Business Environment II

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Class 4

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Business Environment IIpaper Code: N2D : 

Business Environment IIpaper Code: N2D Class 4 30 May 2009

Business Environment II : 

Business Environment II Objectives Modes of entering into international business Fundamentals of international business environment Managing international operations

Class Communications : 

Class Communications Weblog http://powru.blogspot.com Subscribe to Followers list E-mail: rampowru@gmail.com

Recap : 

Recap Global environment (Cartoon Network in India) Economic Analysis (Tata Nano in Russia) Macro-economic analysis: Fiscal, Monetary, Trade Industry analysis: Porter Government role (Bangladesh Textiles) Ideologies: Left vs. Right Liberalization

Geography of Globalization : 

Geography of Globalization Trade Routes – Silk Route though Central Asia Sea Route – Red Sea and Persian Gulf

Age of imperialism : 

Age of imperialism Columbus’ New World; Cape of Good Hope; East India Company

World Trade Organization : 

World Trade Organization Multilateral forum General Agreement of Trade and Tariffs General Agreement on Trade in Services

Economic Integration : 

Economic Integration Preferential Trade Area Free Trade Area Customs Union Single market Economic and Monetary Union Political Union

Trade Areas : 

Trade Areas Preferential Trade Area First step toward Free Trade Select products are free for trade Preferential trade India has PTA with Mauritius, Afghanistan Free Trade Area Elimination of tariffs and quotas NAFTA, ASEAN, SAFTA

Unions : 

Unions Customs Union Common Competition policy Common external tariffs EAC, COMESA, CARICOM Economic and Monetary Union Common Currrency Central Bank EU, CFA, OECS Defacto Currency Unions

Political Union : 

Political Union Federation of State-Nations Common Parliament, Constitution Former USSR European Union Indian Union?

Free Trade Future : 

Free Trade Future Fair Trade International Aid agencies Leftist ideology Fair price for agricultural produce Ecology and environment Developing Countries Emerging economies Lobby, Bloc/cartels

Business Environment IIpaper Code: N2D : 

Business Environment IIpaper Code: N2D Workshop 4 31 May 2009

Economic Integration : 

Economic Integration Preferential Trade Area Free Trade Area Customs Union Single market Economic and Monetary Union Political Union Trade Policy (X-M) Monetary Policy (S-I) Fiscal Policy (T-G)

Common traits to Regionalism : 

Common traits to Regionalism Similar levels of per capita GDP Geographic proximity Similar or compatible trading regimes Political commitment to regional organization Jeffery J Scott, Peterson Institute for International Economics

Persian Union – Case Study : 

Persian Union – Case Study The opportunities for a regional economic union in Persian-speaking countries Iran Afghanistan Tajikistan Azerbaijan Kurdistan? Baluchistan?

Country Overview : 

Country Overview

Challenges - Internal : 

Challenges - Internal Dominated by Iran – size of economy, population and natural resources Afghanistan and Tajikistan are land locked with few natural resources Influence of super-powers: US sanctions on Iran; Russian hold on Tajik politics; Afghan under military control of NATO Poor transportation connectivity

Challenges - External : 

Challenges - External Competition for oil from the 6 Gulf countries (GCC) Other regional economic blocs in the neighborhood – SAARC, Shanghai Co-op, Arab League Part of the regions overlap with Iraq, Turkey and Pakistan with potential areas of conflicts

Trading pattern : 

Trading pattern Tajikistan Export – 53% to former Soviet Import - 75% to Netherlands and Turkey Iran Export – China, Korea, Japan Import - China, EU, UAE Afghanistan Export – 45% SAARC Import – 50% SAARC, 11% USA

Case Analysis : 

Case Analysis Macro, micro analysis Government Regionalism (SWOT) Action for economic integration

Opportunities : 

Opportunities Transportation infrastructure Access to sea routes Exchange of oil, gas for agriculture produce Cultural integration Political stabilization of the region Labour