4 Leverage and Capital Structure: How Much Debt
Is Too Much Debt? 125
8-4a Pros and Cons of Debt Financing 126 8-4b Pros and
Cons of Equity Financing 126 8-4c Financial Leverage:
Using Debt to Magnify Gains (and Losses) 126
8-5 Acquiring and Managing Current Assets 128
8-Sa Managing Cash: Is It Possible to Have Too Much
Money? 128 8-Sb Managing Accounts Receivable: Pay
Me Now or Pay Me Later 129 8-Sc Managing Inventories:
Taking Stock of the Situation 130
8-6 Capital Budgeting: In It for the Long Haui130
8-6a Evaluating Capital Budgeting Proposals 130
8-6b Accounting for the Time Value ofMoney 130 8-6c The
Risk-Return Tradeoff Revisited 131 8-6d Net Present Value:
A Decision Rule for Capital Budgeting 132
Financial Markets: ALLocating
Financial Resources 134
9-1 The Role of Financial Markets and Their Key
Players 134
9-1 a Depository Institutions 134 9-7 b Nondepository
Financiallnstitutions 135
9-2 Regulating Financial Markets to Protect Investors
and Improve Stability 136
9-2a Regulations for Depository lnstitutions 136
9-2b Regulation for Securities Markets 137
9-2c The Role ofSelf-Regulatory Organizations 137
9-3 Investing in Financial Securities: What Are the
Options? 137
9-3a Common Stock 138 9-3b Preferred Stock 138
9-3c Bonds: Earning Your Interest 139 9-3d Convertible
Securities: The Big Switch 140
9-4 Issuing and Trading Securities: The Primary
and Secondary Markets 142
9-4a The Primary Securities Market: Where Securities
Are Issued 142 9-4b Secondary Securities Markets:
Let's Make a Deal 143
9-5 Personal Investing 145
9-Sa Choosing a Broker 145 9-Sb Buying Securities: Let's
Make a Deal 145 9-Sc Strategies for Investing in Securities 146
9-6 Keeping Tabs on the Market 148
9-6a Stock Indices: Tracking the Trends 148 9-6b Tracking
the Performance of Specific Securities 148

Marketing: Building Profitable

Customer Connections 152
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10-1 Marketing: Getting Value by Giving Value 152
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E 10-1 a The Scope ofMarketing: It's Everywhere! 153 10-1 b The
eQ) Evolution ofMarketing: From the Product to the Customer 154
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10-2 The Customer: Front and Centre 155
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70-2b Perceived Value versus Actual Value 156
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VI Contents NEL

10-3 Marketing Strategy: Where Are You Going and
How Will You Get There? 156
70-3a Target Market 157 70-3b Consumer Markets Versus
Business Markets 157 70-3c Consumer Market
Segmentation 157 70-3d Business Market Segmentation 159
70-3e The Marketing Mix 159 70-3fThe Global
Marketing Mix 160 70-3g The Marketing Environment 161
70-3h The Global Marketing Environment 162
10-4 Customer Behaviour: Decisions, Decisions,
Decisions! 162
70-4a Consumer Behaviour 162 70-4b Business Buyer
Behaviour 163
10-5 Marketing Research: So What Do They Really
Think? 163
70-Sa Types of Data 164 70-Sb Primary Research Tools 164
70-Sc An International Perspective 165
10-6 Social Responsibility and Technology: A Major
Marketing Shift 166
70-6a Marketing and Society: It's Not Just about You! 166
70-6b Technology and Marketing: Power to the People! 167
Product and Promotion:
Creating and Communicating
Value 170
11-1 Product: It's Probably More Than You Thought 110
77-7 a Services: A Product by Any Other Name ... 110
77-7 b Goods versus Services: A Mixed Bag 111
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77- 7c Product Layers: Peeling the Onion 112
77-7 d Product Classification: It's a Bird, It's a Plane ... 112
11 -2 Product Differentiation and Planning:
A Meaningful Difference 173
77-2a ProductQuality 173 77-2b Features and Benefits 174
77-2c Product Lines and the Product Mix 175
77-2d Branding 175 77-2e Packaging 177
11-3 Innovation and the Product Life Cycle: Nuts, Bolts,
and a Spark of Brilliance 178
77-3a Types of Innovation 178 77-3b The New Product
Development Process 178 77-3c New Product Adoption
and Diffusion 179 77-3d The Product Life Cycle:
Maximizing Results over Time 180
11 -4 Promotion: Influencing Consumer
Decisions 182
77-4a Promotion in Chaos: Dangeror0pportunity? 182
77-4b Integrated Marketing Communication:
Consistency and Focus 182 77-4c Coordinating the
Communication 183
11-5 A Meaningful Message: Finding the Big Idea 183
77-Sa An International Perspective 184
11-6 The Promotional Mix: Communicating the Big
Idea 184
77-6a Emerging Promotional Tools: The Leading Edge 184
77-6b Traditional Promotional Tools: A Marketing
Mainstay 186 77-6c Choosing the Right Promotional
Mix: Not Just a Science 190
Distribution and Pricing:
Right Product, Right Person,
Right Place, Right Price 192
12-1 Distribution: Getting Your Product to Your
Customer 192
72-7 a The Role of Distributors: Adding Value 192
72-7 b The Members of the Channel: Retailers versus
Wholesalers 194
12-2 Wholesalers: Sorting Out the Options 195
72-2a Merchant Wholesalers 195 72-2bAgents and
Brokers 195
12-3 Retailers: The Consumer Connection 195
72-3a Store Retailers 196 72-3b Nonstore Retailers 197
12-4 Physical Distribution: Planes, Trains, and Much,
Much More 198
72-4a Transportation Decisions 199
72-4b Proactive Supply Chain Management 200
12-5 Pricing Objectives and Strategies: A High-Stakes
Game 200
72-Sa Building Profitability 2oo 72-SbBoosting Volume 2oo
72-Sc Matching the Competition 202
72-Sd Creating Prestige 202
••
Contents VII
12-6 Pricing in Practice: A Real-World Approach 203
72-6a Breakeven Analysis 203 72-6b Fixed Margin Pricing 204
72-6c Consumer Pricing Perceptions: The Strategic
Wild Card 204
Management, Motivation,
and Leadership: Bringing
Business to Life 208
13-1 Bringing Resources to Life 208
73-7 a Management Hierarchy: Levels of Responsibility 208
73-7 b Management Skills: Having What It Takes to
Get the Job Done 209
13-2 Motivation: Lighting the Fi re 210
73-2a Theories of Motivation 210 73-2b Theory X and
Theory Y 211 73-2c Motivation Today 213
13-3 Planning: Figuring Out Where to Go and How to
Get There 214
73-3a Strategic Planning: Setting the Agenda 215
13-4 Organizing: Fitting Together the Puzzle Pieces 218
73-4a Key Organizing Considerations 218
73-4b Organization Models 220
13-5 Leadership: Directing and Inspiring 221
73-5a Leadership Style 221
13-6 Controlling: Making Sure It All Works 222
14-5 Legal Issues: HR and the Long Arm of the Law 237
74-5a Employment Equity: The Active Pursuit of Equal
Opportunity 239 74-5b Harassment: Eliminating Hostility 239
Managing Information and
Technology: Finding New
Ways to Learn and Link 242
15-1 Information Technology: Explosive Change 242
75-7 a The Role of the IT Department 242
75-7 b Hardware and Software 243 75-7 c Networks 244
15-2 Cloud Computing: The Sky's the Limit! 245
15-3 Information Technology and Decision Making:
A Crucial Aid 246
75-3a Data and Information 246 75-3b Characteristics of
Good Information 247 75-3c Using Information
Technology to Improve Decision Making 247
75-3d Expert Systems 248
15-4 Information Technology and the World of
E-commerce 248
75-4a Using Information Technology in the B2C Market 249
75-4b Using Information Technology in the B2B Market 251

Human Resource
Management: Building a
Top-Quality Workforce 224
14-1 Human Resource Management: Bringing Business
to Life 224
14-2 Human Resource Management Challenges: Major
Hurdles 224
74-2a Older Workers 225 74-2b Younger Workers 225
74-2c Women Workers 225 74-2d Work- Life Balance 226
74-2e Wage Gap 226
74-2fLayoffs and Outsourcing 227 74-2g Lawsuits 227
14-3 Human Resources Managers: Corporate Black 15-5 Challenges and Concerns Arising from New
Sheep? 221 Technologies 252
74-3a The Problem 227 74-3b The Solution 227 75-5a Malware 252 75-5b Spam, Phishing, and Pharming 253
75-5c Hackers: Break-Ins in Cyberspace 254
14-4 Human Resource Planning: Drawing the Map 227
75-5d Ethical and Legal Issues 255
74-4a Recruitment: Finding the Right People 228
74-4b Selection: Making the Right Choice 229
74-4c Training and Development: Honing the Operations Management:
Competitive Edge 230 74-4d Evaluation: Assessing
Employee Performance 232
Putting It All Together 258
74-4e Compensation: Show Me the Money 234 16-1 Operat ions Management: Producing Value in a
74-4fBenefits: From Birthday Cakes to Death Benefits 234 Changing Environment 258
74-4g Separation: Breaking Up Is Hard to Do 236 76-7 a Responding to a Changing Environment 258

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VIII Contents NEL
16-2 What Do Operations Managers Do? 260
76-2a Process Selection and Facility Layout 261
Appendix 1: Labour Unions and
76-2b Facility Location 261 76-2c Inventory Control: Collective Bargaining 275
Don't Just Sit There 262 76-2d Project Scheduling 262
76-2e Designing and Managing Value Chains 264 Appendix 2: Business Law 283
16-3 Implications of a Service-Based Economy:
Responding to Different Challenges 265 Appendix 3: Personal Finance 293
76-3a Designing the Servicescape 266
76-3b How Big Is Big Enough? 266 Endnotes 302
16-4 The Technology of Operations 266
76-4a Automation: The Rise of the Machine 267
Index 313
76-4b Software Technologies 267
Tear-Out Cards
16-5 Focus on Quality 267
76-Sa Waking Up to the Need for Quality 268 76-Sb How
North American Firms Responded to the Quality Challenge 268 ONLINE CHAPTER
76-Sc Quality Standards and Quality Initiatives 269
16-6 The Move to Be Lean and Green: Cutting Costs Business Communication: creating
and Cutting Waste 271
76-6a Reducing Investment in Inventory: Just-in-Time to the
and Delivering Messages That Matter
Rescue 272 76-6b Lean Thinking in the Service Sector 272
76-6c Green Practices: Helping the Firm by Helping the
Environment 273

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 In loving memory of
a sister and friend, Lisa.

Kim Snow

To three special fur girls:

Meghan, Emma, and Ceilidh

H. F. (Herb) MacKenzie
We are confident that BUSN wi ll meet your needs and that
you will enjoy it. We have spent considerable time trying to
make the materials student focused so that your first expo-
sure to postsecondary business education in Canada wi ll
be exciting and rewarding for you. The short, lively text cov-
ers all of the key concepts-everything you will need for a
first exposure to economics, global business, accounting,
finance, marketing, management, operations, and more.
At the same time, we have included many relevant and
engaging examples and a lot of visual content-that
help make the book fun to read. But the text is only part of
the package. You can access a rich variety of study tools via
computer or iPhone the choice is yours.
The third Canadian edition of this innovative, student-
focused package was prepared by H.F. (Herb) MacKenzie and
Kim Snow, the same team widely known for one of Canada's
most popular marketing texts. The Canadian authors have
many years of practical business experience, and both have
been recognized for outstanding classroom teaching.
Dr. H.F. (Herb) MacKenzie is an associate professor of
marketing at Brock University, St. Catharines, Ontario. Dr.
MacKenzie received his BA from St. Francis Xavier Univer-
sity, his MBA from Saint Mary's University, and his PhD from
the lvey School of Business. He has taught in the under-
graduate, graduate, and executive education programs at
co
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H. F. (Herb) MacKenzie
We wou ld appreciate any comments or suggestions you want to offer about this package. You can reach Herb MacKenzie
at herb.mackenzie@brocku.ca and Kim Snow at kimsnow@yorku.ca. We wish you a fun, positive, productive term and look
forward to your feedback.
NEL
universities in Canada, Europe, and the Middle East and
has provided consulting to both private and public sector
businesses since 1985. He has over fifteen years of indus-
trial sales and sales management experience and has pub-
lished many cases, conference proceedings, and articles in
the areas of sales management, buyer-seller relationships,
and distribution channel management. He has also co-
authored Canadian editions of textbooks on selling, sales
management, and marketing and has edited five Canadian
marketing casebooks. He has received numerous awards
from his students, including Professor of the Year, Marketing
Professor of the Year, and Faculty of Business Facu lty Award
of Excellence (twice).
Dr. Kim Snow is an associate professor of marketing at
York University in Toronto. Dr. Snow received her Diploma
in Business Administration from Wilfrid Laurier University
and her MBA and PhD from the University of Bradford, UK.
She has been a member of the faculty at York University
since 1992. She has published numerous articles in the
areas of service marketing, service quality, customer satis-
faction, and marketing research. She has worked with the
American Marketing Association Student Chapters and has
participated in severa l advisory and editorial boards. Prior
to joining York University, Dr. Snow spent seventeen years
working in the financia l services industry.
Kim Snow
•
XI

r
an_e s e n
- discuss each key dimension
Business Now: Moving
at Breakneck Speed
Day by day, the business world spins faster. Industries rise-
and sometimes fai l -in the course of a few short months.
Technologies forge instant connections around the globe.
Powerfu l new trends surface and submerge, sometimes
w ith in less than a year. In this fast-paced, flu id environment,
change is the on ly constant. Accord ing to Charles Darwin, it
is not the strongest of the species that survive, nor the most
intelligent, but the ones most responsive to change. And so
it is w ith business.
Successfu l firms lean forward and embrace the change.
They seek the opportun ities and avoid the pitfal ls. They
carefu lly evaluate risks. They completely understand the ir
market, and they adhe re to eth ical practices. Their core
goal: to generate long-term profits by delivering unsur-
passed value to their customers.
Ove r the past few years, in today's dynamic busi-
ness envi ronment, the explosive
value Therelationship between growth in socia l media has been
theprice of agood or aservice having a crucial impact on busi-
andthebenefits it offers its nesses and consumers al ike. Dig-
customers.
ging deeper into current cu ltu re,
2 NEL
After studying this chapter, you will be able to ...
Define business and discuss the role
of business in the economy
Explain the evolution of modern business
Discuss the role of not-for-profit
organizations in the economy
Outline the core factors of production and
how they influence the economy
Describe today's business environment and
Explain how current business trends may
influence your career choices
After you fin ish th is chapte r, go to
page 15 for STUDY TOOLS
Time magazine recently identified "10 Ideas That Are Chang-
ing Your Life:' A few highlights:
• Your Head Is in the Cloud. Swamped every day by
a sta rtl ing su rge of data (each day, the average person
spends about 12 hours consuming information), we
are increasing ly offioad ing the task of remembering
that information to search engines and sma rtphones.
This process of"outsourcing our memory" is changing
our cogn itive habits; in fact, research shows that when
we don't know the answer to a question, we now th ink
about where we can find the nearest Web connection,
rathe r than the subject of the question itself. 1
• Food That Lasts Forever. No one wants to think about
eating a sandwich that's five yea rs old, but w ith our
global popu lation growing so rapidly, long-term food
preservation may be essential to ou r very su rvival. In
some developing countries today, food loss through rot
and decay is as high as 70 percent. As of today, Twinkies
(contrary to popular bel ief) are not even close to
immortal -they have a shelf life of less than a month-
but a well-sea led can of Spam can last more than a
decade. Vacuum-packed tuna tastes fresh for about 30
months, whi le Thermos-stabi lized pork chops apparently
rema in ed ible for about seven years. It w il l be hard to get
past the yuck factor unless surviva l is at stake.2
. 4t,.-•
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• High Status Stress. As people move up the ladder
of affluence, you might expect the stress of having a
lower income to fade away. In fact, research suggests
that the opposite may be true: "life stress increases so
dramatically that its toxic effects essentia lly cancel out
many positive aspects of succeeding:' One reason may
be that the driven perfectionists who often make it
to the top feel enormous pressure to be on call 24/7
via text, e-mail, and phone in order to simply survive
professiona lly.3
• Privacy in Public. In Canada-except in Quebec-
there is no expectation of privacy in public. However,
concern and uncertainty are common, and there
are minor variations depending on city and province.
Assuming no other laws are being broken, anyone may
photograph anything that is visible to them, and pub-
lish where they wish. This includes photographs taken
on public property, unless the photographer has been
asked to cease. Any pictures taken prior to such notifica-
tion, however, remain the property of the photographer,
who may not be forced to delete or surrender it, and
who owns copyright to it.4
• Nature Is Over. Nearly 20 percent of vertebrate
species are threatened, and that number seems sure
to increase. And with the world population now
NEL
topping 7 billion and still growing, a new approach to
nature is crucia 1. 5
• Niche Aging. Back in the day, retirement dreams
typically featured plenty of sunshine, sandy beaches,
and lively bingo games. But while many Canadians do
go south to retire, or at least for the winters, retirees
today are likely to seek more specialized options,
where they can grow old alongside others who share
a specific interest such as country music or university-
level learning. One expert in the field points out: "You're
talking about the generation that created 12 different
versions of Coca-Cola. They're not going to settle for
one kind of retirement communitY:'6
1-1 a Business Basics: Some Key Definitions
While you can certainly recognize
a business when you see one, business Any activity that
more formal definitions may help provides goods and services in
as you read through this book. A an effort to earn a profit.
business is any activity that pro- profit Themoney abusiness
vides goods and services in an earns insales (or revenue] minus
effort to earn a profit. Profit is the expenses. such as the cost of goods
financial reward that comes from andthe cost of salaries (Revenue-
Expenses= Profit [or Loss]].
starting and running a business.
Chapter 1 Business Now: Change Is the Only Constant 3
 More specifically, a profit is the money self-interest-and you can see how the
that a business earns in sales (or revenue), profit motive benefits almost everyone.
The entrepreneur
minus expenses, such as the cost of goods Taking a broader perspective, busi-
and the cost of salaries. Clearly, not every always searches ness drives up the standard of living
business earns a profit all of the time. for change, for people worldwide, contributing to a
When a business brings in less money than higher quality of life. Businesses provide
it needs to cover expenses, it incurs a loss. responds to it, not on ly the products and services people
If you launch a music labet for instance, and eHploits it as enjoy but also the jobs they need. Beyond
you'll need to pay your artists, buy or lease the obvious, business contributes to soci-
a studio, and purchase equipment, among
an opportunity. ety through innovation think cars, TVs,
other expenses. If your label generates hits, Peter Drucker, management and tablet computers. Business also helps
consultant, educator, author
you'll earn more than enough to cover all raise the standard of living through taxes,
your expenses and make yourself rich. But which the government spends on projects
a series of duds could leave you holding ranging from streetlights to environmen-
the bag. tal cleanup. And socially responsible firms contribute even
Just the possibi lity of earn ing a profit provides a more by advocating for the well-being of the society that
powerfu l incentive for people of all backgrounds to launch feeds their success.
their own enterprises. For those considering doing so, now
may be a cha llenging time, but things can change rapid ly.
At the start of 2016, the small business confidence index
measured by the Canadian Federation of Independent
The History of Business:
Business dropped to 54.3 (an index above 50 indicates that Putting It All in Context
most business owners expect stronger performance in the
You may be surprised to learn that-un like today-
coming year). The highest expectations were in Nova Scotia
business hasn't always been focused on what the cus-
(69.0), and the lowest were in Alberta (28.8-a record low
tomer wants. In fact, business in Canada and the United
that was 26 points below its score the previous year). The
States has changed rather dramatically over the past 200
highest scores were in the hospita lity and professiona l
to 300 years. Business historians typica lly divide our busi-
services sectors; the lowest, in the construction and natural
ness history into five distinct eras, which overlap during
resources sectors? In Chapter 6 we will be discussing, in
the periods of transition.
more detait entrepreneurship and entrepreneurs-
people who are wi lling to risk their time, money, and other • The Industrial Revolution. Technological advances
resources to start and manage their own businesses. fuelled a period of rapid industrialization from the mid-
Interestingly, as entrepreneurs create wea lth for them- 1700s to the mid-1800s. As mass production took hold,
selves, they produce a ripple effect that enriches everyone huge factories replaced skilled artisan workshops. The
around them. For instance, if your new website becomes factories hired large numbers of semi-skilled workers,
the next Face book, who wi ll benefit? Clearly, you will. And who specia lized in a limited number of tasks. The result
you'll probably spend at least was unprecedented production efficiency, but also a
some of that money enriching loss of individual ownership and persona l pride in the
loss When a business incurs
expenses that are greater than your local clubs, clothing stores, production process.
its revenue. and car dealerships. But others • The Entrepreneurship Era. Building on the founda-
entrepreneurs People who will benefit, too, including your tion of the Industrial Revolution, large-scale entrepre-
risk their time, money, and other members, the advertisers on your neurs emerged in the second half of the 1800s, bui lding
resources to start and manage site, the staff who support them, business empires. These industrial titans created enor-
businesses. the contractors who build your mous wealth, raising the overall standard of living across
standard of living The facilities, and the government that the country. But many also dominated their markets,
quality and quantity of goods collects your taxes. The impact of forcing out competitors, manipulating prices, exploiting
andservices availableto a one successful entrepreneur can workers, and decimating the environment. Towards the
population.
extend to the far reaches of the end of the 1800s, governments stepped into the busi-
quality of life The overall economy. Multiply the impact by ness realm, passing laws to regu late business and protect
sense of well-beingexperienced thousands of entrepreneurs- consumers and workers, thus creating more balance in
by either an individual or agroup.
each working in his or her own the economy.

4 Chapter 1 Business Now: Change Is the Only Constant NEL

• The Production Era. In the early 1900s, major busi-
nesses focused on further refining the production pro-
cess and creating greater efficiencies. Jobs became even
more specialized, increasing productivity and lowering
costs and prices. In 1913, Henry Ford int roduced the
assembly line, which quickly became standard across
major manufacturing industries. Wit h managers focused
on efficiency, the customer was an afterthought. But
when customers tightened their belts during t he Great
Depression and t he Second World War, businesses took
not ice. The "hard sel l" emerged: aggressive persuasion
designed to sepa rate consumers from their cash.
• The Marketing Era. After the Second World War, the
ba lance of power shifted away from producers and
towards consumers, the producers flooded t he market
wit h enticing choices. To differentiate themselves from
t heir compet itors, businesses began to develop brands,
or dist inctive identit ies, to help consumers understand
t he differences among various products. The marketing
concept emerged: a consumer focus that came to
permeate successful companies in every department,
at every level. This approach continues to influence
business decisions today as global compet ition heats
up to unprecedented levels.
• The Relationship Era. Building on t he marketing
concept, today's leading-edge firms are looking beyond
each immediate transaction with t heir customers with
t he goal of building long-term relat ionships. Satis-
fied customers can become advocates for a business,
spreading t he word with more speed and credibi lity
t han even the best promotional campaign. Also,
cu ltivating current customers is more profitable than
constant ly seeking new ones. A key tool is technology.
With the Web and other digital resources, businesses
can gat her detailed information about their customers
and use t hat information data to serve them better.
Not-for-Profit Organizations
and the Economy: The
Business of Doing Good
Not-for-profit organizations also play a critica l role in the
economy, often working hand in hand with business to
improve the quality of life in our society. Focusing on areas
such as health, human services, education, religion, and the
arts, not-for-profit organizations are business-/ike enti-
ties, but their primary goals do not include profit. Chuck
Bean, execut ive director of t he Nonprofit Roundtable,
explains: "By definition, non-profits are not in t he business
of financial gain. We're in the business of doing good. How-
ever, non-profits are sti ll businesses in every other sense-
t hey employ people, they ta ke in revenue, they produce
goods and services and contribute in significant ways to our
region's economic stability and growth:' Canada has around
170,000 not-for-profit and charity organizations. They con-
t ribute more to the Canadian gross domestic product (GOP)
annua lly t han the enti re retai l sector. Canada has t he world's
second largest not-for-profit sector,
emp loying more t han 2 mil lion
Canadians. Not-for-profit museums,
not-for-profit
organizations Business-
schools, theat res, and orchestras like establishments that
have become economic magnets employ people and produce
for many communities, drawing goods and services with the
additional investment.8 Not-for- fundamental goal of contributing
profit organizations are discussed to the community rather than
generating financial gain.
in greater detail in Chapter 5.

' If"
I 7 .... ~ Donal@, Sllop. Do GOOD. F•tl GOOD.
.......
Your doiUiliDnll'ltlp 1lrengthen flmillo•n Nt.agara

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Not-for-profits, such as Goodwill, employ about

one in ten Canadian workers.

NEL Chapter 1 Business Now: Change Is t he Only Constant 5

 I I I

Dumb, Dumb, or behind Google. On February 2, 2016,

Not So Dumb
n the wake of disastrous mistakes
and outrageous mismanagement,
it might be tough to remember that
some mistakes are actually pretty
amusing. Several examples might help
to remind you.9
• If only they could have
"Googled" the future . .. 1n
1999, the founders of Google were
seeking to sell their search engine.
They approached George Bell, CEO
of Excite, which was one of the
hottest brands on the Internet in
the 1990s, with an asking price of
$1 million. But Bell turned them
the shares of Alphabet (a holding
company formed in October 2015,
and Google's parent) opened
3 percent higher, giving the
company a market capitalization of
$547.1 billion, making it the world's
most valuable company.
• Accidental cybarsnooping.
As Google sent its "Street View"
cars all over the world collecting
panoramic images for uploading
to Google Maps, the firm "uninten-
tionally" collected and retained,
among other things, passwords and
complete e-mail messages picked up
from unsecured Wi-Fi networks.
• Clicking without thinking.
virus-free? Get it infected here!"
It was accepted by Google and
displayed 259,723 times: 409 Web
surfers actually clicked on the ad.
• Wasted time or waD
worthwhile? To celebrate the
30th anniversary of Pac-Man in 2010,
engineers at Google turned the site's
home page into a fully functional
version of the game, wasting an
estimated 4.8 million hours of the
world's time and more than US$120
million in lost productivity.
Sources: Ari Levy,"Google Parent Alphabet Passes Apple Market
Cap at the Open;' cnbc.com, February 2, 2016; "Excite declines
buying Google", Business Excellence website, October 10, 201 0;
Marguerite Reardon,"Google: Oops, We Spied on YourWi-Fi;' cnet
.com, May 14, 201 0; Mitch Wagner, "Google's Pac-Man Cost $120M
in Productivity;'pcworld.com, n.d.;"101 Dumbest Moments in
Business;· fortune com, January 16, 2008.

down, as did Yahoo!, both believing To test Google's ability to block

the acquisition would have been harmful advertising, Belgian IT
too pricey. Excite went bankrupt security consultant Didier Stevens
soon after, and Yahoo! now trails far posted an ad that read, "Is your PC

hen in doubt, we usually and undermine brand image. Aad

don't! Most of us can
, probably think of a time
when we should have
taken some action, but instead we
did nothing, because doing nothing
was easier. Enter the choice architects:
behavioural scientists who claim that
businesses, governments, and other
institutions can engineer our options to
• Green footprints.
"nudge" us into making choices that are
(ideally) more socially desirable or (from
a business standpoint) more profitable
than the choices we'd make on our own.
Consider these examples:
• Better aim. A sign sometimes
seen in men's washrooms says:
"We aim to please; you aim too,
please:' But, as most women who
share toilets with men can attest,
even the best-intentioned men
don't seem to aim very well. In
busy washrooms, this is more
than just a gross annoyance; dirty
bathrooms increase cleaning costs
Kiedboom, an economist who
worked for Schiphollnternational
Airport in Amsterdam, tackled this
issue by etching the image of a
black housefly onto the bowls of
the airport's urinals, just to the left
of the drain. As a result, "spillage"
decreased by 80 percent.
Copenhagen
has been ranked as one of the top six
cleanest cities in Europe, but aspires
to be first. An experiment conducted
at Roskilde University demonstrated
how to "nudge" people in the right
direction. Students first handed out
caramels to pedestrians and then took
a benchmark reading of the number
of wrappers discarded on the street.
Then they placed a series of green
footprints that led to a nearby garbage
can and repeated the experiment. The
result: 46 percent fewer wrappers were
discarded on the street. Clearly, when
people are thoughtlessly disrespectful,
a little nudge can be a great reminder. 10

6 Chapter 1 Business Now: Change Is the Only Constant NEL


Factors of Production:
The Basic Building Blocks
Businesses and not-for-profit organizations both rely on
factors of production four fundamental resources-
to achieve their objectives. Some combination of these
factors is crucial for an economic system to work and cre-
ate wea lth. As you read through the factors, keep in mind
that they don't come free of charge. Human resources, for
instance, require wages, while entrepreneurs need a profit
incentive.
• Natural Resources. This factor includes all inputs
that offer value in their natural state, such as land,
fresh water, wind, and mineral deposits. Most natural
resources must be extracted, purified, or harnessed;
people cannot actually create them. (Note that agricul-
tural products, which people do create through plant-
ing and tending, are not a natural resource.) The value
of all natural resources tends to rise with high demand,
low supply, or both.
• Capital. This factor includes machines, tools, buildings,
information, and technology-the synthetic resources
that a business needs to produce goods or services.
Computers and telecommunications capability have
become pivotal elements of capital across a surprising
range of industries, from financial services to profes-
sional sports. You may be surprised to learn that in
this context, capital does not include money, but
clea rly, businesses use money to acquire, maintain, and
upgrade thei r capital.
• Human Resources. This fa ctor encompasses the
physica I, i ntellectua I, and creative contributions
of everyone who works within an economy. As
technology replaces a growing number of manual
labour jobs, education and motivation have become
increasingly important to human resource devel-
opment. Given the importance of knowledge to
workforce effectiveness, some business experts, such
as management guru Peter Drucker, have broken out
knowledge as its own category, separate from
human resou rces.
• Entrepreneurship. Entrepreneurs are people who
take the risk of launching and operating their own
businesses, largely in response to the profit incentive.
They tend to see opportunities where others don't,
and they use their own resources to capitalize on that
potential. Entrepreneurial enterprises can kick-start
an economy, creating a tidal wave of opportunity
by harnessing the other factors of production. But
NEL
entrepreneurs don't thrive in an environment that
doesn't support them. The key ingredient is eco-
nomic freedom: freedom of choice (whom to hire, for
instance, or what to produce), freedom from excess
regulation, and freedom from too much taxation.
Protection from corruption and unfair competition is
another entrepreneurial "must:'
Clearly, all of these factors must be in place for an
economy to thrive. But which factor is most important?
One way to answer that question is to examine current
economies around the world. Russia and China are both
rich in natural resources and human resources. And both
countries have a solid level of capita l (growing in China
and deteriorating in Russia).Yet neither country is wealt hy;
both rank relatively low in terms of gross national income
pe r person. The missing ingredient seems to be entrepre-
neurship, which is limited in Russia largely through cor-
ruption and in China through government interference
and taxes. Contrast those examples with, say, Hong Kong.
The population there is sma ll and the natura l resources
are severely limited, yet Hong Kong has consistently
ranked among the richest regions in Asia. The reason?
Operating for many years under the British legal and
economic system, the government actively encouraged
entrepreneurship, which fuelled the creation of wea lth.
Recogn izing the potential of entrepreneurship, China
has recently done more to relax regu lations and support
free enterprise. The result has been tremendous growth,
which may yet bring China into the ranks of the wealthier
nations. 11
The Business Environment:
The Context for Success
No business operates in a vac-
factors of production
uum. External factors play a vital Four fundamental elements-
role in determining whether a natural resources, capital. human
given business succeeds or fails. resources, and entrepreneurship-
Likewise, the broader business that businesses need to achieve
their objectives. Some combination
environment can make the crit-
of these factors is crucial for an
ical difference in whether an economic system to create wealth.
overall economy thrives or disinte-
grates. The five key dimensions of
business environment
The setting in which business
the business environment are the operates. The five key
economic environment, the com- components are economic
petitive environment, the tech- environment. competitive
nological environment, the social environment. technological
environment, and the global envi- environment. social environment.
and global environment.
ronment, as shown in Exhibit 1.1.
Chapter 1 Business Now: Change Is the Only Constant 7

Exhibit 1.1
Each dimension of the business environment impacts
both individual businesses and the economy overall.
BUSINESS
en
c
E corporate accountabi lity. If the leg islation effectively curbs
"'
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Q)
en
"'
en
~
c fa ir chance at success.
Q)
1-5a The Economic Environment 12
Canada is a member of the G7-a group of industrialized
nations that also includes France, Germany, Italy, Japan, the
United Kingdom, and the United States. The finance minis-
ters of these countries meet regularly to discuss economic
issues. Since 2008, the global financial crisis still a concern
in 2016, and promising to continue well into the future-
has been a major item on their agenda. The Canadian econ-
omy, wh ile certa inly affected by t his crisis, has proven more
resilient than the econom ies of many countries. However,
Canada did experience a sma ll economic recession in 2015.
Growth in 2016 is expected to lag US growth, and if oi l prices
continue to decline, there is a chance of another recession.
The Canadian economy remains relatively strong in
part because the government takes active steps to reduce
the risks of starting and running a business. As a result, free
enterprise and fair competition flourish. The federal gov-
ernment, largely through Industry Canada, promotes a
number of agencies and initiatives to encourage economic
development across the country. Meanwhile, provincial
governments compete for business development by pro-
viding investment and tax incentives for new businesses or
by making t he tax environment more attractive for existing
businesses, which can then keep more of their profits to
reinvest for growth and job creation.
Another key element of the Canadian economic envi-
ronment is legislation that supports enforceable contracts.
For instance, if you contract a company to supply your silk
8 Chapter 1 Business Now: Change Is the Only Constant
screening business with 1,000 blank T-shirts at $4.00 each,
that firm must comply or face legal consequences. The
firm can't wait until a day before delivery and jack up the
price to $8.00 each, because you would almost certainly
respond with a successful lawsuit. Many Canadian residents
take enforceable contracts for granted, but in a number of
developing countries-wh ich offer some of today's largest
business opportun it ies-contracts are often not enforce-
able (at least not in day-to-day practice).
Corruption also plays a role in the economic envi-
ronment. A low level of corruption and bribery dramati-
cally reduces the risk of running a business. Fortunately,
Canadian laws keep domestic corruption mostly-but not
completely-at bay. Other ethical lapses can also increase
the cost of doing business for everyone involved. In the
wake of ethical meltdowns at major Canadian and US
corporations such as Nortel, Enron, and WorldCom, the
federal government has passed regulations to increase
illegal and unethical practices, eve ry business will have a
Although the Canad ian economy is strong overa ll, it is
threatened by underlying issues. Personal incomes have
risen, but personal debt has risen more rapidly. By 2016, the
ratio of debt to personal disposable income had reached
nearly 165 percent-in other words, the average household
owed $1.65 in debt for each $1.00 of disposable income. If
there is an unforeseen economic shock, some households
may be forced to declare personal bankruptcy. The same
may happen if interest rates rise too rapidly as the economy
recovers. Regardless, as Canad ians are forced to spend more
to service debt, they wi ll have less money to spend on new
purchases, and th is wi ll slow econom ic recovery.
Meanwhile, government debt has been mushrooming
as well. By 2016, combined federal and provincial debt will
reach $1.3 trillion. Government debt has both short- and
long-term effects. In the short term, governments will spend
more to service debt and have less to spend on programs
where it could be better spent. Research suggests that in the
long term, growing government debt dampens economic
growth. The federal government, for example, expects to
spend $25.9 billion to service its debt in 2016, more than
it spent the previous year on national defence. Provincial ly,
Ontario spends more to service its debt than it spends on
its entire welfare system. Going forward, it looks as if most
if not al l governments in Canada wi ll go much more deeply
into debt. Many economists do support governments
taking on debt during poor economic times, to create jobs
and spur growth. While it is very unlikely we will see a bal-
anced federal budget by 2019-20, as the governing Liberals
have promised, it is still possible that our debt-to-GOP ratio
NEL
(another important economic indicator) can be lowered.
The Bank of Canada has stated that the economic situation Exhibit 1.2 Global Brand
in Canada in early 2016 could put the government on track
for an additional $90 billion in debt over the next four years.
Champions and
Later chapters on econom ics and ethics will address Their Value
these economic challenges and their significance in more
depth. But, bottom line, we have reason for cautious (some BRAND VALUE IN
would say very cautious) optimism. Our economy has not
MOST VALUABLE $BILLIONS (CHANGE IN
BRANDS BRAND VALUE IN °/o)
been battered as badly as the US economy, but it is unlikely
1. Apple 170.3 (+43)
to recover as quickly as that of our neighour. The United
States began increasing interest rates in 2015 in antici- 2. Google 120.3 (+12)
pation of economic growth. Since Canada is very much 3. Coca-Cola 78.4 (- 4)
affected by economic conditions there, at least some sec- 4. Microsoft 67.7 (+ 11)
tors of our economy will strengthen in 2016 as a result.
5. IBM 65.1 (- 10)
6. Toyota 49.0 (+ 16)
1-5b The Competitive Environment 7. Samsung 45.3 (0)
As global competition intensifies yet further, leading-edge
8. GE 42.3 (-7)
companies have focused on customer satisfaction as never
before. The goal: to develop long-term, mutually beneficia l 9. McDonald's 39.8 (- 6)
relationships with customers. Getting current customers 10. Amazon 37.9 (+29)
to buy more of your product is a lot less expensive than Source: lnterbrand Releases 2015 Best Global Brands Report, lnterbrand, October 4, 201 5, http://interbrand
convincing potential customers to try your product for .com/?newsroom=interbrand-releases-2015-best-global-brands-report, accessed February 9, 2016.

the first time. And if you transform your current custom-

ers into loyal advocates vocal promoters of your prod-
uct or service they'll get those new customers for you
more effectively than any advertising or discount program.
Companies such as Amazon, Coca-Cola, and Apple lead
their industries in customer satisfaction, which translates
into higher profits even when the competition is tough. 13
Customer satisfaction comes in large part from deliver-
ing unsurpassed va lue. The best measure of value is the size
of the gap between product benefits and price. A product
has value when its benefits to the customer are equa l to or
greater than the price the customer pays. Keep in mind that
the cheapest product doesn't necessarily represent the best
value. If a $1 toy from Dollarama breaks in a day, customers
may be willing to pay several dollars more for a similar toy
from somewhere else. But if that $1 toy lasts all year, cus-
tomers will be delighted by the value and will likely encour-
age their friends and family to shop at Dollarama. The key
to value is quality, and virtually all successfu l firms offer top-
quality products relative to their direct competitors.
A 2015 ranking of the best 100 global brands by the Inter-
brand consulting firm places 8 of the 10 top brands by brand
value in the United States. Also included are Toyota (Japan)
and Samsung (South Korea).The top Canadian brand, Thom-
son Reuters, ranked number 63. 14 Exhibit 1.2 shows the win-
ners and their brand value as they race to capture the hearts,
minds, and dollars of consumers around the world.
Leading Edge Versus Bleeding Edge Speed-
to-market the rate at which a firm transforms concepts
into actual products can be another key source of com-
petitive advantage. The pace of change just keeps get-
ting faster. In this tumultuous setting, companies that stay
ahead of the pack often enjoy a distinct advantage. But
keep in mind that there's a difference between the leading
edge and the bleeding edge. Bleeding-edge firms launch
products that fail because they're too far ahead of the
market. In the late 1990s, for instance, during the dot.com
boom, Montreal-based Peachtree Network sold its services
to many grocers across North America as it helped them
sell to their customers online. But the firm went bankrupt
in 2001, partly because customers weren't yet ready to
dump traditional grocery stores in favour of cybershop-
ping. Leading-edge firms, by contrast, offer products j ust
as the market becomes ready to embrace them. 15
Apple provides an excellent example of leading edge.
You may be surprised to learn that Apple which owns
about 70 percent of the digital music player market did
not offer the first MP3 player. Instead, it surveyed the existing
market to help develop a new product, the iPod, which was
far superior in terms of design and ease of use. But Apple
didn't stop with one successful MP3 player. Racing to stay
ahead, it soon introduced the colourful, more affordable iPod
Mini. And before sales reached their
peak, it launched the iPod Nano, speed-to-market The
which essentially pulled the rug out rate at which a new product
from under the blockbuster iPod moves from conception to
commercialization.
Mini just a few short months before

NEL Chapter 1 Business Now: Change Is the Only Constant 9

 eems like it was long, long ago in
a galaxy far, far away that Apple
first introduced the iPad, but it
was only in 2010 that everyone
was making jokes that iPad sounded
more like a feminine hygiene product
than a tablet computer. In the first three
years after its introduction, Apple built
iPad into such a blockbuster that analysts
for Fortune claim that if it were its own
business, separate from Apple, it would
rank 98 on the Fortune 500 list, higher
than both McDonald's and Nike. But the
iPhone 5 has not done nearly as well.
In fact, Consumer Reports has given the
Q) iPhone 5 mediocre scores, calling it"the
'N
~ worst of the top smart phones:' It scored
u
~ at the bottom of the top three at two
.D
~
listed in the top three at another. Apple
Maps software on the iPhone 5 was
so bad that it misplaced entire towns,
making it three times more likely to get
you lost than Google Maps. Eventually,
Apple replaced Apple Maps with Google
Maps and issued a rare official apology.
The iPhone 5 clearly tarnished Apple.
In a technology market moving quickly
towards greater dependence on mobile,
another product failure and more
negative reviews for the iPhone could
have hurt Apple at its core, despite the
overwhelming success of the iPad and
the iPad mini.
Fortunately, a fix polished Apple:
iPhone 6 and iPhone 6 Plus. In their
first three days after launch, Apple sold

-......- ~ major phone carriers and wasn't even 10 million units.16

the holiday selling season. Why? If Apple didn't do it, a com-
petitor might well have done it instead. And Apple is almost
maniacally focused on maintaining its competitive leadY
1-5c The Workforce Advantage
Employees can contribute another key dimension to a
firm's competitive edge. Recent research suggests that
investing in worker satisfaction yields tangible bottom-
line results. The researchers compared the stock prices of
Fortune magazine's annual list of the "100 Best Companies
to Work for in America" to the S&P 500, which reflects the
overall market. The firms with the highest employee satis-
faction provided a 10.3 percent annual return, compared
to a 2.95 percent return for the firms in the S&P 500. In
fact, from 1997 through 2012, the returns from the "1 00
Best" have quadrupled returns from the overa ll market.
While the critical difference in performance most likely
stemmed from employee satisfaction, other factors-such
as excellent products and superb top management-
likely also played a role in both employee satisfaction and
strong stock performance. 18 As you will see in Chapter
14, employee happiness provides
business technology Any many benefits for the organization.
tools- especially computers. Finding and holding the best
telecommunications. and other talent will likely become a crucial
digital products- that businesses competitive issue over the next
can use to become more efficient decade as the baby boom gen-
and effective.
eration continues to retire. The
500 largest North American companies anticipate losing
about half their senior managers over the next five to six
years. Replacing them wil l be tough, for baby boomers will
be succeeded by a much smal ler cohort of workers. But
the impact will be muted as long as the economy remains
poor: A recent survey of more than 3,000 employees by the
Canadian Payrol l Association found that more than one in
five respondents expected to work at least four years lon-
ger than they originally planned. Firms that cu ltivate human
resources now wi ll find themselves better able to compete
as the market for top talent tightens. 19
1-5d The Technological Environment
The broad definition of business technology includes
any tools that businesses can use to become more efficient
and effective. More specifically, in today's world, business
technology usually refers to computers, telecommunica-
tions, and other digita l tools. Over the past few decades,
digital technology has had a transformative impact on
business. New industries have emerged; others have dis-
appeared. And some fields-such as travel, banking, and
music have changed dramatically. Even in categories
with relatively unchanged products, companies have lev-
eraged technology to streamline production and create
new efficiencies. Examples include new processes such as
computerized billing, digital animation, and robotic manu-
facturing. For fast-moving firms, the technologica l environ-
ment represents a rich source of competitive advantage; it

10 Chapter 1 Business Now: Change Is t he Only Constant NEL

 / demographics, or the measurable characteristics of a
population. Demographic factors include population size
and density as well as specific traits such as age, gender,
race, education, and income. As one can expect, given all
these influences, countries differ greatly from one another
in terms of their social environments. Nations as diverse as
Canada wil l have a number of different social environments.
Instead of covering the full spectrum, this section focuses
on the broad social trends that most st rongly impact Cana-
dian business. Understanding the various dimensions of the
social environment is crucial for businesses, which must offer
goods and services that respond to it if they are to succeed.
Diversity Canada today is one of the world's most
ethnically diverse countries. More than 20 percent of
Canadians were born in another country (about 11 percent
of Americans were born outside the United States). Further-
can also be a major threat for companies that are slow to more, while US multicultural policy has tended towards
adapt or to integrate new approaches. assimilation, Canada continues to encourage its citizens
The World Wide Web has transformed not only busi- to retain and honour their cultural
ness but also people's lives. Anyone, anywhere, anytime, can heritage. Another major difference World Wide Web The
use the Web to send and receive images and data (as long as between the United States and service that allows computer
access is available). One result is the rise of e-commerce (i.e., users to easily access and share
Canada is that the former has a few
information on the Internet in the
online sales), which al lows businesses to tap into a world- ethnic groups that make up the form of text. graphics, video, and
wide community of potential customers. In the wake of the great majority of non-Caucasians, animation.
global economic crisis, e-commerce has slowed from the while Canada is now home to
e-commerce Business
breakneck 20 percent- plus growth rates of recent years, but many (but smaller) ethnic groups. transactions conducted online,
even so, analysts predict that solid single-digit growth will Exhibit 1.3 shows Canada's top four typically via the Internet.
continue. Business-to-business selling comprises the vast visible-minority groups and the demographics The
majority of tota l e-commerce sales (and an even larger share numbers of each expected by 2017. measurable characteristics of a
of the profits). Also, a growing number of businesses have However, the national statistics population. Demographic factors
connected their digital networks with suppliers and distribu- are somewhat misleading because include population size and
tors to create a more seamless flow of goods and services.20 ethnic groups tend to cluster density and specific traits such
as age, gender, and race.
Alternative selling st rategies thrive on the Internet, together. Canada's 15 largest cities
giving rise to more individualized buying experiences. If
you've browsed seller reviews on eBay or received shop-
ping recommendations from Amazon, you have a sense
of how personal Web marketing can feel. Online technol-
Changes in Major
Exhibit 1.3
ogy also allows leading-edge firms to offer customized Canadian Visible Minorities,
products at prices comparable to those of standardized 2001-17 21
products. On the NikeiD website, for instance, customers
2000
can "custom build" Nike shoes, cloth ing, and gear, al l whi le ~ 2001
1800
sitt ing at home in their pyjamas. 1600 D 2o17
As technology continues to evolve at breakneck speed, 1400
the scope of change in both everyday life and business 1200 I
operations-will be almost unimaginable. In this environ- 1000
800
ment, companies that welcome change and manage it 1
600
well will clearly be the winners.
400
200

1-5e The Social Environment 0

Chine s e South Asian Black Filipino
The social environment encompasses the values, attitudes, Source: Statistics Canada, "Population Projections ofVisible Minority Groups, Canada, Provinces, and Regions:
2001-2017: Catalogue no 91-541-XIE, based on the reference scenario.
customs, and beliefs shared by groups of people. It also covers

NEL Chapter 1 Business Now: Change Is the Only Constant 11

are home to 90 percent of Canadians who were born
abroad. Around half of the popu lations of Toronto and
Vancouver are expected to comprise visible-minority
groups by 2017, as will approximately one-quarter of the
populations of Calgary, Ottawa, and Windsor.22
What does this mean for business? Growing ethnic
populations offer robust profit potentia l for firms that pur-
sue them. TD Canada Trust, for example, has 43 percent of
the South Asian Canadian market and 29 percent of the
Chinese Canadian market. It employs ethnic, bilingual, or
multilingua l staff to better serve Canada's ethnic markets,
and it ensures that it has promotional material in all of its
branches to meet their needs. More than 60 languages are
spoken in TD branches, and more than 200 languages are
available by phone. For other businesses in Canada, reach-
ing ethnic markets is becoming increasingly easier. Rogers
Communications has been actively targeting ethnic con-
sumers and now has over 100 multicultural channels, which
broadcast in more than 20 languages.23
Growing diversity also impacts the workforce. A
diverse staff- one that reflects an increasingly diverse
marketplace- can yield a powerful competitive advan-
tage, for these employees are better ab le to serve a diverse
customer base. There is considerable research that dem-
onstrates a strong link between diversity and innovation.
Decision-making and problem-solving skills are enhanced.
From global behemoths such as Procter &Gamble to loca l
corner stores, companies have taken proactive steps
to hire and nurture people from a broad range of back-
grounds. True diversity includes differences in gender,
race, age, religion, and nationality, among others. Leading-
edge firms that take a proactive approach to effective
integration achieve greater employee performance and
higher employee retention.24
Effectively managing diversity should become easier
as time goes by. Multiple studies demonstrate that young
Canadian adults are the most tolerant age group, and
they are moving in a more tolerant direction than earlier
generations regarding racial differences, immigration,
and LGBTQ issues. As this generation gathers influence
and experience in the workforce, they are likely to lever-
age diversity in their organizations to hone their edge in a
fiercely competitive marketplace.25
Aging Population As lifespans increase and birth
rates decrease, the Canadian population is rapidly aging. In
2015, the estimated median ages in Canada were 40.6 for
men and 43.1 for women, and they're increasing monthly.26
By mid-century the global population of people aged 60
and over is expected to double, and 60 percent of that
growth wi ll be in Asia.The global population of older people
is expected to reach 2.3 billion by 21 00, triple what it is nowY
12 Chapter 1 Business Now: Change Is t he Only Constant
Fast Food?
Sometimes. Fast
Computer? me!
Fast Fashion? Buh?
n most industries, faster is better, and those of you who have
surfed the Web on a newer, faster device can certainly relate.
And when you're hungry, it's great to get a pizza delivered in
less than thirty minutes. But fashion has gotten faster, too,
in this case, faster may not be better. Mass market powerhouses,
such as H&M, Forever 21, and Zara, can take a product quite
literally from the drawing boards to store shelves around the
in about two weeks. And with rock-bottom prices, many consumers
are able to buy more than ever before. In fact, Canadian consumers
purchase billions of garments each year-about 64 items per
person-and no matter how much they give away, this excess can
lead to waste. According to Elizabeth Cline, author of OverDressed,
"charities long ago passed the point of being able to sell all of our
wearable used clothes:' In part because of this surplus, every year
billions of pounds of apparel end up in landfills. So it may be better
for everyone involved-and for our planet-if it took a little longer
for affordable versions of this year's fashions to make it from the
pages of Vogue magazine to the hangers in your closet.28
Sources: Julian Sancton, "Book Review:'Overdressed;by Elizabeth L. Cline,"bloomberg.com, June 21,201 2;
Eliana Dockterman, "How U.S. Clothing Brands Are Getting Greener; August 20, 2012.
The rapidly aging population brings opportunities and
threats for business. Companies in fields that cater to the
elderly such as health care, pharmaceuticals, travel, rec-
reation, and financia l management- will clearly boom.
Creative companies in other fields will capitalize on this
trend by reimagining their current products to serve older
clients. Possibi lit ies include books and movies- and
perhaps even video games- with mature characters, low-
impact fitness programs such as water aerobics, and smart-
phones and tablets with more readable screens. Again, the
potentia l payoff of age diversity is clear: companies with
older employees are more likely to find innovative ways to
reach the aging consumer market.
But at the same time, surging retirement rates pose sig-
nificant threats to overa ll business success. Because of the
smaller labour pool, companies will need to compete even
harder for top talent, and this will drive up recruitment
and payroll costs. As governments at all levels stretch to
serve the aging population, taxes may increase, placing an
add itional burden on business. And as mid-career workers
spend more on eldercare, they may find themselves with
less to spend on other goods and services, shrinking the
size of the consumer market.
NEL
Another random document with
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I like, and I had made him come to the station because I was afraid
of meeting Rahas alone. And I told him to take tickets for him and
me, and we went back by the next train to the station where Rahas
got out. The porter said two gentlemen had got out and gone across
the fields; and I knew who the other one was, and I screamed, and
told William my husband had come back. But he said it was a fancy.
We walked across the wet fields in the dark, and I was trembling so
that I could scarcely stumble along, and William carried a lantern,
and said I had better go back, for we were on a wild-goose chase.
And when we came down to the wood, my foot slipped, and I fell on
to the grass, and as he stooped to pick me up, William saw marks on
the ground, as if something had been pulled along over it. He went a
little way slowly until I heard him give a cry, and I ran to him, and—
and we found you.”
She could not say more, her voice was suffocated, her lips were
shaking. But the whitewashed walls of the room in which he was
lying, the hayrick he could see through the window, told George that
it was to a farmhouse he had been brought; and there they spent two
days, until he was well enough to get up and go with Nouna back to
her friends in Plymouth. Then began for them both in the pretty
southern town a new and sweeter honeymoon, marred only for each
by a secret fear for the other. In the first days of their re-union
happiness gave their wasted frames a new vitality which made each
feel on the high road to health, but which made to each only the
more evident the pale face and heavy breathing of the other.
They were sitting together in the sunlight one May afternoon, the
window wide open, the breeze coming in straight from the sea,
drinking in the joy of each other’s presence as they were never tired
of doing, when George passed his hand slowly down his wife’s
cheeks, and shivered.
“Are you cold?” she asked anxiously, nestling up to him and
putting her little arms round him as if to protect him from the spring
air.
“No,” he said in a troubled voice, “I’m all right. But I’m afraid this
place doesn’t suit you, Nouna; you’re getting so thin and white. You
are paler than when I came back.”
 Nouna’s face changed; after a moment’s pause she sprang up
with her old vivacity, and running to a looking-glass, gazed at her
own reflection for some minutes, and then crept back to her
husband’s side with a bright light in her eyes. As he looked at her
inquiringly, she drew up the sleeve of his coat as far as she could,
very gently, and then baring her own arm also, laid it beside his, and
glanced up into his face with an odd, tender, yearning expression
which, after a moment’s wonderment, opened his own dull eyes. For
a few seconds neither spoke again. Then he snatched her into his
arms and their eyes held each other’s for some minutes in an
ecstasy of relief and gratitude. George had loved his wife better than
his career, better than his own happiness. Nouna, since the fall of
her first idol—her mother—had turned all her devotion to the
husband who had cherished her so tenderly. Both, therefore,
dreaded life without the other a thousand times worse than death,
and when it dawned upon them that they were not to be parted
again, there was no further sorrow possible for them in this world.
“George,” said Nouna at last, in a broken whisper, “if you had
never met me you would have been much happier, for you would
have married that good Ella and have got on in the world and
become a great man.”
“Yes,” said he at once.
“Well, aren’t you sorry?”
“No.”
“Why?”
It was not easy to explain. The sailor, sinking with his ship at
twenty-five, does not in his last moments wish that he had been a
grocer, though if he had he might have gone on contentedly selling
tea and candles for half a century. George, struck down by
misfortune in the prime of his youth, had tasted some of life’s
supremest joys, and the rolling years could give him no delight such
as he had felt in running the whole gamut of an absorbing passion.
He hesitated before he answered her.
“If I had not married you,” he said at last, “you would never have
been poor, you would have had as many lovely dresses and
diamonds as you wanted, and nobody would ever have teased you
to tell the truth, or to do anything you didn’t want to do. And yet you
are not sorry you married me. What’s the reason?”
She curled herself about him. “I don’t know,” she said shyly.
“You’ve made me feel things I didn’t—feel—before.”
“Well, Nouna, and you’ve done the same to me. Are you
satisfied?”
“Yes,” she said.
“Then so am I.”
And in this state of placid but languid contentment these two
shipwrecked creatures drifted on day by day, tired out by the buffets
of fortune, and making no effort to escape from the black archer who
seemed to have marked them down. The young come to this stage
more easily than the middle-aged; when their strong passions and
eager desires burn low, quenched suddenly by ill-health or desperate
misfortune, all the busy wheels of the world seem to stand still with
them, and they cry, when they feel that the pulse of life beats weakly:
“This is the end!” While older sufferers, who have shaken Time by
the hand, and know his ways, and have learnt to bear his penalties
patiently, see only the daily work interrupted against their will, waiting
to be taken up again when the storm is over.
There came to Plymouth, when Lauriston and his wife had been a
week there together, a friend who saw something of this, and set her
wits to work, after her custom, to put right what she saw was wrong.
Ella Millard had brought her whole family to the town on the plea that
a fortnight of the Devonshire air would improve her sisters’
complexions, and arm them for the triumphs of the coming season.
Having gained over her mother, from whom she inherited her own
strong will, the rest yielded like lambs, and within a week of her
resolution to come they were all installed in a house at the upper end
of Lockyer Street, near the Hoe. By Sir Henry and his two eldest
daughters, who all enjoyed a serene animal health, and to whose
lymphatic temperament trials of the nervous system were
meaningless words, the wan faces and languid movements of the
Lauristons were looked upon as altogether fatal signs. But the more
discriminating Ella would not give up hope so easily. It seemed to her
contrary to common sense, and to the lofty qualities she attributed to
him that the man who had been her ideal should allow himself to be
snuffed out of life so easily. Afraid to depend entirely upon her own
judgment in such an important matter, she refrained from setting her
scathing little tongue to jibe at him for the inertness of his mind until
she had found some person of authority to pronounce upon the
health of his body. But George had never before in his life been in
need of a doctor, and scouted the idea of seeing one now; while
Nouna, on whose behalf Ella then pleaded, shrank sensitively from
the ordeal of meeting a stranger, and only consented at last to see
the physician whom George had called in to dress her arm on the
memorable evening of his first visit to Mary Street. The very next day
Dr. Bannerman arrived, and had an interview with both his patients.
The entrance of the tall, slightly stooping figure, the sight of his dark,
penetrating face, lean, lined, and impressive as that of a magician,
raised a flush of excitement to Nouna’s face, and brought back to her
husband’s mind a vivid recollection of the prophecy uttered by the
doctor on that May evening. If the sharp eyed man of science knew
all the circumstances that had chequered Lauriston’s life since he
disregarded that warning, he would indeed think that his sinister
prophecy had been amply fulfilled.
The interview was a short one. The doctor affected to have no
recollection of either of his patients until George followed him out of
the room, and stood face to face with him on the landing.
“You remember me, doctor, I suppose,” he said in a rather
shamefaced way.
“Perfectly.”
“The first time you met me you were kind enough to read me a
sermon. You might read me one to more purpose now.”
“More purpose! No. You can read your own sermon now, and I
come to my proper function, that of curing the results of the acts my
warning could not save you from.”
“If you knew the whole story, doctor, you would hardly blame me.”
“I don’t blame you. How can I blame conduct which brings me a
patient? If all men were wise, we poor medicine men might go sweep
crossings.”
“But, doctor, if I had been a wiser man I should have been a worse
one.”
 “Not necessarily. And it shows no more virtue than wisdom to
throw up the sponge when you are beaten by Fortune at the first
round.”
George reddened. “First and last round too, isn’t it, doctor? Come,
tell me honestly how long you give me to live.”
Dr. Bannerman looked at him steadily.
“If you remain mooning about here, hovering along like a moth in
the sunshine, brooding over things which are past and beyond
remedy, I give you a year. If you buckle to, make yourself new
interests in life, start on a new career, and get new air into your lungs
and new thoughts into your brain, I give you any time from ten years
to five-and-twenty.”
George instinctively drew himself up into a more martial attitude.
“And my wife?” he asked with fresh interest and eagerness.
“I give her as long as she has a strong heart and a brave arm to
take care of her.”
The young man turned his eyes away with a new light burning in
them. At last he said with a tremor in his voice:
“You would not deceive us about this, of course, just to keep us
lingering on a little longer?”
“Not a bit of it. You are both suffering from severe shock to the
nervous system, and because each of you thought you were going to
lose the other, neither has had the energy or the desire to pull round.
You besides have a weak lung, and I tell you frankly you would not
make her majesty such a smart young officer again. But a man of
your intelligence must have other resources.”
George saw by the foregoing speech that very little of his history
during the past year was unknown to the doctor. On the whole, this
knowledge made him feel easier.
“I think I could write,” said he reflectively. “I have already given
myself some sort of training for it, and if only all my ideas did not
seem to be locked up somewhere out of my reach, I think I could
express them at least intelligibly.”
“Good,” said Dr. Bannerman. “Then all we have to do is to find the
key. I think I know a friend of yours whom we can consult about that.
You shall hear the result of our conference very shortly. In the
meanwhile, keep up your spirits and keep out of draughts, and
English literature may yet thank your wife for taking you out of the
army.”
George shook his hand warmly, and the doctor left the house. Half
way down Lockyer Street he met Ella Millard, who was burning with
impatience to know the result of the interview. As he came up she
hastily dismissed a fair-haired young fellow of three or four and
twenty, who trotted meekly off at once towards the Hoe. She was too
deeply interested in what the doctor had to tell to utter more than the
word “Well!” in a tremulous voice. She thought, however, by the
expression of his face that his news could not be very bad.
“Well!” he repeated after her.
“Is it well?” said she impatiently.
The doctor smiled. “I think so.”
Her face softened. “I thought it could not be the worst; it would
have been too dreadful—and too foolish,” she added sharply.
“That is just what I told him. Oh! I was very hard with him; I thought
he wanted it. He has had an awful time of it lately, and the poor boy
hardly knows even yet whether he is on his head or his heels. But it
is quite time now that he made an effort to pull himself together. I
gave him a good talking to, I can tell you.”
Her look seemed to implore mercy, but she said nothing. He
continued: “They ought to go away. He thinks he could write, and I
should encourage him to try.”
“And—his wife?” she asked, with a scarcely perceptible diminution
of interest.
“There is nothing organically wrong with her at all. She will be
herself again before him, and then help his recovery.”
“Help him! Do you think so?” asked Ella doubtfully.
“Yes.”
“I thought you told me, that when you first saw her she produced
on you a very different impression.”
“So she did. But then—she was a very different woman.”
Ella’s mouth twitched rather scornfully. She thought that the weird
prettiness of Nouna’s little wasted face had bewitched even this
middle-aged doctor.
“She is scarcely even yet an ideal companion for a man of
intellect,” she said with a slight touch of her worst, most priggish
manner.
“H’m, I don’t know,” said the doctor. “Your man of intellect is
generally a man of something else besides; and the housekeeper-
wife and the blue-stocking wife both frequently leave as much to be
desired as—well, say, the flower-wife, if once the flower learns to
turn to the sun, as, I think, little Mrs. Lauriston has done.”
“She is fond of him,” agreed Ella rather grudgingly.
“And what more does he ask of her?”
“Nothing more now; but will it be always so?”
“Who can tell? But love on both sides is a good matrimonial
foundation. Have they any money?”
“Enough to live upon as quietly as they are doing now.”
“Ah! but they want something more than that. He ought to move
about, to travel, and she ought to be tempted back to interest in life
with some of the pretty things she is so fond of. Haven’t they any
relations who could manage that?”
Ella’s face brightened with a little smile as she nodded assent. “I
think the relations can be found,” she said.
Apparently the doctor thought he had put the suggestion into good
hands, for he looked at her very good-humouredly as he held out his
hand and bade her good-bye.
“The gentleman who was dismissed for me will be wishing me all
the nauseous draughts I ever prescribed,” said he drily.
Ella grew superbly disdainful.
“Oh no,” she cried with haughty emphasis. “He is only a silly young
fellow who was a fellow-officer of Mr. Lauriston’s, and who is so fond
of him that he has come down here on purpose to see him, although
he puts off doing so from day to day for fear of waking in him
recollections which might distress him.”
The doctor was more than satisfied with this elaborate
explanation.
“I dare say he manages to fill up his time agreeably enough—in
this pleasant neighbourhood,” said he gravely.
And he raised his hat and left her before she had time to utter
another protest.
Now, quite unintentionally, Dr. Bannerman had done a very ill turn
to a most harmless and kindly fellow-mortal. Clarence Massey, the
humble companion whom he displaced at Ella’s side, having been
attracted to Ella by the devotion with which she had worked for his
friend George Lauriston, had raised up an altar to her in his most
affectionate and warm heart, on which, figuratively speaking, he
burned incense all day long. Whenever and wherever she would let
him, he followed like a dog, bearing her snappish fits with beautiful
meekness, accepting any remarks she liked to throw to him, as
precious pearls to be treasured in his memory; gentle, loyal, and
devoted always. Ella, who had begun by laughing at him, had been
thawed by his distracted anxiety and misery over George Lauriston’s
misfortunes, until from tolerating she had begun to like him. And
now, just as she was getting so amiable to him that he had begun to
entertain hopes which he had the sense and modesty to think
extravagant, this light suggestion on the part of a stranger chilled her
into anger at the thought that any one should think her capable of a
serious thought for so unintellectual a person as Clarence Massey.
She had promised, on Doctor Bannerman’s approach, to rejoin
Clarence on the Hoe; but it was with the step of an offended
empress that the plain little girl met this well-provided young fellow,
on whom a dozen mammas of marriageable daughters now fixed
longing eyes.
“Well, what does he say?” asked Clarence, afraid from the
expression of her face that the report was bad.
She told him briefly and coldly the substance of the doctor’s
opinion, but without any hint of his last suggestion except the vague
information that the pair had better go abroad. Then she walked
briskly on in the direction of the Fort, and to Clarence’s meek request
for permission to accompany her, she gave the most brusque, most
chilling answer that he could “do as he pleased.” Of course he
pleased to go, and when they got on to the narrow footpath which is
only wide enough for one, he followed with tears in his eyes at the
change in her, wondering what in the world had happened to make
her so unkind to him. Meanwhile, however, an idea had come into
her busy little head which helped the effect of the spring air in
restoring her to good humour; so that when she stopped to look
reflectively out to sea and caught sight of his disconsolate face, she
smiled at him with mingled mercy and majesty and asked him why
he looked so miserable.
“I’m not miserable now,” said he, brightening up at once. “It was
only that I was afraid you didn’t want me.”
Ella grew prim again.
“It is very kind of you to come,” said she.
“Ella, don’t say that. How can you say that, when you know very
well how happy it makes me to be with you!”
“Happy! How absurd! I wish, Clarence, you wouldn’t say such
ridiculous things.”
“But, Ella, why is it ridiculous? It’s true, you know it’s true. You
know very well I would follow you to the end of the world if you’d let
me, that I’d do anything you wanted me to, that I’m never so happy
as when I’m with you. Well, why is it ridiculous to say what is true
and what you know?”
“But I don’t want to know it,” said Ella sharply. “If I had thought you
would ever talk to me in such a silly way I would never have let you
come out with me. When I’m thinking about serious things, too!”
“Can’t you see that this is serious to me?”
“It’s only all the more ridiculous. You must either promise never to
talk such nonsense to me again, or you must give up the walks.”
“Very well, then, I must give up the walks,” said Clarence
resignedly, “for I can’t make the promise.”
And he walked away over the rough grass, and began to look out
to sea on his own account. Ella, in spite of the “serious things” which
had occupied her thoughts, was forced to turn her attention to this
importunate and foolish person close at hand, and she did so with a
much graver countenance than was her wont in matters relating to
him. The fact was that this unexpected threat of withdrawing his
despised attentions woke her suddenly to the fact that she should
miss them. Ella discovered all at once that she was not so insensible
as she had imagined to the ordinary feminine pleasure in the
possession of a devoted slave. Even a Clarence who occasionally
talked nonsense would be better than no Clarence at all. Some
expression of these conclusions found its way to her face, for the
crestfallen swain was emboldened by her glance to draw near her
again. She said no kind word however, and he was afraid that further
pleading at the moment might be injudicious, so they stood very
quietly side by side until Ella broke out vehemently:
“I wish I had twenty thousand pounds!”
The wish and the fiery manner in which it was uttered took
Clarence so completely by surprise that instead of assuring her that
she had only to say the word, and he would lay that sum at her feet,
as perhaps she had expected of the impulsive little Irishman, he only
said simply:
“What for?”
“To throw into the sea,” was her surprising answer.
He laughed, supposing that this was a faint sort of joke.
“I mean it,” she added gravely. “I can get five thousand pounds of
my fortune from papa, but I want twenty thousand more.”
“But what a strange use for it; you are not in earnest about that!”
“Oh, yes, but I am.”
“Well, if anybody were to offer you twenty thousand pounds, what
would you say to—him?”
“I should say, Thank you.”
“Prettily?”
Ella paused. He was bending his head to look into her eyes, and
putting into that word a great deal of impertinent meaning. Then she
flashed up into his face a grand glance full of magnificent
haughtiness.
“Of course, because I am not handsome, you think I ought to jump
at you!”
“Oh, no, I don’t. But whether you jump at me or away from me, you
shall have the twenty thousand pounds.”
“What, without knowing what I am going to do with it?”
“You said you wanted it to throw into the sea.”
“Oh, yes, yes, so I do. But supposing I were to throw it to another
man—a merman, for example?”
Clarence winced. “Whatever you do is right, Ella,” he said, at last.
“You can throw it to whoever or whatever you like.”
“When can I have it?”
“I shall have to go up to town. I can raise it by next week.”
Ella put her hand on his arm impulsively.
“You’re a good fellow,” she said, in a very sweet voice.
 And Clarence, who had never had such a mark of her favour
before, felt all on fire, and wished he dared to hold her fingers where
they had so unexpectedly placed themselves. But the overwhelming
reverence he felt for this small girl taught him discretion, and you
might have thought, by the stiffness with which he held himself under
her touch, that a wasp had settled upon him, and that he was afraid
to move for fear of provoking it to sting. But they walked back
together to the Hoe in a very amicable manner, Clarence feeling that
luck had helped him to make a splendid move, and Ella wondering
whether by the acceptance of twenty thousand pounds from a man
she could be considered in any way to have compromised herself.
 CHAPTER XXXII.
Three weeks passed very quietly for George Lauriston and his
wife without any markedly apparent result of the doctor’s visit, except
that George, trying to shake off the lethargy into which he had sunk
since his imprisonment, had put himself into harness for a new battle
with fortune by writing articles on the condition of the army for a local
paper. He also took a journey to London to fulfil his long-promised
revenge upon Rahas, and would probably have got himself into fresh
trouble by using other than legal means of chastisement upon the
Arabian, if that ingenious gentleman had not just got into a little
difficulty with the excise officers over a large consignment of choice
tobacco which was more than suspected of having paid no duty, and
some silver goods not up to standard, the hall-mark on which had
been forged, which forced him to leave the land of his adoption for
shores where genius is more respected.
Both George and Nouna for a long time refrained from mentioning
her mother’s name, and it was with some emotion that they both
recognised her handwriting one day outside a letter directed to the
husband, the postmark of which was Bath. George took it away to
read, and Nouna made no remark, but when he came back to her,
holding it open in his hand, he found that she was trembling with
intense excitement. She took it from him with a passionately anxious
glance, but gathered comfort from his gravely smiling face.
Nouna then read these words:

“My dear Mr. Lauriston,

“I am writing to make a request which I pray you will
generously grant. I know there are differences between us
which would make another meeting undesirable and perhaps
painful to both, I would not suggest that we should see each
other again: but I implore you to let me see my daughter just
once more. Six months ago I could have claimed this as a
right, or I would have contrived it by a trick. But I have learnt
 to respect you, and I only ask. I am a different woman, I have
grown old, I am changed, you would not mind her coming now
—I swear it. Lord F. has been very generous, and I want
nothing but just one more look at my daughter. Let her come
and see the Condesa di Valdestillas, that is the name I bear
here, and shall bear to the end of my life. A foreign title covers
whatever of eccentricity is left in

“Yours very sincerely,

“Lakshmi di Valdestillas.”

Nouna was crying quietly as she finished. She clung to her

husband’s arm.
“Must I go?” she whispered.
“Oh, yes,” said George promptly. “She has always loved you,
Nouna; I will write to tell her you are coming.”
“Oh, George, George,” panted the little creature in the same low
voice, “I feel so wicked for not wanting to go! But all my heart has
turned to you now, and I can’t get the old feeling back.”
He clasped his hands round her shoulders.
“But you will, Nounday, you will have just the feeling that is right
when you see her all by herself, lonely, waiting for you whom she
has always loved better than anything in the world.”
All the sting had now gone out of his feelings towards the creature
who, with all her odd mixture of coarseness and refinement,
corruption and generosity, had lived to see the very virtues she had
fostered in her child turn against her in the loneliness of her
premature age. For George had learnt from Lord Florencecourt, who
ran down to Plymouth two or three times to see him and Nouna, to
whom he was beginning to be reconciled, that Chloris White had
indeed retired from her old life, broken up and suddenly middle-
aged, and had fixed her retreat in the pretty old city of Bath, where
she lived safe from recognition in a colony of what the Colonel
irreverently called “old tabbies,” feeling neither contrition for the past
nor discontent with the present, and passing her time, with a serenity
born of dulled faculties and worn-out energies, in petty charities and
petty scandal.
 Two days after the receipt of the letter George arrived with Nouna
in Bath, left her at the door of her mother’s residence, a small, well-
kept house in a quiet street, and walked up and down outside until
she should rejoin him. When she reappeared at the door she was
very serious, and she beckoned him to come up the steps to her.
“Mamma wishes—to say—good-bye to you,” she said in a
tremulous voice.
Standing aside she let George see a bent figure, dressed in black,
with greyish hair, and a wan dark face, who raised her great black
burning eyes, but not with the old boldness, to his face. He took his
hat off, and held out his hand. The lean little dark fingers she put into
his were shaking.
“Good-bye, Mr. Lauriston. I shall not see you again. It has made
me happy to see you. Remember when you think of me that I had no
chance—from the beginning. But I kept my child pure, and so God
sent you to her. I dare not bless you, but I thank you; if I were better I
would pray for you. Good-night. Good-bye.”
The long evening shadows were creeping over the quiet streets,
as George and his wife, walking slowly away, caught the final
glimpse of a pale, drawn face, and great eyes like flaming fires,
straining in the gloom for a last look at them. Nouna was very quiet,
but she was much happier than she had been in coming.
“George,” she said in a low voice, “I can think about her and love
her now just as I used to do. When may I see her again? She would
not tell me.”
And George could not tell her either, though he gave her a ready
assurance that she should come whenever she was summoned; for
he had a shrewd suspicion that, in spite of Lord Florencecourt’s
belief that she was happy and contented, the restless spirit of the
reputed Countess was untamed still, and chafed in secret under the
new bonds of broken health, changed habits, and disappointed
ambition. Two days later this suspicion was confirmed, when he
received the tidings, conveyed to him only, of the sudden end of the
Condesa di Valdestillas, who had been found dead in her bed from
an overdose of a sleeping-draught. But as she left a sealed letter for
George with instructions to keep the news of her death from her
daughter until Nouna was stronger, full of passionate thanks to him,
and equally passionate regrets that she might not leave what she
possessed to her child, he was not deceived, though he was the only
person who ever knew the secret.
Poor Sundran, who was with her mistress to the last, implored
George, who went at once to Bath on learning the tidings, to let her
come back to her darling Missee Nouna. And as he was sure
enough now of his influence over his wife no longer to dread that of
the black woman, he promised that, at no distant time, she should
return to her service.
On hearing that the “Condesa di Valdestillas” was dead, Lord
Florencecourt, finally relieved from his fears, openly acknowledged
Nouna as his daughter “by a former wife,” as indeed poor Chloris,
thinking over the position of affairs on the eve of her first and last
attempt at reparation, had foreseen that he would do, and settled a
handsome allowance upon her. He came down to Plymouth in the
last week of May to make this determination known to his son-in-law.
He was accompanied by his niece Ella, who was in a state of strong
but subdued excitement, but who gave no reason which her uncle
could consider adequate for her entreaty that she might thus leave
London for a few days in the height of the gaieties of the season.
On their arrival in Plymouth, Ella chose to remain alone at the
hotel while the Colonel went to call upon the Lauristons. He thought
this decision very extraordinary; but on his return a light came to him;
for in the sitting-room, standing close by his niece’s side, and
bending over her to speak with a passionate earnestness which
seemed to infect the usually self-contained girl, was Clarence
Massey. They both started guiltily on Lord Florencecourt’s entrance,
and Clarence shook with nervousness as he greeted him. Ella
rushed at her uncle, and asked about the health of the invalids with
great vivacity and interest.
“What were you talking about when I came in?” asked the Colonel
bluntly, when he had informed her that George and Nouna were
neither better nor worse than they had been three weeks ago.
“We were talking about them—about the Lauristons,” answered
Ella.
And Clarence echoed her words. The Colonel looked from the one
to the other incredulously. His niece seized both his hands
impulsively, with a light-hearted laugh.
“We must tell you—it’s a great secret, but it’s coming out now, and
you shall be the first to hear it,” said she.
Then she made him sit down, and told him, rather breathlessly, a
long story, to which Clarence played Chorus, and to which the
Colonel listened with amazement, admiration, and something like
consternation too.
“And who’s to pay for it all?” he asked at last in bewilderment.
“Oh, we’ve arranged all that,” said Ella airily.
Again Clarence echoed, “We’ve arranged all that.”
And this astonishing unanimity naturally led Lord Florencecourt to
a conclusion the expression of which would have filled Ella with the
loftiest indignation. In the meantime, having been informed of the
plot, he was pressed into the service of the conspirators, and that
evening, when it had grown dark, they all three went to the house
where the Lauristons were staying, and the Colonel entered, leaving
the two young people to walk up and down outside in a state of
breathless expectancy.
“Break it gently!” was Ella’s last injunction as he left them.
Lord Florencecourt found his way up stairs to his son-in-law’s
sitting-room in a state of great nervousness. He found George and
Nouna, pale, thin, and languid as ever, the former sitting at the table,
writing, while his tiny wife, curled up on the sofa with a large ball of
wool, some long wooden pins, and a small, misshapen piece of work
which was the result of many evenings’ labour, flattered herself that
she was knitting. They were both surprised by this second visit from
the Colonel, and by the fact that now he had come he seemed to
have nothing to say.
“What are you doing?” he asked Nouna at last.
“I’m making George a comforter,” she answered proudly. “I can’t
be idle while my husband’s at work.”
“Well, it keeps you quiet at any rate,” he observed injudiciously, a
glance at the comforter having convinced him that if ever it should be
finished and worn it would belie its name. The Colonel fidgeted for a
few moments, and the young people began to assume an attitude of
expectancy, perceiving that something was to come of this unusual
restlessness. “I suppose you wouldn’t like to leave Plymouth—to go
anywhere—to—India, for instance,” he blurted out at last.
Nouna sprang up with a cry, a great light in her eyes. George’s
face flushed; he crossed the room and came to support his wife, who
was tottering.
“Why does he say it? why does he say it? It can’t be true, oh, it
can’t be true!” sobbed she, burying her face in his breast.
“What does it mean, Colonel? Are you serious?” asked George in
a hoarse voice.
He hated England just now, sore and beaten down as he still felt,
but he had felt that to run away from it was cowardly, even if he had
been able to afford it. This suggestion of change for himself and joy
for Nouna therefore came upon his heart like a ray of bright light in
the dead grey level of their languid lives.
“Make all your preparations to-night,” said the Colonel, “for you will
have to start to-morrow.”
And, as if afraid of committing himself by any explanation, he left
the room, and darted out of the house like a lad before they had time
to stop him. In the street Ella and Clarence met him, full of
excitement.
“Well?” said they at the same time, both quivering with excitement.
“It’s all right. I told them—just enough and no more. I said it rather
suddenly perhaps, but I was afraid they’d ask questions. They’re to
be ready to start to-morrow, I said. You couldn’t have managed
better yourself, Ella. They were delighted, absolutely delighted.”
The Colonel was right. To these two beings, whose hearts and
minds were still scarcely as convalescent as their bodies after the
trials of the preceding few months, the suggestion of this great
change came as the grant of a new bright life to them. Nouna, in
particular, was half crazy with delight, and seemed to recover in a
moment all her lost vivacity, as she babbled of palms and sunshine,
palaces with stately domes and graceful minarets, of elephants with
rich trappings, birds with bright plumage, and dark depths of jungle
where the tiger was known to lurk, and where every step was
hedged with fascinating peril. That night she scarcely slept, and next
morning, when Lord Florencecourt again made his appearance,
accompanied this time by Ella, he was quite bewildered by the
change in his daughter’s looks. Ella herself, although very quiet, was
almost as much excited, as she asked whether they were ready.
George, with dull masculine pertinacity, worried everybody by asking
for details of the journey for which they had so hastily prepared; but
at last perceiving, by the evasive answers he got, that some surprise
was intended, he was in the end content to hold his tongue, and to
wait patiently till the proper time should bring enlightenment.
Arrangements had been made, they were told, for the transport of
their luggage, and they had nothing to do but to start in the company
of Ella and the Colonel. They set out on foot, which was one
astonishing thing, and they were taken in the direction of the Hoe,
which was another. It was a beautiful, bright May morning. From the
seat by the camera obscura they all stood for a moment, looking
down at the water, when suddenly Nouna burst forth into a cry of
admiration at the sight of a beautiful yacht which was anchored half-
way between the shore and Drake’s Island.
“When did it come?” she cried with much interest. “It wasn’t here
yesterday. What a beautiful little thing!”
“Little thing!” cried Lord Florencecourt, with untimely impetuosity.
“Why it’s 150 tons; big enough to go round the world in!”
Then an awkward silence fell upon everybody, for, vulgarly
speaking, the cat was out of the bag. And the conversation was kept
up with difficulty until, descending the cliff, they all came to the little
landing-pier, where a small boat was waiting with Clarence Massey
standing up in it, waving his hat frantically and beaming with
unspeakable enthusiasm. Neither George nor Nouna asked any
questions now; and they all got into the little boat in a state of
surprising silence, and were rowed straight out towards the beautiful
yacht without anybody’s remarking upon the strangeness of the
circumstance. But as they drew near her, Nouna caught sight of the
name, painted in bright gold letters on the stern—“Scheherazade.”
She touched her husband’s arm, and made him read it too. Before
he could speak, they were close under the yacht, and Lord
Florencecourt was leading the way on board. Nouna climbed up next
like a cat, and the rest followed quickly.
Then Ella took the young wife by the hand, and, leaving the three
men on the deck, led her on a tour of inspection. The yacht was a
tiny floating palace, fitted up by the dainty taste of one woman to suit
the luxurious fancy of another. The rooms were hung with rich
tapestry, and with delicate China silks embroidered in gold and pale
colours. The woodwork was painted with birds and flowers on a
background of faint grey landscape. The bed-room was fitted up with
satin-wood, and hung with rose-coloured silk; while in order that
George might have a corner better suited to masculine taste in this
dainty little craft, a very small room, dark with old oak and
serviceable leather, had been appointed for him as a study. Every
corner of the yacht held something beautiful and curious: skins of
white bears, mounted in maroon velvet; carvings in ivory, securely
fixed on dark brackets that showed off their lacelike outlines;
treasures in bronze, in delicate porcelain, in exquisitely tinted glass
from Salviati’s, met the eyes at every turn. The whole furnishing and
fitting of the little vessel, down to the choice of silver-gilt teaspoons
from Delhi and a lamp which was said to have been dug up at
Pompeii, had clearly been a labour of love.
Nouna was overwhelmed; she walked along with her hand in
Ella’s, scarcely uttering a sound, until at last she heard the words
whispered in her ear: “This is a present for you—all for you, with my
love. You are to make good use of it, and be very happy in it. No”—
she stopped Nouna, who was breaking into tears, and incoherent,
passionate thanks—“you may thank me when you and your husband
both come sailing back strong and rosy and well.”
Nouna smiled at her with glistening eyes as she put her little
hands round the girl’s shoulders.
“I can’t thank you, I can scarcely try. You were born to be a good
fairy to everybody. Kiss me, kiss me hard, and give me some of your
own sweetness that I may be a better wife.”
When they came on deck again they were both very quiet; and
George, who had in the meantime learnt that this fairy yacht was a
present to his wife, and also that, in common with the fairy presents
of tradition, for a whole year at least it would entail no expense upon
its owner, could do nothing but shake Ella’s hand warmly and
murmur some incoherent words.
All the visitors on board now felt that their task was done. The
luggage was on board, the steam was up, the hands were ready to
hoist the anchors; and both George and Nouna showed signs of
having suffered as much excitement as their still weak frames could
bear. Lord Florencecourt, Ella and Clarence took their leave quickly,
descended from the yacht into the little boat, and rowed away in the
sunshine, while the young husband and wife waved them good-bye.
“Where are we going to, George?” asked Nouna, when the little
boat had reached the pier, and the passengers were landed.
“Just where you like. You are its mistress, you know.”
She drew a long breath of pleasure.
“Tell the captain to go, as quickly as possible, to some place—
nearer than India—where there are palms and blue skies, and bright
birds.”
George obeyed, and, coming back, told her that they were going
first to Malta. She was satisfied, considering that Valetta was a pretty
name, and remembering she had heard the air was good for people
with weak lungs.
“Yes, yes, let us go to Malta, George, and there you will get well,”
said she.
And she drew him towards a pretty little pavilion which had been
erected on the deck. The hanging curtains were crimson and gold,
and could be looped back to command a view of the sea in any
direction.
“Why didn’t Ella take me in there?” she said.
“Perhaps it contains some great treasure which she kept as a
bonne bouche at the last,” suggested he, smiling.
Already she had an inkling of the truth, and when she tore back
the nearest curtain and found, kneeling on the ground on a leopard’s
skin among white silken cushions which were to support her young
mistress’s head, the old servant Sundran trembling with joy, she
gave way, and fell sobbing into the Indian woman’s arms.
“Oh, George, George,” she whispered passionately, springing up
again to her husband’s side, “Ella must have an angel from heaven
hovering about her to whisper to her just what will make people
happiest! Aren’t you afraid of waking up and finding it isn’t real?”
“No, Nounday,” said he, tenderly, but with a thoughtful face; “I’d
rather think that we have been in a dreary, feverish sleep, and that
we are sent away to wake us up to life again!”