93348737 Assignment on BRIC

8/16/2019 93348737 Assignment on BRIC

1/13

1

Assignment on “Meet the BRIC” Case

Study

ITB 301

Section: 3Spring 01

Su!mitted to:

Sa"ma A#ter$ecturer

%epartment o& Business Administration'

(ast )est *ni+ersity, %ha#a'

Su!mitted !y

Ara&at Rau& 00-..10.3/

%ate o& Su!mission: th March 01


2/13


3/13

Table of contents

Title !age number

" BRIC 3

#conomic gro$th of BRIC 5

%uestion &: Ma the roosed se-uence o+ the

evolution o+ the economy o+ the #$I%6s' What

indicators mi!ht comanies monitor to !uide their

investments and or!ani)e their local market

oerations7

8

%uestion ': What are the imlications o+ the

emer!ence o+ the #$I%s +or careers and

comanies in your country7

8

%uestion ( Do you think recency ias has led to

overestimatin! the otential o+ the #$I%s7 9o(

(ould you, as a mana!er +or a comany assessin!

these markets, try to control this ias7

%uestion ): 9o( mi!ht mana!ers interret the

otential +or their roduct in a market that is, in

asolute economic terms, lar!e ut, on a er

caita asis, characteri)ed y a ma:ority o+ oor

to very oor consumers7

10

%uestion *: In the event that the #$I%s +ail to

meet ro:ected er+ormance, (hat (ould e some

o+ the imlications +or international usiness7

10

%uestion +: %omare and contrast the merits o+

;


4/13

“BRIC”

#$I% is a !rouin! acronym that re+ers to the countries o+ #ra)il, $ussia, India and %hina,

(hich are all deemed to e at a similar sta!e o+ ne(ly advanced economic develoment' It is

tyically rendered as =the #$I%s= or =the #$I% countries= or =the #$I% economies= or

alternatively as the =#i! >our='

#$I%S is an international olitical or!ani)ation o+ leadin! emer!in! economies, arisin! out o+

the inclusion o+ South A+rica into the #$I% !rou in 2010' As o+ 2012, its +ive memers

are #ra)il, $ussia, India, %hina and South A+rica' With the ossile e*cetion o+ $ussia, the

#$I%S memers are all develoin! or ne(ly industriali)ed countries, ut they are distin!uished

y their lar!e economies and si!ni+icant in+luence on re!ional and !loal a++airs' As o+ 2012, the

+ive #$I%S countries reresent almost hal+ o+ the (orld?s oulation, (ith a cominednominal ;D@ o+ US1'B trillion, and an estimated US3 trillion in comined +orei!n reserves'

.he term (as +irst rominently used in a ;oldman Sachs reort +rom 200, (hich seculated

that y 2040 these +our economies (ould e more a++luent than most o+ the current ma:or

economic o(ers' 9avin! some Ca +e( common +eatures, ut actually ein! very di++erent Cin

most o+ the asects, and in an asence o+ a uni-ue mission, vision and develoment strate!y, the

+our countries have started to e seen as an entity C!iven their revious Sevolution and ased on

+orecastin! studies not only (ill chan!e the atterns o+ the !loal economy, ut also ale to

lead it in the +uture Cthe year 2040' .o!ether, the +our ori!inal #$I% countries comrise more

than 2'8 illion eole or 30 ercent o+ the (orld6s oulation, cover more than a -uarter o+ the

(orld6s land area over three continents, and account +or more than 24 ercent o+ !loal ;D@'

Due to lo(er laor and roduction costs, many comanies also cite #$I% as a source o+ +orei!n

e*ansion oortunity'

4

http://en.wikipedia.org/wiki/Acronymhttp://en.wikipedia.org/wiki/Acronymhttp://en.wikipedia.org/wiki/Countrieshttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/BRIChttp://en.wikipedia.org/wiki/BRIChttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/Countrieshttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/People's_Republic_of_Chinahttp://en.wikipedia.org/wiki/Emerging_markethttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/BRIChttp://en.wikipedia.org/wiki/Brazilhttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/GDPhttp://en.wikipedia.org/wiki/Acronym


5/13

Bra,il- Russia- India- China and South Africa

BRIC

.ederati/e Re0ublic of Bra,il

Russian .ederation

Re0ublic of India

!eo0le1s Re0ublic of China

;oldman Sachs ar!ues that the economic otential o+ #ra)il, $ussia, India and %hina is such that

they could ecome amon! the +our most dominant economies y the year 2040' .he thesis (as

roosed y Fim G?


6/13

9o(ever, it is not the intent o+ ;oldman Sachs to ar!ue that these +our countries are a olitical

alliance Csuch as the Euroean Union or any +ormal tradin! association, like ASEA


7/13

Proportion of world (countries with data) nominal GDP for the countries with

the top 10 highest nominal GDP in 2010 from 1!"0 to 2010 with #$%

pro&ections until 2016' ountries mared with an asteris are non*G"

countries hina +ra,il and #ndia' Gre- lines show actual ./ dollar alues'

he ten largest economies in the world in 2050 measured in GDP (illions of

2006 ./D) according to Goldman /achs

#conomic gro$th of BRIC:

.he #$I% are !ro(in! markets economies' .hey account +or almost three illion eole, or :ust

under hal+ o+ the total oulation o+ the (orld' In recent times, the #$I% have also contriuted to

the ma:ority o+ (orld ;D@ !ro(th' #y 2020, all o+ the #$I% should e in the to 10 lar!est

economies o+ the (orld' .he develoment anks each state si!ned an a!reement to +urther

!radually alter loan currencies +rom U'S' dollars' .his (as intended to stren!then +inancial

cooeration et(een the #$I%S countries, as (ell as to e*and the international si!ni+icance o+

their national currencies' So, the rise o+ ne( o(erhouse economies in the develoin! (orld can

shi+t the e-uation o+ !loal economic order' .hus the #$I% thesis reco!ni)es that #ra)il, $ussia,

http://en.wikipedia.org/wiki/Goldman_Sachshttp://en.wikipedia.org/wiki/Development_bankhttp://en.wikipedia.org/wiki/Development_bankhttp://en.wikipedia.org/wiki/Goldman_Sachshttp://en.wikipedia.org/wiki/Development_bank


8/13

India and %hina J have chan!ed their olitical systems to emrace !loal caitalism'

Moreover, #ra)il, $ussia, India and %hina have lon! een a +avorale destination o+ emer!in!

market investors' .his is otimistic +or economic !ro(th and hu!e investment may come to the

#$I%s in comin! decades' .he sur in economic !ro(th re-uires a road analysis to have a ri!ht

icture o+ the #$I%s economic !ro(th and develoment'

&2 Ma0 the 0ro0osed se3uence of e/olution of the econom of the BRICs2 4hat indicators

might com0anies monitor to guide their in/estments and organi,e their local mar5et

o0erations7

Ans(er

.he evolution o+ economy o+ #$I% is very imressive' .hey are in the seedy !ro(th o+ their

end user markets' CE*erience indicates that consumer demand takes o++ (hen ;ross


9/13

'2 4hat are im0lications of the emergence of the BRICs for careers and com0anies in our

countr6

Ans(er

.he #$I% thesis osits that %hina and India (ill ecome the (orld?s dominant suliers o+

manu+actured !oods and services, resectively, (hile #ra)il and $ussia (ill ecome similarly

dominant as suliers o+ ra( materials' It?s imortant to note that the ;oldman Sachs thesis isn?t

that these countries are a olitical alliance Clike the Euroean Union or a +ormal tradin!

association ut they have the otential to +orm a o(er+ul economic loc' #$I% is no( also

used as a more !eneric marketin! term to re+er to these +our emer!in! economies' Due to lo(er laor and roduction costs, many comanies also cite #$I% as a source o+ +orei!n e*ansion

oortunity' Develoin! countries like us may +ace challen!ed and hi!her stresses in the laor

market and the declinin! cost cometitiveness o+ their countries6 comanies' Students +rom

#an!ladesh may e encoura!ed ecause their states variety and comete +or the investment

caital and those usiness actions that lead to imortant monetary !ro(th and the increasin!

international cometitiveness o+ our countries6 +irms'


10/13

that the current trend (ill continue into the +uture' $eeatedly, comanies, e*ecutives, investors,

and o++icials e*traolatin! the resent into the +uture have made mistakes' here are a numer o+

-ualitative issues that investors must consider (hen contemlatin! an allocation to emer!in!

market e-uities' Gne o+ the most decisive +actors is li-uidity, as lan sonsors may shy a(ay

+rom markets (ith lo(er volume and smaller market cas' Many o+ these issues are incororated

in the classi+ications o+ MS%I Emer!in! Markets Inde*, (hich consider economic develoment,

si)e and li-uidity re-uirements, and market accessiility' @er MS%I, market accessiility

inte!rates -ualitative measures re+lectin! the investment e*erience o+ international investors in

a !iven market, +ocusin! on lierali)ation, level layin! +ield, cometitive landscae,

in+ormation +lo(, and staility' In addition, emer!in! markets may involve a multitude o+ other

olitical, social, le!al and re!ulatory risks'

3' 8o$ might managers inter0ret the 0otential for their 0roduct in a mar5et that is- in

absolute economic terms- large but- on a 0er ca0ita basis- characteri,ed b a majorit of

0oor to /er 0oor consumers6

Ans(er

9o(ever, (e elieve the est active mana!ers may e ale to identi+y oortunities in smaller

markets, and uild ort+olios that are more diversi+ied than the inde*' As such, mana!er

selection is critical !iven the volatility in the asset class and (ide disersion o+ outcomes' In all,

(e elieve institutional investors should consider estalishin! or increasin! allocations to

emer!in! market e-uities' Mana!ers mi!ht interret the otential +or their roduct in a market ('

I+ there is innovation in the interaction (ith other +irms and (ith kno(led!e in+rastructure

includin! universities and technolo!ical institutes 'so that it can clari+y the seciali)ation, and

cometitiveness ';ro(th er+ormance can also !o a lon! (ay'

10


11/13

4' In the e/ent that one BRIC countr- if not all- fails to meet its 0rojected 0erformance-

$hat $ould be some of the im0lications for the economic en/ironment of international

business6

Ans(er

Macro staility, institutions, oenness, education is the indicator o+ economic !ro(th' I+ one o+

the #$I% country +ails to meet the ro:ected er+ormance, the standard o+ #$I% countries

er+ormance (ill e hamer to some e*tent' As every country have microeconomic and

macroeconomic environment' .he elements o+ economic environment as !ross national income

C;


12/13

In economics, urchasin! o(er arity C@@@ asks ho( much money (ould e needed to

urchase the same !oods and services in t(o countries, and uses that to calculate an imlicit

+orei!n e*chan!e rate' Usin! that @@@ rate, an amount o+ money thus has the same urchasin!

o(er in di++erent countries' Amon! other uses, @@@ rates +acilitate international comarisons o+

income, as market e*chan!e rates are o+ten volatile, are a++ected y olitical and +inancial +actors

that do not lead to immediate chan!es in income and tend to systematically understate the

standard o+ livin! in oor countries,

.he 9uman Develoment Inde* C9DI is a comarative measure o+ li+e e*ectancy, literacy,

education, and standards o+ livin! +or countries (orld(ide' It is a standard means o+ measurin!

(ellein!, esecially child (el+are' It re+ers li+e e*ectancy, education Crimarily the adult

literacy rate, and income er erson and is desi!ned to cature lon!term ro!ress rather thanshortterm chan!es' .hus, y cominin! indicators o+ real urchasin! o(er, education, and

health, the inde* o++ers a comrehensive measure o+ a country6s standard o+ livin! that

incororates oth economic and social variales'

A green econom is one that results in imroved human (ellein! and social e-uity, (hile

si!ni+icantly reducin! environmental risks and ecolo!ical scarcities'

%ountry ;I


13/13

Date post:	05-Jul-2018
Category:	Documents
Upload:	-
View:	213 times
Download:	0 times

93348737 Assignment on BRIC

Documents