Global Business Management

GlobalBusiness Management

GlobalBusiness Management

Theadvancement of industrialization, transportation, outsourcing,multinational corporations and globalization play a critical role inthe growth of global business. International business has a vitalimpact on the growth of any nation. The involvement and growth ofinternational business can expand the prospects of a country beyondcertain margins. Furthermore, the success in global business earns acountry a commanding positon in global politics. Therefore, countriesare keen to building unions with other countries to exercise thecomparative advantage of trading among each other and establishthemselves in the global front.

Overthe last two decades, the BRICS (Brazil, Russia, India, China andSouth Africa) have come to global attention. These five countriesexemplify the rising dominance of the world’s major developingnations and their prospective to influence the global affairs. Thefinancial and technical strengths of the BRICS in the past decadehave improved enabling them to create a platform of economiccollaboration. The principal focus of the BRICS is in the regionalamalgamation, technical support and development collaboration withthe developing countries.

Descriptionof BRICS economies

Brazil

Brazilranks seventh in the list of world’s wealthiest countries with anapproximated Gross Domestic Product (GDP) of USD 2.4 trillion (TheWorld Bank). It is also the most populated country in the Caribbeanregion and South American Continent. At present, Brazil still hasinsufficiency of transport infrastructural facilities, but it hasundergone tremendous changes given that it is hosting the 2016Olympic Games.

Duringthe 2008 financial crisis, Brazil experienced a positive economicgrowth despite the rest of the world suffering from negative or zeroeconomic growth. During this time, it reached a record high growthrate of 7.5%, presumed to be the highest since 1986 (The World Bank).Nonetheless, this growth rate dipped in the subsequent years and ithas been sluggish for the last few years. This trend is highly linkedto the decline of the demand for Brazilian exports in European andAsian markets. Moreover, the demand for consumer goods among theBrazilian middle class was poor. Nevertheless, economic forecastsindicate that Brazil will rank fifth among the largest consumermarkets in the world by 2020. The competitive advantages of Brazilpresently lie in social and economic growth, natural resourceendowment, a strong domestic market, political stability andabundance of clean and renewable energy. The most critical advantageof Brazil is that it ranks as a vital energy exporter in the world.Besides, it is naturally endowed with vast mineral resources such asdiamonds, gold and quartz among others.

Russia

Ingeographical terms, Russia is the biggest country in the world withenormous natural resources. It has a highly educated workforce andprides itself in the possession of technologically advanced researchand production abilities. Russia arose from the dreadful Sovietterritory to reclaim itself as a global powerhouse. Russia has apopulation of close to 150 million people who form a rich andpotential consumer market. During the early years of this century,the GDP of Russia had more than doubled. This made Russia to climbthe rank from the 22ndlargest economy in the world to the eighth. Russia contains thelargest natural gas deposits in the world, besides other naturalresources such oil and coal (The World Bank). The country implementeda swift privatization policy that saw the government relinquish thecontrol of many industries, thus creating opportunities for privateinvestors in the country to attain sustainable margins.

Russiahas a booming consumer market, which is ideal to support investmentsin various sectors. The economic situation in Russia has beenunsteady in the last few years characterized by a declining GDP and afalling economic growth rate. According to the BRICS report of 2015,Russia experienced a negative growth rate for the better part of2015. The GDP of Russia constricted by 0.57 percent in the thirdquarter of 2015 (The World Bank). This trend is attributed to theslow recovery from the 2008 financial crisis, the pressure exerted onRussian economy by western sanctions motivated by militaryinterventions in Ukraine and falling prices of commodities. Similarly, the business environment in Russia has experienced lowsureness in the consumers and loss of business practices caused byincomprehensive structures. The volatility in the marketplace wasfurther driven by the military interventions in 2014.

India

Indiais home to over 1.2 billon people and it is the world’s fourthlargest country. The recent developments in India have been of greatsignificance both domestically and internationally. Since itsindependence, the country has undergone massive improvements in theagricultural sector. This has enabled it to shift from depending onimported agricultural products to a major producer and exporter.India has a mixed economy, which eliminates market inefficienciesinduced by communist and capitalist economic systems.

Moreover,India has a highly skilled human resource base, particularly inscience, engineering, mathematics and technology, besides businessmanagement and entrepreneurship. The country’s GDP is estimated toincrease by about 9%-10% for the next couple of years and grow fivetimes more from the current USD 2073.54 attained in 2015. India’sdomestic savings account for almost 40% of its GDP and they fuel mostof the country’s investment requirements. Furthermore, thecountry’s domestic consumption has played a significant role in itsgrowth mostly led by the private sector. The current level ofdomestic consumption is expected to remain steady, and perhapsincrease given the high prospects of better economic conditions inthe country.

Indiais an ideal destination for the production and selling of certainitems due to the low cost of labor. Economic forecasts indicate thatIndia’s wealthiest individuals will increase by 40 million in thenext decade (The World Bank). The country has a vigorous, diverse andwell-regulated financial system that cushioned it from the globalfinancial crisis. The country prides itself in a strong andcompetitive banking sector characterized by quality accountingrecords.

Nonetheless,despite the positive trend noted in the Indian economy, the countryneeds to make improvements in some areas. Among these areas are:promotion of equality in dimensions such as gender, religion andincome, foster the development of skills and education at a greaterlevel, health care and nutrition in children, and infrastructuraldevelopment to open-up rural areas.

China

Movingfrom a centrally planned economy to a market-based economy in Chinafueled rapid social and economic growth. Globally, China is thesecond largest economy with a GDP average of 10% per year (The WorldBank). The Chinese government introduced numerous rules that raisedthe country’s image as an investment destination. The ease ofinvestment in China is facilitated by few entry barriers, whichattract numerous investors from other parts of the world. On asimilar point, the country’s communication infrastructure hasundergone massive developments in the last decade and has influencedinvestors’ perception regarding China as an investment destination.

China’seconomy is solid and growing fast. In the World Bank internationalcomparison project of 2011, China’s GDP estimates were close tothose of the United States. This was an indication that the Chineseeconomy had the potential to surpass the world’s economicheavyweight. This economic growth increases China’s purchasingpower parity. Besides, considerable urbanization and marketizationare significant factors that make China ideal for business. However,the most important factor is the huge market size in the country. Itis estimated that 19% of the world population lives in China (TheWorld Bank). Furthermore, apart from the market size and firmeconomy, China has many natural resources that represent 19% of theworld’s resources. These include coal, oil, natural gas, and avariety of minerals.

SouthAfrica

SouthAfrica is the most developed country in the African continent. SouthAfrica’s abundance of natural resources and highly skilled manpower play a crucial role to the country’s development. Thetransition of South Africa from colonialism to independence underNelson Mandela was a key development of the 20thCentury. Before the 2008 financial crisis, the GDP and economicchanges in South Africa underwent a steady growth (The World Bank).The country has a well-functioning financial sector characterized byconsistent budgetary policies and well-performing bonds. SouthAfrica’s GDP has been declining since the USD 416.6 Billionrecorded in 2011 to USD 312.8 Billion in 2015.

Importanceof BRICS economies on the international stage

TheBRICS growing importance on the international stage is explainedthrough various economic and demographic indicators. These indicatorsinclude increased forex reserves, increased flows of foreign directinvestments, debt sustainability and share in the world trade.

Sharein global trade and GDP

Inthe last two decades, the BRICS countries have developed as acollective force as far as trading is concerned. This is supported bythe growing share of the BRICS in the world GDP from 10% in the 1990sto 25% at present. On a similar note, the BRICS share in the globaltrade has increased from 3.6% to over 15% (The World Bank). Thegreatest value in this contribution has come from China whose sharein the world trade has increased from 2% to 9%.

IncreasedFDI flows

Persistenteconomic activities in conjunction with growth-oriented strategies inBRICS economies has resulted in massive changes in theirinfrastructural layout. These changes have positioned these countrieson potential growth paths and increased the market size for productsthus, transforming them into attractive destinations for FDI. Datafrom the BRICS report indicates that the flow of FDIs into thesecountries have improved at an aggregate annual growth rates of almost11% over a period of 10 years. At the same, the FDI outflows from theBRICS economies have also increased by more than 35% within the sameduration.

Growthof labor force

BRICScountries are the largest shareholders in terms of populace and workforce. According to the international labor organization (ILO), BRICSmake up more than 40 percent of the world’s population. Moreimportantly is the fact that their population constitutes of a largershare of economically active people compared to other countries.Among the BRICS, China has the largest proportion of population andworking people. Although India ranks second in terms of population,it has a relatively lower number of economically active peoplecompared to Russia and Brazil.

Debtsustainability

TheWorld Bank classifies the BRICS as developing debtor countries. TheBRICS economies facilitate growth in the developing countries byfinancing development agendas in the form of debt. In 2010 forinstance, the BRICS accounted for almost 40% of the total externaldebt held by developing countries (The World Bank). Although someBRICS countries have incurred huge amounts of external debts, none ofthe countries is severely indebted.

Forcesthat may influence organization success of the BRICS

Internalforces

Althoughthe BRICS may have more differences than similarities, the economicand political benefits of this union are immense, and that representstheir biggest internal strength. The primary aspect of similarity isthat the BRICS are regional leaders and exhibit rapid economic growthrates. Moreover, the success of these countries is positivelyinfluenced by the stable political atmosphere and their environmentalsustainability (Hill,2015).This makes their economies ideal destinations for investors from allover the world. In addition, there is improved trade cooperationamong the BRICS, which means that they benefit from each otherthrough imports and exports. This is an indication that the internalcooperation among the BRICS member countries is key to their success.The establishment of the New Development Bank for the BRICS to poolfinancial resources to support development projects confirms this(Hill,2015).

However,despite the internal forces positive influences on their success,there are a few negative things about these internal forces, whichmay affect the purported organizational success of the BRICS. First,the Chinese economy is dominant, which makes other BRICS members seeminferior, rather than a union of identical members. Second, althoughthe BRICS trade among themselves, they lack identical economicinterests, which is evident through the declining trade among them,when compared to their trade with the US and the EU (Hill,2015).Furthermore, the BRICS economies compete in third-world markets. Theyare able to replicate technologies meaning that they cannot shareresearch and development insights. This limits the potential for thedevelopment of cross-country cooperation in science and technology.

Externalforces

Externally,the BRICS are greatly influencing international affairs. As such,their organizational success largely depends on the outside world’sreceptiveness to their development ideologies. Their success is alsosubject to various international institutions such as the World Bank,the IMF, the UN and the World Trade organization among others (Hill,2015).The policies passed or proposed by these institutions will influencethe BRICS countries directly because they are bound by theirmembership. The world views the BRICS as role model in restructuringthe financial system of the world and normalizing internationalpolitics.

Importanceof the Saint Leo University core value of responsible stewardshiprelative to international business and the rise of these economies

TheSt. Leo University core value of responsible stewardship states,

“OurCreator blesses us with an abundance of resources. We foster a spiritof service to employ our resources to university and communitydevelopment. We must be resourceful. We must optimize and apply allof the resources of our community to fulfill Saint Leo University`smission and goals” (SaintLEO University).

Thecore value of responsible stewardship on the University’s missionstresses the importance of making good use of the resources at one’sdisposal for the good of the community. This is a call to improve onthe wellbeing of people through business at the national and theinternational levels.

Thecore value of responsible stewardship is applicable to globalbusiness and the growth of the BRICS. These nations are endowed withmassive natural resources and human resources. As such, they shouldexploit these resources in the right way for the right reasons. Thismeans that these countries should use their resources to fostercommunity development domestically and in other developing nations.They should do this through environmental friendly ways to avoiddestruction of the environment or pollution. This can lead to theprotection of these natural resources and improvement of people’shealth and living standards, which would be an indication of balancednational and international development. This core value alsoreinforces the importance of service to other countries and sharingskills, technical progress, and most importantly, working together asa unit. This can greatly reduce the incidence of poverty indeveloping countries, diseases and international conflicts.

Conclusion

TheBRICS is a collaboration between five countries with the aim ofcreating a platform where they can share comparative advantages interms of economic, political and social development to improve theirrole in the global economic order and have meaningful influence oninternational trade and economic policies. The combined growth ofthese countries is massive from an aggregate global GDP of less than10% to over 30% at present. This is an indication of better prospectsin future, which is culmination of proper utilization of theirresources. The BRICS are on a gradual trajectory to becoming thehealthiest economies in the world and growing in significance on theinternational front.

References

Hill,C. W. (2015). International Business: Competing in the globalmarketplace. New York, NY: McGraw-Hill Education.

SaintLEO University – Mission &amp Values. (2016). &quotMission andValues: Core Values.&quot SaintLeo University. Retrievedfrom University website:http://www.saintleo.edu/about/florida-catholic-university.aspx

TheWorld Bank. (2016). &quotBrazil Overview.&quot TheWorld Bank IBRD. IRD. Retrievedfrom The World Bank website:http://www.worldbank.org/en/country/brazil/overview

TheWorld Bank. (2016). &quotChina Overview.&quot TheWorld Bank IBRD. IRD. Retrievedfrom The World Bank website:http://www.worldbank.org/en/country/china/overview

TheWorld Bank. (2016). &quotIndia Overview.&quot TheWorld Bank IBRD. IRD. Retrievedfrom The World Bank website:http://www.worldbank.org/en/country/india/overview

TheWorld Bank. (2016). &quotRussia Overview.&quot TheWorld Bank IBRD. IRD. Retrievedfrom The World Bank website:http://www.worldbank.org/en/country/russia/overview

TheWorld Bank. (2016). &quotSouth Africa Overview.&quot TheWorld Bank IBRD. IRD. Retrievedfrom The World Bank website:http://www.worldbank.org/en/country/southafrica/overview