Evolution
The BRICS is an acronym of Brazil, Russia, China and India, according to the case study the grouping of the four countries must have came into existence at the onset of Millennium stage, however according to Jim O’Neil in his paper, “Building Better Global Economic BRICs” it traces it evolution 2001.the BRICs are considered to be in their early economic development.
Investment indicators
Interest rate
Companies should look at the current interest arte and probably the speculated future interest before investing. When interest rate is higher more investment is encouraged as the returns are high, however the lower the interest rate low the return. Therefore before any company makes decision as to invest in a particular business opportunity then an analysis of the likely interest rate should be conducted.
Political
Companies should also scan the environment to identify the possible and or prevailing political situation; stability within the political environment enhances business performance unlike in situations where there is political instability. Political instability scares the investors whereas stability of same promotes business operation.
Inflation
When inflation is high the investors are scared since the returns is low, companies should therefore scan the environment to understand the operation of any given economy to know it is bets to invest in any given business opportunity.
Capital
Capital is the basis for any organization; acquisitions will only be possible if the company has necessary funds to facilitate the purchase. Investors therefore must look for the sources of fund of their intended investment. It is necessary to have sufficient cash for daily operation of business.
What are the implications of the emergence of the BRICs for careers and companies in your
Country?
The emergence of BRICs has great effect on the careers and companies within the Group, first the GDP of the associated groups are on an increasing stage, when GDP increases it implies more production which calls for more labor to maintain or production limit, when more labor are absorbed empowerment opportunity is created thus reducing unemployment rate.
There is increased market for the companies within the group; this therefore will lead to more access to such markets thereby increasing productivity in terms of profit maximizations which the main aim of any is given business organization. Generally more career opportunities will be created amongst the trading partners. Other people argue that it will create a superior risk adjusted for long term investors due to the geographical diversification since it will reduce the portfolio risk while capturing higher arte of return that would be offered by the emerging market of the Asia, Latin America, and Eastern Europe. Generally there is high production from these countries leading high economic growth.
How might managers interpret the potential for their product in a market that is, in absolute economic terms, large, but on a per capita basis, characterized by a majority of poor to very poor consumers?
It is not easy to operate in absolute market conditions, especially where by default it is argued that market is large in terms of number of individuals within any given economy. The potential interpretation of this is that market should be composed of products and services that are of basic necessity to everyone. Therefore while undertaking production what needs to be given attention is the necessities to enable the business tap into the large market yet composed of mainly poor individuals. In such a situation managers need to conduct market analysis to know the actual services demanded by the consumers before commencing commercial production.
In the event that the BRICs fail to meet projected performance, what would be some of the implications for international business?
In the event the group fails to meet the targeted performance, it will imply more people still shall have not attained the middle class income, it will also imply unemployment rate still on an increasing trend. The net effect to the international market is the decrease in purchasing power since people still cannot afford sufficient income to boost their purchasing power; it will also lead to a drop in the value of the currency pair of the trading countries which will imply high standard of leaving to almost 40% of the world population. Generally it will lead to decrease in world GDP and a will lead to low economic performance.
Compare and contrast the relative merits of GNI per capita versus the idea of purchasing power parity, human development, and green economics as indicators of economic potential in Brazil, Russia, China, and India.
GNI make available a better snapshot of an economy and any changes within the economic set up as compared to any other measure like GTI, this ensure that the BRICS are able to measures the general activities taking place within their respective individual countries. It is an accurate measure for the business climate as such activities like recession as may be highlighted by the indicator could act as signal for the businesses and government to adjust their policies.
GNI of the BRICS can also act as adequate measure in changes in social welfare however this is only possible if other factors affecting welfare remains constant. It has been argued by numerous economists like William and Tobin, (1970), that changes in GDP mirrors an overall change in welfare. However some encomiasts do not buy this idea as they believe this measure do not measure accurately utility. The renowned economists behind this idea include those from Simon Kuznets since they believed it has the following weakness;
Exclude non market activities; there some productions that are not taken into consideration these include services offered by unpaid house wife, voluntary services, childcare in this case it excludes activities with no price attached to it. Activities within black market are not taken into consideration. Such activities like illegal drug trades are not taken into consideration yet contribute economy.
Expenditures on some items such as ammunition during war lead to increase of GDP when the welfare of individual could be statistic as such GDP is not a good measure of economic welfare. This unambiguous spending increases expenditure. GDP also deals with flow of rather than stocks the case of oil reserves not taken into consideration clearly proves this.
Reference
Kowitt, Beth (2009-06-17). "For Mr. BRIC, nations meeting a milestone". CNNMoney.com. Retrieved 2012-1-27.
Global Economics Paper No. 99, Dreaming with BRICs and Global Economics Paper 134, How Solid Are the BRICs?
Economist's Another BRIC in the wall 2008 article http://www.thedailybeast.com/newsweek/2012/01/27/power-up.html
"How Solid are the BRICs?" (PDF). Global Economics. Retrieved 2012-01-27.
William Nordhaus and James Tobin, (1972) “Is Growth Obsolete?” in Economic Growth, National Bureau of Economic Research General Series No. 96E, New York: Columbia University Press,
