Chapter 4: BRICs Vanguard of the revolution closing case

Chapter 4: BRICs Vanguard of the revolution closing case

1. Estimate the likely market evolution of the BRICs over the next decade. What economic indicators might companies monitor to best guide investments and actions.

Research has indicated that the demand of the consumers increases with an increase in per capital income or GDP (Lyssiotou, Pashardes & Stengos, 2004). Due to rapid emerge in the middle class in the BRICs countries and an increase in GDP, there is an increasing demand for latest products and services in these countries. International corporations have recognized this fact and therefore they are trying to introduce their products and services in for the consumer market in the BRICs countries. This helps rise the economy and create a job market for the talented ones. Investors are also attracted to the BRICs market due to the fact that it holds 40% of the world’s total population i.e. 2.8 billion people (Daniels and Radebaugh, 2015). Looking at these facts, I believe that BRICs would progress rapidly over the coming decade or so.

The progress of these countries would be observers by the investors and their decisions to invest in these countries include the indicators like financial pointers like Purchasing Power Parity. GDP growth and Human Development Index.

1. Identify three implications of the emergence of the BRICs for careers and companies in your country.

According to the case study BRICs is going to be a world leader in the provision of different services and products. Especially China and India will be supplying goods and services to many countries in the future and would have a dominance in different manufacturing and services sectors. Brazil and Russia has abundance of raw material and the world industry will be looking to get their share of this raw material. My country is an oil producing country. The first implication for my country might be an increased demand for oil that would benefit my country. The second impact might be a negative one as there are many foreigner workers working in my country. These workers might find more opportunities in the BRICs countries and might migrate there. The third implication would be that my country and its industry might benefit from the good practices of the BRICs and this could help our whole region in moving towards the formation of a strong economic block.

1. Do you think recency bias has led to overestimating the potential of the BRICs? How would you, as a manager for a company assessing these markets, try to control this bias?

Yes I do think that recency bias let to overestimate the potential of the BRICs as it has created a delusion that the present trends of the economic progress of the BRICs is here to remain and never decline. As a manager of a company I think that this bias can be controlled by making a company make realistic decisions keeping both present trend and future predictions in their mind. The labor market should be assessed continuously as the way the life of the laborers change impacts the economic growth of a country in either direction.

1. 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 consumers?

In BRICs, China and India are the most populous countries in the world. Especially the Indian market I saturated with poor consumers. As a manager, when working in an absolute market, one should be aware of the needs and the economic conditions of the consumers. The potential of this kind of market is to sell products in large quantities with less profit margin in each item. When the majority of the people can afford a product, the profit would increase exponentially.

1. In the event that the BRICs fail to meet projected performance, what would be some of the implications for the international business environment?

In the event that the BRICs fail, there would be a greater chaos among the international investors. They would then realize that they have been the victims of the recency bias. This would cause a need to downsize the employees force and even take their investment out of the projects implemented in the BRICs countries.

1. Compare and contrast the merits of GNI, Net National Product, and Your Better Life Index as indicators of economic performance in Brazil, Russia, China, and India.

GNI is the total income that is earned by a country from domestic means and the outside income earned by its nationals. The NNP on the other hand refers to the total market value of the goods and services produced during a certain period and then excluding the depreciation. Your Better Life Index is a comparison of different economic factors in a country that provide an overview of how the economy is impacting the life of the residence of a country (Asheim, 1994).