Pros and Cons of Going International - 1995 Words

Pros and cons of going international When thinking about internationalization, a lot of people instantly associate it with multinational companies. It cannot be said that they are wrong; however, internationalization is a far more complex phenomena as it does not only consist of companies setting their headquarters outside the borderlines of the countries of origin. If an entity simply decides to import or export commodities or services, their action can also be described as ‘going international’; producing effects both domestically and internationally. In recent years, the number of companies that chose to get involved in international business operations and transactions increased substantially to the point where becoming visible in†¦show more content†¦There are many companies that derive their sales from outside their home country. Very large companies such as BASF of Germany, Electrolux of Sweden, Gillette and Coca-Cola of the United States, Michelin of France, Philips of the Netherlands, Sony of Japan, Nestle of Switzerland make over half of their sales through international operations. Diversifying the sources of sales and supplies. Most of the times, in order to avoid the fluctuations in sales and profit, companies look for foreign markets; taking advantage of the business cycle differences among countries. For instance, if they incur price fluctuations or shortages in one country, they can obtain supplies of the same product and component in other. Other factors that contribute to the positive trend regarding internationalization are represented by the following: the need to increase global competition along with the quick exposure to new products, the development and expansion of technology, the liberalization of cross-border movements and the development of supporting services that ease international business (examples of supporting systems include the airmail and international payment systems). Internationalization does come with costs, though, from the immediate monetary costs incurred related to extending the operations to the risk of failure brought by the difficulty in running such operations. These costs depend on theShow MoreRelatedAmerican Eagle : Saturated The United States Market904 Words   |  4 PagesRussia, Saudi Arabia, United Arab Emirates, Thailand United Kingdom (International Stores, AE). The reason I chose this company is because it is actually a company that I used to shop at when I was in high school. I have noticed since then, that their sales figures have decreased drastically and they have become quite unappealing to the public. After learning in class about companies that could potentially go international, and reasons why, I felt as if American Eagle would be a good company toRead MoreAmerican Eagle : Saturated The United States Market? Essay904 Words   |  4 PagesRussia, Saudi Arabia, United Arab Emirates, Thailand United Kingdom (Internati onal Stores, AE). The reason I chose this company is because it is actually a company that I used to shop at when I was in high school. I have noticed since then, that their sales figures have decreased drastically and they have become quite unappealing to the public. After learning in class about companies that could potentially go international, and reasons why, I felt as if American Eagle would be a good company toRead MoreUnilever Ice Cream Business1400 Words   |  6 PagesUnilever: Globalising Ice-cream Business LUISS GUIDO CARLI International Marketing course (2009-2010) By Filippo Unilever Ice-cream division Plans for changes in marketing and brand strategy Ice cream market has several features that determine a constant need of change and innovation. Unilever marketing measures should move in parallel or anticipating these kind of major changes. Firstly, to create and deliver superior costumer value, satisfing costumers who stay loyal and buy more. Secondly,Read MoreThe Three Advancements of Globalization 1058 Words   |  5 Pagestendency of business, technologies or philosophies to spread around the world, or the process of making this happened. Globalization depends on three keys of advancement, the role of human migration, international trade and rapid movements of capital. Globalization has many pros but yet also many cons that can have a deciding factor in an economy. Many people think globalization still favors the rich and it’s a detriment to countries who emerging in the world and does not have a stable or great economyRead MoreEconomics Of The Gold Standard Debate963 Words   |  4 Pagescomplicated, its sole purpose was to set the exchange value for currencies for gold. The United States eventually had to abandoned the Gold Standard because President Nixon did not allow for the redeeming of money with gold. Today, whether or not going back on the Gold Standard is dependent on the eyes of the viewer. Now that we are financially stable, many argue to implement the return. 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According to Humane Society International, â€Å"Animals used in experiments are commonly subjected to force feeding, forced inhalation, food and water deprivation, prolonged periods of physical restraint, the infliction of burns and other wounds to study the healing process, the infliction of pain to study its effects and remedies, and killing by carbon dioxide asphyxiation, neck-breaking, decapitation, or other means† (â€Å"Pro Con†). Very graphic images of a test performed on rabbitsRead MoreProstitution: Should A Change Be Made? Essay775 Words   |  4 Pagesactivity with someone for payment.† It has been around since the first civilizations of Mesopotamia and isn’t going anywhere. Prostitution is also one of the most controversial topics i n todays modern society. There is a wide variety of different pros and cons related to this subject. With these pros and cons come supporters and critics of the concept of legalized prostitution. Those who are pro-prostitution believe legalization would do more bad than good, that it would solve more problems than it would

how did black death transformed Europe - 898 Words

How did the Black Death transform Europe? The Black Death was one of the most devastating diseases in human history. In October 1347 twelve Genoese ships came to the Sicilian port of Messina. In the following three hundred years, one-third of the European population had died due to the Black Death changing Europe significantly. Europe transformed in aspects of economy, society and religion. Massive death caused Landlords to have trouble both in finding enough manpower and collecting dues. Meanwhile, peasants’ social status seemed to rise a bit and they began to demand for higher wages. The society was awfully unstable that numerous peasants rose up against their king, Richard II. Also resulted for the miserable population decline,†¦show more content†¦They did not have to work as hard as before and stick to one master. They did not have to worry about couldn’t find a job. Just the opposite, they are working on different farms and their living standard improved , as well as their social status. This is probably the only benefit that the peasants enjoyed during the period of Black Death in regard of economy, but certainly a financial trough for Europe. Aside from the economy, the society of Europe had become very unstable and went through some big changes. A common phenomenon along with all other widely spread disease is starvation. There was not enough manpower to harvest, so both rural and urban area suffered from food shortage, thus causing a serious inflation. For example, â€Å"in some parts of England, food prices went up by four times.† (The HLS) This put the poor in a very desperate situation. Meanwhile, the landlords didn’t show any sympathy for the peasants, they kept collecting tax and tried to lower the farmers’ salary. There was even a law published for the sake of lords’ interests. It confined peasants’ wages to the level in 1346, and prohibited peasants from going to villages other than his own master’s for â€Å"a better income† This caused a great indignation among the serfs and later lead to a revolt known as the Peasants Revolt. Thousands of peasants with their lea der, Wat Tyler, marched to London to meet the king,Show MoreRelatedThe Economic, Political, and Social Effects of the Black Death1268 Words   |  6 Pages1351 in Europe. This massive destruction of human life was known as the Black Death. This Black Death was an ecological disaster on a global scale. The effects of the plague on human and certain animal populations from East Asia to as far west as Greenland were catastrophic. All facets of society, from peasant to king were affected; no one was safe. All of society was affected; nothing would ever be the same. Thus, there were many economic, social, and political effects of the Black Death. BeforeRead MoreEssay about black death1251 Words   |  6 Pages nbsp;nbsp;nbsp;nbsp;nbsp; Black Death nbsp;nbsp;nbsp;nbsp;nbsp; The people at the Messina Harbor , a port in Northeast Sicily , stood and watched as a Genoese fleet made its way to dock..(Gottfried 141-144). The people standing ashore could by no means conceive of the horror found on board of these ships. The crew had a disease the like of which no one had seen before in the history of western civilization. The harbor masters looked on in complete awe and terror and tried to quarantineRead MoreMedieval Medicine. Life For People During The Medieval1329 Words   |  6 PagesLife for people during the Medieval Times, also known as the Dark Ages or middle ages, between 400 – 1450 was incredibly difficult due to disease and illnesses being spread throughout Europe. Medieval medicine during the time was easily misunderstood and generally mistreated. 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South African Economy Free Essays

From the days of Apartheid, to the times of today, South Africa has relied on foreign capital inflow for the purpose of sustaining high levels of growth through investment in the various sectors of the country. This great reliance on foreign investment has made South Africa vulnerable to fluctuations in the exchange rate and other global conditions. This essay will discuss the extent to which South Africa is reliant on foreign capital, reasons why this is so and the nature of these inflows. We will write a custom essay sample on South African Economy or any similar topic only for you Order Now Exchange rate issues will also be discussed, with detail of how South Africa combated these issues in the various years that they arouse. Finally, methods on how South Africa can reduce its vulnerability to such fluctuations will be made apparent. South Africa’s reliance on foreign capital inflow After the end of The Apartheid era and the abolishment of all laws that were associated with the era, the various international sanctions and bands that were put on South Africa were lifted. This allowed numerous countries to begin investing in South Africa. These foreign capital inflows were greatly needed by the South African economy as the new government had the following economic goals: â€Å"Attract foreign capital, reduce the large role of government as government owns half the countries fixed capital assets and facilitate gradual restructuring of industry along globally competitive lines† (Germishuis, 1999: 2). The two latter goals could only be achieved through proper financing for the government. During the 1994 era, domestically raised capital could not be used for the financing of local investment initiatives that promote economic growth. As Mohr (2003: 2) states, â€Å"Between January 1990 and June 1994, there was a steady net outflow of capital not related to reserves of almost R27 billion, partly as a result of repayments of foreign debt emanating from the 1985 debt standstill arrangement†. This effectively meant that South Africa had very little funds available for boosting the investment industry which in turn helps with the sustainability of high levels of economic growth. Due to these foreign debt payments by domestic funds, South Africa heavily relies on foreign capital inflows for high levels of investment. Since the government was obviously aware of this situation, various policies and acts were put into action to attract foreign investment. â€Å"In 1997, South Africa managed to attract a net capital inflow of $3. 58 billion (3. 4 percent of GDP), more than seven times the $478 million invested in 1996. The inflow was predominantly long-term private capital, moving into stock and bond markets†(Germishuim, 1999: 1). Though the government was successful in attracting foreign capital inflows, a decrease in the domestic interest rate is eminent when capital inflows are high. From 1994 to 1999, net capital inflows in South Africa were on a steady rise for 3% of GDP in 1994 to a staggering 6. 5% of GDP in 1999† (Mohamed, 2004: 28). Between 2000 and 2002, capital inflows fell to -2% of GDP. This was due to South Africa currency crisis in 2001 that led to high levels of capital flight in the country. After the new millennium, capital inflows in South Africa began to steadily rise and are now ranging between 4 and 7% of GDP. Exchange rate crisis of 1998 In 1997, East Asia experienced an exchange rate crisis. It is said that these countries were victims of their own success. Their very success led foreign investors to underestimate their underlying economic weaknesses†(IMF, 1998: 1). Because of large capital inflows that these economies enjoyed, there was increased demand for policies that protect the financial sector and institutions struggled to keep up with the demand. Since Asia is probably the largest exporter of goods in the world, a financial crisis in that region will evidently cause a ripple effect that will cause a global financial crisis. This Asia crisis added to what South Africa would have experienced the following year. In 1998, the South African currency dwelled into great depreciation. Causes of this crisis include: * Commodity prices * After the Asian financial crisis, the global demand for commodities had weakened, putting downward pressure on market prices of SA commodities. This meant a flight to safer havens such as United States commodities occurred. * Foreign Exchange Market intervention * In 1998 and 1996 as well, the South African Reserve Bank had heavily intervened in the foreign exchange market. These ventures resulted in net losses of $10 billion (8% GDP) and $14 billion (10% GDP) respectively. The capital for these ventures was acquired in the forward market, thus compromising SARB’s Net Open Forward position. * Mboweni Bump * 1998 saw the end term for the Governor of the Reserve Bank. The potential that Tito Mboweni might have left the position created doubt for South Africa and the Rand. (Saayman, 2007:1) To try and counter this currency depreciation, the Reserve Bank believed that this depreciation was a temporary reaction to rumours of divisions within the government so they sold off massive amount of its foreign reserves (Diamond, Manning, Vasquez and Whitaker, 2003: 2). The Asia crisis, coupled by SA’s own currency issues led the exchange rate crisis. â€Å"The authorities reacted by intervention in reserves and then through raising of interest rates to stimulate growth. The policies implemented in 1998 did not solve the crisis but merely slowed down the process and created a false image. Yes the country did benefit through an increase in investment due to higher interest rates but paid the cost when the country was hit by another exchange rate crisis in 2001. The economy had to deal with the costs of increased debt, decreased capital inflows, which retards growth in the country. Exchange rate crisis of 2001 The Rand depreciated by 26% in nominal terms against the dollar in 2001 between September and December. It is suggested that, â€Å"there was an acceleration in money growth in the summer of 2001, suggesting that the depreciation may have been a case of exchange rate overshooting† (Bhundia and Ricci, 2004: 1). Though this was the case, the South African Reserve Bank did not intervene or raise interest rates this time around (as was the case in 1998). Bhundia and Ricci (2004: 7-11) identify the following as probable cause of the 2001 financial crisis: * Delays in privatising Telkom * The SA government had announced that the privatisation of Telkom will happen in 2001 but this did not happen due to weakening global stock markets. This had a negative effect as it created doubt within the financial market of SA’s commitment to economic reform. * South African Reserve Bank’s Net open forward book * â€Å"The SARB’s forward book contained large short term liabilities. These low reserve adequacies have been found to increase the probability of exchange rate pressure (Bhundia and Ricci ,2004: 7). The forward book received from the Apartheid government was rather large and despite repayments made, the book remained huge. * Tightening of existing capital controls * The South African Reserve Bank announced on the 14th October 2001 that there would be a tightening of exchange rate controls. It was argued that, â€Å"this announcement reduced market liquidity and thereby contributed to the sharp rand depreciation† (Bhundia and Ricci, 2004: 8). Though market data cannot confirm this for sure, these actions and the time they were taken have an effect on the crisis of the time In 2001, the SA government and SARB decided to act differently than it did in 1998. The increase in interest rates of 1998 had limited effects on reducing depreciation and was seen to be costly for growth and investment. South Africa was less likely to be affected by fluctuations in the exchange rate as it did not hold large foreign currency. The South African government decided not to intervene in interest rate percentages and reserve ratios. â€Å"The South African government have admitted that the 1998 intervention policy was inappropriate. When 2001 arrived, the intervention policy of 1998 was not used and that showed to be a very successful strategy as the macroeconomic reactions of the crisis were very few and over the next few years, the rand strengthened†(Bhundia and Ricci , 2004: 17). There was a large improvement in macroeconomic framework (policy), which made policy credibility stronger. The forward book that was utilised in 1998 was also abolished. â€Å"Also, the adoption of an inflation- targeting framework successfully provided a more credible nominal anchor for exchange rate expectations† (Bhundia and Ricci, 2004: 18). So effectively, the policy reactions of 2001 were more successful. Reduction of SA’s vulnerability to external shock SA is the economic powerhouse in Africa and hence needs measures that help reduce the effects of external shocks such as global financial crises. For this reduction to occur, certain conditions such as, â€Å"peace and security, quality institutions, infrastructure and support for the private sector must be in place† (UNECA, 2010: 11). With the above in place, South Africa should try and implement the following: * Provide sufficient policy space, so that policymakers can handle the shocks that are externally generated. * Improve the mobilization of domestic resources and encourage regional integration * Strengthen neighbouring country relations and cooperation * Increase private capital inflows Open new and improve existing markets * Heighten social safety nets that will minimise shocks effect on the poor * Investment in labour-intensive employment-focused public investment programmes that promote private sector growth. * Decrease the amount of debt owed The above mentioned points need to be encoded into policies that can be properly implemented by the government of South Africa and the South African Reserve Bank so as to reduce the vulnerability that SA has when it comes to external shocks. This objective has been achieved by South African economic policies. Monetary policies have been used to contain inflationary pressures and financial policies for the strengthening of public finance that will allow exchange rates that are competitive. In the February of 2000, an inflation targeting strategy was adopted that helped to regulate monetary growth within the economy. These policies have encouraged international competitiveness and assisted in the reduction of the current account deficit of 1999 (0. 4% of GDP), to 0. 3% of GDP in 2000 (IMF, 2001: 1). In 2006, real Gross domestic product grew by 5% and continued to grow into early 2007. During the start of the new millennium, the SARB publically announced that it would have a foreign market intervention policy that was used solely for boosting reserves. This new approach was successful because by 2007 May, gross reserves had reached $27,9 billion (IMF, 2007: 1). This shows that South Africa has been successful economic policies in place: policies that will combat external shock. A United Nations report places South Africa as one of the six oil importing nations that withstood the effects of the global financial crisis of 2008-2009. This was done through implementation of stimulus packages and affective countercyclical fiscal and monetary policies that encouraged expenditure on services and infrastructure (UNECA, 2010, 8). Conclusion The new South African government had to take the mess of the past and turn it into the message of the future. A message that says that anything is possible; all that is needed are the correct tools, used in the correct scenarios. With the various monetary and fiscal policies put into play in South Africa, I have no doubt that we are ready for the next global financial crisis. How to cite South African Economy, Papers