PESTEL analysis of Canada (country profile)
This is a detailed PESTEL analysis of Canada. Canada is the 2nd largest country in the world by total area. It is also a rich and beautiful country. With a service-oriented economy and growth in manufacturing, it has become one of the top economies in the world.
Political environment in Canada
Canada is a founding member of the United Nations and is a powerful country. It maintains good relations with the most powerful country in the world, the USA. It also maintains good relations with the United Kingdom, France, and many other countries in the world. Ottawa is the capital of Canada.
Canada is a democratic country with a parliamentary system in place. It also has a constitutional monarchy. The Prime Minister is the head of the government and holds the executive power.
Canada enjoys a very good political stability. It is in fact one of the safest countries in the world. With a low crime rate and trustworthy policing services, it positions itself a very good place for business and tourism. It is worth mentioning that Canada’s focus on international peacekeeping has earned it a very good global image.
Economic environment in Canada
The next element to address in the PESTEL analysis of Canada (country profile) is the economic environment. Canada is one of the 10 largest economies in the world (Focus Economics, 2023). It has membership in the Organisation for Economic Co-operation and Development (OECD), the World Trade Organization (WTO), the G20 and the Commonwealth of Nations.
Canada also has free trade agreements with a number of countries. For example, it signed a free trade agreement called Comprehensive Economic and Trade Agreement (CETA) with the EU few years back. This agreement has made it easier to export goods and services to benefit people and business both in Canada and the EU.
Canada along with Mexico and the United States signed the North American Free Trade Agreement (NAFTA) long time ago to create a trilateral trade bloc. While this agreement has certain limitations, it has increased trade among the partners.
Canada has a highly developed mixed economy. Both the government and the people of Canada make economic choices for the country. Some industries are publicly owned, while some others are privately owned.
For example, Canada has more than 40 state-owned enterprises (SOEs) at the federal level. Likewise, it has more than 100 SOEs at the provincial level that immensely contribute to a variety of sectors including, finance; power, electricity, utilities, and transportation (ITA, 2023).
With a strong and dynamic economy, diverse and entrepreneurial people, world-class infrastructure, and one of the best banking systems in the world, Canada draws the attention of investors and businesses around the world. However, it is worth mentioning that the impact of lockdowns was deeper than expected.
Some of the top exports of Canada are motor vehicles and parts, gold, telecommunications equipment, industrial machinery and crude petroleum. Canada’s top imports are cars, vehicle parts, computers, and delivery trucks. The top trading partners of Canada are the US, Mexico, China, Japan, Germany, and the UK.
Social environment in Canada
Canada is the 2nd largest country in the world by area; however, its population is not that big. Its total population is 38.5 million and the population density is 4 per Km2 (Worldometers, 2023). Population growth has been fairly consistent over the last four decades and currently there is no sign of slowing down.
Canada is a very diverse country. In fact, diversity has played a big role historically, and many people call the country a country of newcomers. Canadians come from a wide range of nations, races, religions, and heritage.
There is a big shortage of skilled workers in a number of sectors in Canada and many business owners say that this shortage is obstructing the growth of their companies. The government is dealing with this situation with the development of people in the country and a flexible immigration system. Canada encourages immigration, and people with appropriate skills and experience can apply to immigrate to the country.
According to some sources, around 46% of Canadians aged 15 and older could be foreign-born, or could have at least one foreign-born parent by 2031. While English and French are the two official languages, there are over more than 200 languages which are spoken in Canada as a home language or mother tongue.
Freedom of religion in the country is a constitutionally protected right. Therefore, Canadians are free to have their own beliefs and opinions, and they can assemble and worship without limitation or state interference. This makes Canada an ideal place for expatriates of many different faiths and none to work in the country.
The living standard in Canada is one of the highest in the world. Canadian consumers are confident about the sustainability of their jobs, and the economy in general. They almost always demand high quality products/services and after-sale customer support.
However, there are some concerns regarding growing economic inequalities in Canada. For example, Canada’s 100 richest citizens have assets of around $230 billion, while the richest 10 per cent of the population controls 40 per cent of the country’s wealth.
Technological environment Canada
Another important aspect in the PESTEL analysis of Canada (country profile) is the technological environment. Like all other major economies, technology plays a big role in the Canadian economy. In fact, technology is one of the fastest growing sectors in the country.
Canadians make use of technology for many purposes, most notably education, careers, and leisure. The technology sector provides people with high-paying jobs as well. The rate of online shopping is growing very fast as the young customers are increasingly using their tech devices to shop online (Banco Santander, 2023).
Both public and private investments in Canada’s technology industry are growing swiftly. In addition, political, economic, and social stability have made the country a fertile ground for entrepreneurship advancement.
In fact, many international IT professionals and firms see Canada as one of the best countries in the world to advance their careers and grow their businesses. Across Canada, technology is changing the landscape of many traditional industries and is offering both people and companies a lot of opportunities.
Environmental issues in Canada
Millions of tourists visit Canada every year to experience its scenic beauty. The Arctic mountains, glaciers, lakes, forests, deserts, and particularly attractions such as Niagara Falls, Banff National Park & the Rocky Mountains, Toronto’s CN Tower, Old Quebec (Vieux-Quebec), Whistler, Vancouver Island, Victoria’s Inner Harbour, and Gros Morne National Park offer tourists a diverse experience which is full of surprises.
However, there are a number of environmental challenges that Canada is facing today. For instance, a number of air pollutants, acid rain, smog, and climate change are affecting Canadians. Many Canadians in fact see air pollution a major environmental concern.
It is worth mentioning that the government of Canada has taken a number of initiatives to decrease air pollution and the emissions of greenhouse gases like carbon dioxide that cause climate change.
Legal environment in Canada
Legal environment is the last element to discuss in the PESTEL analysis of Canada (country profile). A number of relevant issues should be discussed here; however, in brief. For example, certain rights of employees are protected by law in Canada.
There are some minimum standards employers must abide by concerning employees’ hours of work, minimum wages, sick days, vacation, dismissal, and many more. The Canadian Human Rights Act (CHRA) prohibits discrimination on the basis of gender, race, ethnicity, age and a number of other grounds.
There are many methods to do business in Canada. For instance, corporations, joint ventures, general or limited partnerships, trusts, sole proprietorships, co-operatives, and Branch plant operations are the most common ones. For international businesses, corporation is the most popular method of entry into Canada (Mercier & Woodman, 2021).
Summary of PESTEL analysis of Canada (Canada country profile)
Certainly, Canada is a rich and beautiful country. It excels in many areas and industries. However, as the global competition is intensifying, it needs to do more in some areas as discussed above.
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Last update: 16 January 2023
Banco Santander, S.A (2023) Canada: Economic and political outline, available at https://en.portal.santandertrade.com/analyse-markets/canada/economic-political-outline (Accessed 15 January 2023)
Focus Economics (2023) The World’s Top 10 Largest Economies, available at: https://www.focus-economics.com/blog/the-largest-economies-in-the-world (Accessed 15 January 2023)
ITA (2023) Canada – 7-State-Owned Enterprises, available at: https://www.export.gov/article?id=Canada-State-Owned-Enterprises (Accessed 16 January 2023)
Mercier, M. & Woodman, B. (2021) Establishing a business in Canada (Federal), available at https://uk.practicallaw.thomsonreuters.com/9-564-0499? (accessed 12 January 2021)
Trading Economics (2021) Canada GDP, available at: https://tradingeconomics.com/canada/gdp (accessed 17 January 2021)
Worldmeters (2023) Canada Population, available at http://www.worldometers.info/world-population/canada-population/ (Accessed 16 January 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.