A Case Study of:

‘Meet The BRICs'

SUBMITTED TO:

Ms. Sadia Akhter

Chairman of Marketing Faculty of Business Administration

Presented By: “APPLE’S FOLLOWERS’ Rocky Mallick ID# 0817112511

Munmun Das Payel ID# 0817112520

Md. Istiak Kabir ID# 0817112578

Hasnatun Nahar ID# 0817112489

Ridwana Habib ID# 0817112493

Meet The BRICs

Introduction

The BRIC countries, Brazil, Russia, India and China, while much larger in scale and scope than other emerging markets, symbolically represent trends that are developing throughout the world

Over the next few decades BRIC will become a larger, powerful force in the world economy .

China and India will be the dominant global suppliers of manufactured goods and services, while Brazil and Russia will become the principal suppliers of raw materials. Collectively, they will become the largest entity on the global stage

Russia Brazil China India President President President Prime Minister Vladimir Putin Dilma rouseff Hu Jintao Manmohan Sing

Basic Information on BRICs Countries

Top Ten world’s Largest Economies’

Questions 1. Map the proposed sequence of evolution of the BRICs economy.

What indicators might companies monitor to guide their investments and organize their local market operations?

2. What are the implications of the emergence of the BRICs to careers and companies in your country?

3. 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?

4. How might managers interpret the potential for their product in a market that is in the absolute large but on a per capita basis characterized by many poor consumers?

5. In the event that one BRIC country, if not all, fails to meet its projected performance, what would be some of the implications to the economic environment of international business?

6. What are the relative merits of GNI per capita versus the idea of purchasing power, human development, and green economics as indicators of economic potential in Brazil, Russia, China, and India?

Question 01. Map the proposed sequence of evolution of the BRICs economy. What indicators might companies monitor to guide their investments and organize their local market operations?

Ans :-

The BRIC’s economies are on the verge of the rapid growth of

their consumer markets.

It is expected that within a decade or so, each of the BRICs will

show higher returns, increased demand for capital, and stronger

national currencies.

Experts’ forecasts that the most dramatic transition will take place over the next 20 to 30 years.

Proposed sequence of BRICs, 2010

Country Rank in

World

GDP in PPP

US $

GDP US $ Share in

world GDP

2010

Per capita

US $ in

2010

Brazil 8 2,172 2,090 2.9 10,816

Russia 6 2,223 1,465 3.0 10,437

India 4 4,060 1,538 5.4 1,265

China 2 10,086 5,878 13.6 4,382

South Africa 26 824 357 0.7 7,158

Some Indicators that might guide local market

To appreciate the importance of the economics analysis.

To identify the major dimension of international economic analysis

To compare and contrast the economy of local market

To profile the characteristics of the types of economics system.

To discuss the idea of economic freedom.

To profile the idea ,drivers and constraint of economic transition.

Question 02. What are the implications of the emergence of the BRICs to careers and companies in your country?

Responses will vary according to the level of economic development and the economic basis of our country.

Industrialized nations may feel challenged and express the fear of a decline in their standards of living due to increased pressures in the labor market .

The declining cost competitiveness of their countries’ firms.

Emerging Markets-Opportunities

Increased foreign direct investments Huge investments in infrastructure Huge middle class boosting demand Abundant supply of educated cheap workforce High potential for outsourcing work specially India. High growth rate. Disinvestments Domestic/global mergers/acquisitions Technology up gradations Abundant agri /mineral resources Commodity markets expanding fast

Emerging Market- Challenges Volatile markets

Natural disasters

Steep increase in energy cost

Weak infrastructure

Unstable macro-economic policies

Slowdown in FDI/increasing interests in USA

Setback in rain dependent agricultural sector bring down GDP growth rates

Currency appreciation for export led economies

Question no 03. 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?

Ans :-

Recency bias is the delusion that current trends will continue indefinitely and uninterrupted.

History shows great mistakes made by companies, executives, investors, and officials who inferred the present into the future.

The possibility of an economic natural disaster, a large-impact, impossible to predict, rare event beyond normal expectations-such as the collapse of the Soviet Union, the emergence of the Internet, and the global financial crisis.

In order to evaluate the BRICS there are also several practical threats.

Recency bias the natural tendency to weight recent events more heavily then earlier events that are just as statistically relevant a common trap in risk assessment.

Green constraints shadow the bright futures of all. the emergence of the BRICs will challenge the well-being and sustainability of the global environment.

Global warning, diminishing raw materials, and escalating pollution suggest there is a finite limit.

BRICs can develop before exceeding the capacity of the global economy to supply them and of the environment to support them.

Question no 04. How might managers interpret the potential for their product in a market that is in the absolute large but on a per capita basis characterized by many poor consumers?

Ans :- when manager interpret their product in potential economy of rural area/state there too many obstacle.

At first they may have competitor/the product is not affordable for that areas consumer.

Second problem is transportation problem, because this type of country facing grassroots development in certain state.

Thirdly one political barriers, this type of rural state especially have corruption, superstitious, religions, culture.

Judging local public participation like making community and take decision among them.

After that price of that product, whether it z affordable for them/not. if not then price of that product can be discriminate by diminishing the quality of that product.

If there z competitor then they have 2 earn their profit at B.E.P. and also giving distribution channel to local areas people and also recruit them. so the income of that may increase.

Giving them training (operating machinery, tools ,vehicle. If the plant z set up, the transportation problem will be

solve. At the end government interests will increase tax will be

favorable.

If manager have knowledge about this and the solution is given below:

Question no 05 .In the event that one BRIC country, if not all, fails to meet its projected performance, what would be some of the implications to the economic environment of international business?

Ans :-Emerging countries growing rapidly year by year could not avoid the evils of worldwide recession.

Impact on BRIC Countries - (Brazil, Russia, India and China)

BRICs will face the different negative impact.

The economy of each country will close to reach the mature mode.

The US GDP based on PPP share of world total shrunk slowly after the year of 2000.

The stock index fell in an accelerated manner. During the six months from May to October 2008.

Real estate prices continuously declined.

Money supply and loan supply growth rate continued to fall

BRICs Impact on The Global Economy (1991-2015)

Estimating the Direct Impact from BRICs.

LIC individual domestic variables,

BRIC sources of spillover variables (e.g., productivity, trade, FDI, exchange rates), and

Global factor variables (world oil prices, world commodity prices, world demand, and U.S. Fed Fund rates).

GDP, trade, inflation, and real exchange rates.

World demand, oil prices, other commodity prices, and U.S. Fed rates,

Estimating the Indirect and Total Impact of Shocks from BRICs Lose of huge market- First world developed countries like U.S.A, U.K

will lose huge market base of BRICs.

Threat free market theory-Free market economy theory will face a threat in this era of globalization.

Political instability- Political balance becomes threatened.

Low FDI- Failure of one of the BRICs country will result in low Foreign Direct Investment (FDI)

Low Consumption- Consumption level will that’s why world may face depression.

Impulse response of global factor variables (e.g., world oil price) to shocks (e.g., to productivity) in BRICs. This result, shocks to global market (e.g. oil price) produces the indirect impact of shocks from BRICs (e.g. Low productivity).

Question no. 06. Compare and contrast the merits of GNI per capita Versus the idea of purchasing power parity, human development, and green economics as indicators of economics potential in Brazil , Russia, China and India.

Ans :- Gross national income per capita (GNI per capita) represents the market value of all final goods and services newly produced in an economy by a country’s domestically-owned firms in a given year divided by its population.

Purchasing power parity (PPP) ) represents the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market that one unit of income would buy in another country.

GNI VS PPP-Gross National Income GNI of BRICs countries of 2010 Rank Country Million of (US$)

1 China 5,700,018

2 Brazil 1,830,392

3 India 1,566,636

4 Russia 1,223,324

PPP

Rank Country Million of (US$)

1 China 10,169,521

2 India 4,194,856

3 Russia 2,812,383

4 Brazil 2,185,421

BRICs Development Indicator

Human development - But Living Standards Remain Far Below Those in the Developed World A long and healthy life,

Knowledge and

A decent standard of living

Green economics - Features Low-carbon energy Sustainable production of food Sustainable transport system Sustainable tourism Green jobs, sustainable lifestyles Reforming International Environmental Governance Appropriate pricing Public procurement policies Reforming the system of "environmental" tax Increase public investment Targeted government support for research and development Social policies

BRICs concern of Green Economics China - will endeavor to lower its carbon dioxide emissions per

unit of GDP by 40-45% by 2020 compared to the 2005 level.

South Africa – 34% below BAU 2020; conditional 42% BAU by 2020

India - will Endeavour to reduce the emissions intensity of its GOP by 20-25% by 2020 in comparison to the 2005 level.

Brazil -36.1-38.9% of projected emissions by 2020

Russia - Russia’s forestry in frame of contribution in meeting the obligations of the anthropogenic emissions reduction; - Undertaking by all major emitters the legally binding obligations to reduce anthropogenic GHG emissions.

Share of Countries in CO2 Emissions

Reference: www.globalsherpa.org

WEO Projection for 2015

World Economic Market Exchange rate.

WWW.INVESTMENTPEDIA.COM

IMF and Word ECONOMIC OUTLOOK 2010

Questions?