Question

Task: The below table shows socio-economic data of two fictitious countries. From the perspective of a business considering the possibility of undertaking business in these countries, consider what the data could mean and present three conclusions. Each conclusion should compare both countries using at least two variables. You can relate each conclusion to any type of international business (eg. you can present a conclusion from the perspective of a business choosing a new export market, a business seeking an import source, a business choosing a location for FDI, etc). Recommended length for each conclusion: approximately 200 words.                                           (4 marks per conclusion)

Country	Country A	Country B
1. Population	86.24 million	22.94 million
2. Area	300,000 km²	268,680 km²
3. GDP	$330.91 bil	$204.14 bil
4. GDP Per capita (PPP)	$4,600	$21,600
5. Gini Coefficient	.451	.320
6. Population below poverty line	21.6%	12%
7. % of Urban Population	45.3%	86.32%
8. Main Exports	Machinery and transport equipment, medical apparatus, garments, coconut products, fruits and nuts, copper and chemicals.	Dairy products, meat, fish, wood, aluminium, fruits and nuts.
9. Main Imports	Electrical machinery, computers, iron and steel, vehicles, fuels and cereals.	Vehicles, machinery and equipment, computers, pharmaceuticals, aircraft, fuels, and plastics.
10. Inflation	3.1%	1.8%
11. Internet Users (% of Population)	60.1%	89%
12. UN Human Development Index (HDI)	.699	.917
13. Adult literacy rate 14. Labour Force by Occupation	96.6% 45% agriculture, 15% industry, 40% services	99% 7% agriculture, 19% industry, 74% services
15. Unemployment	5.5%	3.9%

Answer 1

Solution

From the above data,we can infer that among the two countries A&B,A is developing and B is developed country.

Here,I am assuming that I hold a FMCG business.

Conclusion 1 : I will choose Country A as FDI destination in FMCG industry. I will choose Country A as an FDI destination because 45% of the labor force is engaged in agriculture (there is scope for agriculture),unemployment is more (at 5.5%,implies higher demand for work meaning availability of cheap labor),the population is huge

As the country is underdeveloped,there is scope for value addition in the agriculture sector. In other words,agriculture based economy so we can utilize it in the best manner.So,I will invest in the local FMCG companies in country A.

Conclusion (ii) I will establish my FMCG industry subsidiary there to cater to the local demand there &exporting the surplus to different parts of the world including my present country based on the supply and demand,pricing,regulations,etc

Since 21.60% of the population is below the poverty line,GDP per capita is just $4600 meaning the country is looking to increase it's GDP with the help of it's available resources (i.e., land and labor),so the country is looking to move up the value chain i.e., to increase manufacturing of value added products in the agriculture because it's strength is agriculture - It is an agri-based economy.Also since country A imports agri-products like cereals,my company can manufacture them locally (as there is abundance of agri raw materials) thus saving foreign exchange reserves for the country A by making it self-sufficient.

Conclusion (iii) As per the labor force by occupation,only 15% of the work force are employed in industry which is very low.Normally it is recommended that any country should have that % as minimum of 20-25%. So,the govt. in country A will definitely be looking to increase manufacturing /industry which means it will mostly be providing some incentives for establishing the industry over there.The population and unemployment is very high .Agriculture is an labor intensive industry.The economy is also Agri-based makes it easy for procuring high quality raw material easily.High population means high demand for FMCG goods.This environment makes it conducive for establishing an FMCG industry

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