Question 1
Bulgaria has a free and open market economy, with a well a private sector that makes significant contribution to Bulgaria’s trade. However, Bulgarian government regulates some of its essential industries for strategic reasons. The country has experienced positive growth in recent years even though the country’s GDP remains one of the lowest in Europe (Edvinsson 105). Bulgaria’s main import partners include Germany, Russia, Romania, Italy, and Ukraine. Its main export partners include Greece Turkey, Germany Greece, Italy, and Romania. Some of the commodities that Bulgaria exports to its trading partners include footwear, clothing, fuel, equipment, and machinery, steel and iron. On the other hand, the country’s imported commodities include chemicals, plastics, minerals and fuels, ores and metals, machinery and equipment and raw materials.
Question 2
As at Feb 20, 2016, Bulgarian Lev exchanged as follows against the currencies of its major trading partners: United States Dollar 0.5689, Russian Ruble 43.78, Ukrainian Hryvnia 15.29, Turkish Lira 15.29, Romanian Leu 2.291 and Euro 0.5111. One of the factors that can be attributed to strengths of Bulgarian Lev include good international relations and EU membership, significantly low systematic political risks, the country ‘s fiscal policies are historically prudent, adequate and business environment. The weaknesses associated with Bulgaria’s rating include failure establish credible anti-corruption structures and slow progress on judicial reforms that are required by the EU, deflation that occurred after august 2013, the vulnerability of the banking sector a financial contagion within the euro-zone such as banking crisis or euro-zone debt. Tight credit markets and the discontent among members of the public about standards of living are also affecting the currency. Overall, the country’s domestic demand is supporting its growth momentum.
Question 3
Coca-Cola is one of the multinationals operating Bulgaria. The Company is involved in the production, selling and distributing an array of non-alcoholic drinks (beverages) to customers. The products include some of the company’s bestselling brands across the world such as Fanta, Coca-Cola, Sprite, Coca-Cola light, and Schweppes (Bailey1). In Bulgaria, Coca-Cola is aiming to refresh its customers and to be striving to be their business partner as well as giving back to communities and the environment.
Coca-Cola is currently one of world’s most known brands (Robert 34). The company continues to grow fuelled by the expanding beverage industry in the world and capitalizing on its ranking world’s largest beverage company. The company’s overall strategy is to increase its global market share. The company operates in over 200 countries worldwide. Today, the company is generating over 70 percent of its business interest from foreign sources. The company’s growth in a multi-billion dollar enterprise occurred in over a century. However, Coca-Cola experienced a decline in its foreign revenue due to fluctuations in foreign exchange rates. The company’s sales and revenue gained momentum in the 3Q of 2015 due to its focus on still beverages (Bailey1).
Question 4
In mid-2015, the European Union was experiencing unprecedented financial challenge. Greece that was experiencing currency problems at that time was not indicating continued commitment to financing the huge amounts of debts and this heightened the likelihood of its default. Greece was facing high demands from other E.U. member states and it showed signs of leaving the euro (Lee 1). Economists are concerned that Greece, which is a core member of the euro-zone, may experience economic chaos after spiralling out of currency. The E.U. is not well equipped to deal with strains and stresses caused by Euro crisis. Greece, which is one of Bulgaria’s trading partners, owes a lot of money to other European countries. The country is facing difficulties to pay its debt and this has negative impact on its currency. On the hand, Bulgaria’s currency is cushioned by being part of the Euro zone.
Question 5
Greece’s central bank has been implementing various tough money rules that are aimed at stabilizing its currency and getting the country back on the path of economic growth (Lee 1). Some of the intervention measures include reducing government expenditure, increased taxes, and a rise in the prices of various commodities and services.
Bulgaria’s Central Bank is carrying out asset quality review among the country’s commercial banks with an aim of restoring trust in Bulgaria’s banking system (Chobanova 89). In order to achieve its objective, Greece employing methodology used by European Central Bank. It will also carry out a stress on the commercial banks to determine whether they can withstand unexpected losses.
Question 6
In conclusion, Bulgaria is expected to continue experiencing growth of about 1.3 percent in the coming years. However, this growth is low when compared to other Eastern and Central European countries (Bell 67). The country’s exports are expected to grow at annual rate of 12 percent. The country’s demand for imported goods is also likely to rise. The country will be importing fuels, metals and ores, electrical equipment and office telecom that account for about 38 percent of its imports. Bulgaria’s exports largely consist of textiles and basic foods, metals and ores (Chobanova 56). Most of Belgium’s imports come from Turkey, Germany, and Russia. Its main export markets include turkey, Italy and Germany. Multinationals corporations and foreign countries that are keen on trading with Bulgaria should monitor its future business opportunities and trade patterns.
Works Cited
Bailey, Sharon. Can Coca Cola’s Focus on Still Beverages Boost Its 3Q15 Revenue?
marketrealist.com. Oct 15, 2015.Web. February 20, 2016.
Bell, John. Bulgaria In Transition: Politics, Economics, Society, And Culture After Communism. Oxford: Oxford University, 2008. Print.
Chobanova, Rossitsa. Innovativeness of a National Economy: The case of Bulgaria. Berkeley: University of California, 2011. Print.
Edvinsson ,Leif . National Intellectual Capital and the Financial Crisis in Bulgaria, Czech Republic, Hungary, Romania, and Poland. Cambridge: Cambridge University, 2013. Print.
Lee, Timothy. The Euro was a Big Mistake, and Greece is Paying the Price.
www.vox.com . June 30, 2015 .Web. February 20, 2016.
Robert. Foster. Coca-Globalization: Following Soft Drinks from New York to New Guinea
New York: Prentice Hall, 2008. Print.
