Marketing Case Study on International Business: The BRICS (Case Study Sample)
The BRICS (Brazil, Russia, India, China, and South Africa) nations are increasingly important in international business. Provide a comprehensive description of the economy of each of these nations and identify reasons why the BRICS countries are growing in importance on the international stage. Also, describe the internal and external forces that may influence organizational success as it relates to these countries. Finally, discuss the importance of the Saint Leo University core value of responsible stewardship relative to international business and the rise of these economies.
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BRICS is an acronym for identified industrial emerging countries which are: Brazil, Russia, India, China and South Africa (Cooper, 2016). The five countries are among the developing nations in the world, and they formed the group for economic purposes. BRIC was established in 2006, and later South Africa joined the group in 2011 hence creating BRICS. The principal goals of BRICS are to offer financial assistance, develop infrastructure, support various projects, co-operate among the member countries for economic development as well as fostering their trade activities (Cooper, 2016).
According to a study carried out in 2014, BRICS nations comprises of a population more than three billion which is approximately 40% of the people in the world. Remarkably, the combined Gross Domestic Product (GDP) of the five nations amounted to $16.04 trillion which is estimated to be around 20% of the world GDP. Additionally, foreign reserves were approximate $4 trillion which depicts that the countries have a significant contribution to the global economy.
The countries play a fundamental role in international trade since they dominate world market with the supply of manufactured goods as well as raw materials. Increased growth of GDP, Foreign Direct Investment (FDI) as well as the Purchasing Power Parity (PPP) has resulted in growing importance of the BRICS countries in the whole world. Therefore, this paper will analyze the economy of the BRICS countries, explain why these countries are growing importance on the international stage as well as describe internal and external forces that may influence organizational success about the BRICS nations. Finally, the paper will explain the importance of Saint Leo University stewardship core value concerning international business and rise of economies.
Brazil is the largest country in Latin America with a population of approximately 206 million people. According to the study carried out in 2010, Brazil was ranked the seventh largest in the globe based on the purchasing power parity with a GDP of $2.09 trillion (Sadler, 2017). The population hugely depends on traditional and natural resources such as pure and renewable energy. The country is a valuable global energy exporter, especially in oil products. Remarkably, many Multinational Corporations have extensively invested in the country hence boosting economic growth. For the last decades, Brazil had been experiencing economic growth until the reign of Dilma Rousseff who misused public funds hence causing a decline in GDP. Brazil engages in trading activities for commercial purposes.
For instance, the total value of imports and exports are estimated to be 27% of GDP. Economically, inflation, as well as the unemployment rate, ranges from 10%. Between 2003 and 2014, Brazil social and economic progress elevated approximately 29 million individuals out of poverty which significantly resulted in a decline in inequality (Sadler, 2017). The income level of 40% of the poor population rose by substantially 7.7%. However, the political crisis in Brazil has led to a steady deceleration of economic growth. According to Sadler (2017), between 2006 and 2011 Brazil experienced a growth of 4.5% GDP.
Remarkably, between 2011 and 2014, the annual economic growth was noted to be 2.1% which depict a drop (Sadler, 2017). In 2015, the GDP was contracted by 3% which enabled Brazil to reserve $358 billion on imports at the end of the year. Also, trading economies reported that the FDI increased by $6800 million in 2016. According to Sadler (2017), the economy of Brazil is currently growing. In January 2017, the economy rose by 0.62% while in February it increased by 1.3% which depicts that the economy will improve in 2017 (Sadler, 2017).
Russia is the biggest country in the world, and it's associated with enormous natural resources such as natural gas, oil, and precious metals. In fact, studies depict that the country holds approximately 30% of the world's natural resources with an amount of $75 trillion (Hutt, 2016). The state participates in trading activities to expose the surplus production to boost the economy of the country. Based on GDP, Russia is ranked as the eighth largest economy globally.
Notably, the combination of the total value of imports and exports equals to 51% of GDP. The tariff rate is averagely applied at 4.9% while foreign investment in the economy is capped for economic purposes. The main exports are natural gas, oil products as well as high technological military equipment. For instance, natural gas, petroleum products, and crude oil comprise 58% of Russia's total exports (Hutt, 2016). The major imports include ground transport and food which respectively represent 12% and 13% of total imports. According to Hutt (2016), the exports amounted to $527 billion in 2012 while imports stood at $341 billion. Russia trades with various countries in Europe which represent 60% of export sales. A study carried out in 2012 revealed an increase in the living standards and the disposable income grew by 160% due to prudent fiscal policies and high prices of oil.
However, in 2014 the economy experienced two main blows which led to recession in GDP growth. The first shock was based on the decline in oil prices worldwide. Notably, Russia economy depends on oil exports. Also, geopolitical tensions on the Military invention in Ukraine adversely affected investments in Russia which resulted in stagnation of GDP. According to Hutt (2016), Western governments imposed economic sanctions to punish Russians for taking control of crime region in Ukraine. Furthermore, the economy shrunk by 3.7% in 2015 and further rebounded with 0.3% in 2016. Russia GDP is expected to rise to $1.370 trillion by the end of 2017 first quarter. Also, econometric models project the GDP to approximately $1.640 trillion in 2020 which depict that the economy is growing (Hutt, 2016).
India is the second most populated country in the world with a population of Over 1.3 billion with 20.6% of its people live on low standards usually less than $3.1 in a day. However, based on nominal GDP and PPP, the country is ranked on the seventh position global wise (Iyengar, 2017). Currently, India is recognized as a newly industrialized nation with 7% average growth rate.
Remarkably, the economy’s growth is attributed to its savings, young population, investment rates, and low dependency ratio. The generation of the young people provides skilled labor force in mathematics, science, engineering and technology. According to Iyengar (2017), India majorly specializes in the exportation of software and IT services which amount to approximately $167 billion in exports.
Also, the country exports farm products which contribute highly to the country’s GDP. India has two major stock exchanges which include the National Stock Exchange of India and Bombay Stock Exchange with a market capitalization of $1.68 trillion and $1.71 trillion respectively in 2015 (Iyengar, 2017). Among the BRICS countries, India has the fastest annual economic growth of 7.5% which represent $2.38 trillion of the whole economy.
Indian economy moderately depends on trade with the value of imports and exports amounting to 49% of GDP and a tariff rate of 6.2% (Iyengar, 2017). Furthermore, India economy is growing at a faster rate and the government forecast that by the end of the 2016-2017 financial year, the economy will have grown by 7.1%. The growth is attributed to resilient government reforms through Reserve Bank of India which controls commodity price inflation.
The population of China is of over 1.38 billion people. Based on GDP, China has the second largest economy with a GDP of $11.4 trillion (Eckart, 2016). According to IMF, China has the largest economy based on purchasing power parity. Despite the fact that the country has the second biggest economy in the world, it is still not categorized as a developed nation since its Capita GDP is below the accepted minimum threshold.
The country specializes in the manufacturing of goods hence it's referred to as a global manufacturing hub. The country is the second-largest exporter of goods with the public sector dominating in the trade market. China participates in the international trade by engaging herself in business activities with the greatest training unions such World Trade Organization, BRICS and other countries. The major exports include machinery and electronics will amount to 55% of overall exports, equipment and construction material represent 7% and garments that account for 13%. Intermediate goods dominate the countries imports.
Overall, trade plays a significance role in the entire economy of China with the total value of imports and exports amounting to 41% of GDP, and a tariff rate of 3.2% is applied (Eckart, 2016). Despite that the country has a massive economy development, people have a low standard of living as shown by low payment given to workers. In fact, small amount results in cheap products which make China goods to be more appealing in the market. Also, the country has invested in foreign investment such as in US bonds, treasury bills, and notes. According to Eckart (2016), China had $1.059 trillion in America treasury as at February 2017. Moreover, the government controls the overall economy by controlling all banks in China which are currently at the risk of nonperforming loans.
South Africa Economy
Based on GDP, South Africa has the second largest economy based on GDP. Its economy accounts for at least 35% of African GDP. The economy of the country majorly depends on trading activities. For instance, the country is endowed with natural resources such as coal, gold, diamond and chromium among other m...
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