ASSIGNMENT NAME: Nguyễn Trịnh Hoàng Oanh Student ID: 1952106 Class: CC02 I Discussion questions Free market economies stimulate greater economic growth, whereas state-directed economies stifle growth Discuss Production choices are made by state-directed economies The state makes decisions on behalf of the general population If an entrepreneur comes up with an innovation but is not on the state planning board, the new procedure or idea is unlikely to be implemented Furthermore, a person would not devote time, money, and effort developing a new idea or strategy if all of the rewards went to the state An entrepreneur has the capacity and motivation to develop, produce, and become more efficient in a free market economy As a result, a free market economy fosters economic growth, whereas a state-directed economy stifles it What is the relationship between corruption in a country (i.e government officials taking bribes) and economic growth? Is corruption always bad? While there is no obvious linear link between corruption and economic growth, it can be fairly stated that they are both adversely related- yet an essential component in the same is the kind of nation and its governing institutions Corruption will progressively decrease with economic growth in a free market economy with solid institutions, hence many of the world's most developed economies rank well on transparency rankings However, regardless of the sort of nation, the contrary is always true: excessive corruption leads to weaker economic growth Furthermore, I don't think that corruption is always harmful There are different scholarly views on the subject, with the majority claiming that corruption is generally negative for countries, particularly emerging economies, since it inhibits the transfer of productive resources into the hands of a select few However, other studies have claimed that, to a limited extent, corruption may be beneficial if it allows entrepreneurs to avoid constraining restrictions, bureaucratic procedures, You are a senior manager in a U.S automobile company considering investing in production facilities in China, Russia, or Germany These facilities will serve local market demand Evaluate the benefits, costs, and risks associated with doing business in each nation Which country seems the most attractive target for foreign direct investment? Why? Country CHINA Benefits ● Affordability ● Service expectations ● Higher productivity in a shorter period of time ● Huge resources available at competitive prices RUSSIA ● Large consumer markets and human capital ● The economy has improved technologically Nguyễn Trịnh Hoàng Oanh - 1952106 Risk ● Duplication ● Economic and political aspects that are unpredictable ● High levels of competitiveness ● ● Consumer tastes are changing ● Structures of financing ● If there is a sudden collapse, the recovery will be slow Logistics and ● Taxation scheme that is appealing ● infrastructure are seen as costly, yet natural resources and inexpensive energy provide a competitive edge in the vehicle industry ● GERMANY ● Excellent economics with IPR protection ● Premium markets and strong R&D ● Friendly FDI markets for the establishment of new ones ● Money laundering and deception ● Legal concerns and previous lawsuits ● Concerns about investors, management, and the workforce Premium market standards will be evident in every minute of the manufacturing process since they are expensive and necessitate the use of sturdy technology In terms of manufacturing, the resources are plentiful As a result, CHINA with solid infrastructure, mixed labor accessible at reasonable prices, flexible FDI and security regulations, and a regulated market economy is the greatest site to invest in manufacturing plants In the case of RUSSIA and GERMANY, competition, costs, and control are all vexing issues A visiting American executive finds that a foreign subsidiary in a less developed country has hired a 12-year-old girl to work in its factory floor, in violation of the company’s prohibition on child labor He tells the local manager to replace the child and tell her to go back to school The local manager tells the American executive that the child is an orphan with no other means of support, and she will probably become a street child if she is denied work What should the American executive do? In this instance, the American executive must adhere to the principles of 'utilitarianism,' and hence must be concerned with the morality of his actions Allowing the girl to continue working results in her being able to earn for herself and therefore being financially independent, allowing her to live a respectable life, wearing nice clothing and eating decent meals This would not be feasible if the girl was dismissed, and the result of her dismissal would be that she would be denied the right to live a good life Therefore, based on utilitarian considerations, the American CEO should allow the girl to continue working at the plant You are the CEO of a Vietnamese beverage company that has to choose between making a $50 million investment in Russia or Poland Both investments promise the same long-run return, so your choice is driven by risk considerations Assess the various risks of doing business in each of these nations Which investment would you favor, and why? Poland is a democracy that emerged from the Soviet bloc after electing its first government in 1989 Russia has had several elections since the dissolution of the Soviet Union, yet it lacks democracy It has elected authorities, but they are merely there for show That country has no political freedom It appears to be reverting to the previous Communist form of administration As a result, the political risk in Russia is substantially larger than in Poland Although Poland's economy is still mixed, it is fast reforming and moving toward a more market-based economy Russia still has a substantial number of state-owned enterprises, and any private companies Nguyễn Trịnh Hoàng Oanh - 1952106 that remain are supported by either the state or the oligarchs.Therefore, the economic risk in Russia is bigger than in Poland Russia has several times the degree of corruption that Poland has Poland is reforming its tax system as well as its numerous legal systems In Russia, these mechanisms are extremely opaque ⇒As a result, it is possible to infer that investing in Poland is preferable to investing in Russia II Research tasks Differences in political, economic, and legal systems have considerable impact on the benefits, costs, and risks of doing business in various countries The World Bank’s “Doing Business Indicators” measure the extent of business regulations in countries around the world Compare Brazil, Kenya, India, New Zealand, Canada, Sweden, and Turkey in terms of how easily contracts are enforced, how property can be registered, and how investors can be protected Identify in which area you see the greatest variation from one country to the next ★ Doing business indicators: - These indicators highlight the regulations and measures that a business unit must adhere to before establishing itself in a certain location Data on many variables must be obtained in order to compare and pick the best potential business regulatory environment - Every year, the "world bank" publishes a thorough index for 189 nations called "doing business measures." These indicators are useful for analyzing economic results and identifying business reforms and laws that have had a major impact ★ Contract enforcement: This type of indicator includes the judicial process index, which indicates how long and how much money the firm must spend to resolve a commercial disagreement ★ Variations in regions: - Typically, variance emerges when calculating the complexity and expense of regulatory processes The cost of regulatory processes covers the costs of starting a firm, obtaining building licenses, paying taxes, trading, and registering property Important considerations to bear in mind when entering into a cross-border transaction If the company has a relationship with suppliers in another location, include them in the contract Include in the deeds all essential terms The most difficult responsibility for the business unit is to protect the investors, because the risk factors in terms of internal and external environment vary Increased instability in the global marketplace can introduce unanticipated risks in a company’s daily transactions As such, your company must evaluate these commercial transaction risks for its foreign operations in Argentina, China, Poland and South Africa A risk analyst at your firm said that you could evaluate both the political and commercial risk of these countries simultaneously Provide a commercial transaction risk overview of all four countries for top management In your evaluation, indicate possible corrective measures in the countries with considerably high political and/or commercial risk Country Political Risk Rating Commercial Risk Rating Cover Argentina High Open cover without bank guarantee is possible Nguyễn Trịnh Hoàng Oanh - 1952106 China High Open cover without bank guarantee is possible Czech Republic Medium Open cover without bank guarantee is possible India Medium Open cover without bank guarantee is possible Indonesia High Open cover without bank guarantee is possible United Arab Emirates Medium Open cover without bank guarantee is possible Typically, cultural factors drive the differences in business etiquette encountered during international business travel In fact, Middle Eastern cultures exhibit significant differences in business etiquette when compared to East Asian cultures Prior to leaving for your first business trip to the region, a colleague informed you that a guide named Business Etiquette around the World may help you Using this guide, identify five tips regarding business etiquette in Saudi Arabia There are some business etiquettes in Saudi Arabia: ★ Use the right greetings: It is critical to address persons with their proper titles first, followed by their first name Saudis are quite sensitive about such matters and should be aware of this When exchanging business cards, make sure one side is printed in English and the other is printed in Arabic ★ Dress appropriately: Because this is a conservative nation, one should dress correctly The Saudi business partner will very certainly be dressed in traditional Saudi garb Men must wear a suit, and because this is a Muslim nation ruled by Sharia law, ladies must wear the right dress and carry a headscarf ★ Avoid alcohol and pork: Because this is a Muslim country ruled by Sharia law, alcohol and pork are completely prohibited by the legislation Business transactions are typically conducted over tea and coffee ★ Don't rush your Saudi partner: business meetings in Saudi Arabia move slowly, so don't get frustrated They should go with the flow of their Saudi partner, build rapport and confidence, and then finalize whatever choices that need to be made ★ Time management: bear in mind that your Saudi business partner will pray five times a day, and Fridays and Saturdays are religious holidays for Muslims As a result, meetings should be scheduled according to the availability of one's Saudi partner rather than imposing time constraints It is also important not to become frustrated if one's spouse is being late, as the Saudis appreciate their laidback lifestyle Nguyễn Trịnh Hoàng Oanh - 1952106 ... ones ● Money laundering and deception ● Legal concerns and previous lawsuits ● Concerns about investors, management, and the workforce Premium market standards will be evident in every minute... countries simultaneously Provide a commercial transaction risk overview of all four countries for top management In your evaluation, indicate possible corrective measures in the countries with considerably... persons with their proper titles first, followed by their first name Saudis are quite sensitive about such matters and should be aware of this When exchanging business cards, make sure one side