Macro Environment Factor for an International Business Order Instructions: The topic is as follows:
Choose and collect two newspaper or periodical articles that have relevance
for international firms from developed markets doing business in
emerging/developing markets.
Your chosen articles must be published between 1
st June and 30th September
2014 in one of the following newspapers or periodicals:
The Sydney Morning Herald, The Australian, The Australian Financial Review,
The Wall Street Journal (US edition), Business Review Weekly, The Economist
Based on your articles you should address the following point within your
essay:
1. In your opinion, what is the most relevant macro-environment factor
(legal, political, cultural and economic differences) for an international
business when choosing to internationalize into an
emerging/developing market? Discuss any international business
concepts or theories that could be used to help justify your answer.
Include copies of both articles (either the original ‘cut-outs’ or a print out of the article
from the newspaper’s website) as appendices to your assignment.
Your essay should incorporate at least 12 different references. These can be sourced from the
following:
? Academic articles
? Relevant textbooks
? Periodicals
? Newspapers
? Relevant online sources
The 12 references should be evenly balanced between these five resource options.
Students are expected to maintain an appropriate standard in presenting their essay
Remember to acknowledge your sources throughout the paper using the Harvard referencing
system. The report is to be typed and 1.5 spaced (a standard 12 point font should be used). It
should be checked for spelling, consistency, and clarity of expression.
Macro Environment Factor for an International Business Sample Answer
Appendices
Article 1
http://www.afr.com/p/markets/oil_prices_help_push_emerging_markets_f1OZPcrRo07mmIipC13cvN
emerging-market stocks fell to a six-month low after briefly extending their decline from a September high to 10 per cent as lower oil prices weighed on Russia. Indonesian shares slumped on concern a new parliamentary speaker will hurt President-elect Joko Widodo’s growth plans.
OAO Gazprom, the world’s biggest natural gas producer, led the Micex Index to a seven-week low as Brent crude sank to the weakest close since June 2012. The Jakarper centa Composite Index tumbled 2.7 per cent, with PT Astra International sliding 5.7 per cent. Argentina’s Merval stock index plummeted after the resignation of the central bank’s head. The Ibovespa rose after plunging 7.6 per cent in the past three days.
The MSCI Emerging Markets Index declined 0.4 per cent to 992.53 in New York, after falling as much as 989.13 and entering a correction from a three-year high reached September 3. The Standard & Poor’s 500 Index was little changed following a three-day slide, as the Federal Reserve held its course to end a bond-buying program. European shares tumbled on concern central- bank stimulus will fail to revive the economy.
“For now the negative drivers remain in place, so EM should continue to be under pressure,” Maarten-Jan Bakkum, an emerging-market strategist at ING Groep NV in The Hague, said by phone. “Oil weakness is the main reason for drops in Russian equities.”
The developing-nation gauge, which sank 7.6 per cent in September, has fallen 1 per cent in 2014 and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has advanced 0.4 per cent in the period and is valued at a multiple of 14.5.
Macro Environment Factor for an International Business and Ruble slide
The Micex dropped 1.7 per cent in its second day of declines, as Gazprom and OAO Lukoil fell at least 1.5 per cent. Russia receives about half its budget revenue from oil and natural gas. The International Monetary Fund yesterday cut its previous 2015 growth forecast in half to 0.5 per cent.
The Market Vectors Russia ETF, the largest US dedicated exchange-traded fund tracking the nation’s stocks, gained 0.6 per cent, reversing an early drop. It is down 19 per cent from a July high.
The ruble briefly weakened beyond 44.40 against the Bank of Russia’s basket of dollars and euros, the level at which the central bank said it would intervene, before rebounding 0.1 per cent to 44.2991. President Vladimir Putin said his government doesn’t intend to impose measures to hinder capital movements from the nation. Brent, Europe’s benchmark, declined 0.8 per cent on the London-based ICE Futures Europe exchange, sinking 20 per cent from its peak in June.
The Ibovespa gained after posting its biggest three-day slump since 2011. Itau Unibanco Holding SA, Latin America’s biggest bank by market value, climbed 3.3 per cent in Sao Paulo from the lowest level since July.
Macro Environment Factor for an International Business in Argentina rout
Argentine bond and stock markets deepened their losses after the resignation of Central Bank President Juan Carlos Fabrega dimmed the prospect of a second peso devaluation this year. The Merval stock index sank 7.1 per cent, bringing to 15 per cent its plunge since President Cristina Fernandez de Kirchner on September 30 publicly criticised the bank for allegedly leaking inside information.
Shares in Budapest and Prague retreated at least 1.3 per cent. OTP Bank Plc, down 3 per cent, and Mol Nyrt, which slid 2.4 per cent, led Hungarian equities lower. The country is working on setting up a “fair banking system” that will regulate consumer lending practices in the “strictest manner,” ruling Fidesz party parliamentary group leader Antal Rogan told reporters in Budapest. The PX Index fell for a second day, led by Erste Group Bank and CEZ AS.
Macro Environment Factor for an International Business and the Indonesian opposition
Setya Novanto, a lawmaker from the opposition Golkar Party, was chosen as a speaker for the lower house of the Indonesian parliament. Parties opposed to Widodo may make it more difficult for the former Jakarta governor to push through plans to boost growth. PT Astra was the biggest drag on the Jakarta Composite. The rupiah weakened 0.2 per cent.
Markets in Hong Kong and mainland China are closed for the National Day holiday.
The premium investors demand to own emerging-market debt over US Treasuries narrowed three basis point to 302, JPMorgan Chase & Co. indexes show.
Nine out of 10 industry groups in the emerging-markets measure fell, led by consumer-discretionary shares. Hyundai Motor, South Korea’s largest automaker, sank to the lowest level since August 2011.
Article 2
http://online.wsj.com/articles/emerging-markets-chocolate-lovers-boost-cocoa-prices-1404849640
More than a decade ago, Anupama Amarnath learned how to make chocolate candy for her husband, who had a hard time finding enough of the rare treat in Bangalore to satisfy his cravings.
But demand for her chocolate, which is tempered and molded into various shapes, grew far beyond her household. Fifty-year-old Ms. Amarnath now operates a chain of 11 retail outlets under the Chocolate Junction brand in and around the Indian city and owns a 10,000-square-foot chocolate factory.
Years of rapid growth in chocolate consumption have given India and other developing markets unprecedented sway in the global market for cocoa. These countries’ share of global chocolate sales is pegged at 45% this year, according to data from market-research firm Euromonitor International. That is up from 33% a decade ago.
The voracious appetite in developing countries ranging from India to Saudi Arabia and China has sparked a rally in the price of cocoa, the key ingredient in chocolate. In recent days, cocoa futures, also supported by growing consumption in developed markets, have risen to nearly three-year highs. Chocolate sales by volume in Switzerland, the world’s biggest per-capita chocolate consumer, are forecast to rise 1.5% this year, according to Euromonitor.
Cocoa’s 43% price surge in the past year through Tuesday has made the beans the second-best-performing commodity in the S&P GSCI Commodity Index, trailing only nickel, which is up 47%.
“Emerging-market demand is the principle reason behind the steady and consistent rise that we’ve seen in the cocoa market,” said Sterling Smith, a futures specialist at Citigroup C +1.47% in Chicago. “Is that demand enough to propel it higher? Oh, yes.”
Thanks to steadily rising incomes in these countries, chocolate has gone from being a rare luxury to an affordable treat and now is becoming an everyday habit. Helping to drive the shift is an explosion of new products, as well as improvements to transportation and refrigeration infrastructure that has eased the distribution of candy bars and bonbons.
“We can put your photo on a chocolate, emboss a company’s logo or create chocolate bouquets, arranged like a flower,” Ms. Amarnath said. “There is a big demand, so long as the quality is right.”
Many investors and analysts say they realized just how big an influence emerging-market demand has become in the $6.6 billion cocoa market after prices continued their ascent despite reports last month that No. 1 cocoa producer Ivory Coast would deliver a record crop.
Cocoa for delivery in July, the front-month contract, ended Tuesday up 0.6% at $3,134 a ton. The contract hit $3,153 a ton on June 27, the highest intraday level since July 22, 2011.
Rising cocoa futures already are prompting candy makers to increase prices around the world. A kilogram (2.2 pounds) of chocolate is forecast to cost an average of $12.62 in the U.S. this year, up 2% from last year, and an 18% increase over the last five years, according to Euromonitor.
Investors and candy makers are betting that chocolate lovers will keep on swallowing these price increases. Fund managers, hedge funds and other investors as a group have boosted their bullish bets in the cocoa-futures market by 45% in the past eight weeks, according to the U.S. Commodity Futures Trading Commission.
CFG Asset Management, an investment adviser in Newtown Square, Pa., that manages about $335 million, bought shares in the iPath Pure Beta Cocoa exchange-traded note, a security that aims to track cocoa prices, in November. Matt Forester, the firm’s chief investment officer, added to the position in mid-June, citing supply concerns amid rising demand.
“That is about as strong a signal as we can get,” Mr. Forester said, of prices near three-year highs.
Sales in India are expected to soar 14% this year, according to Euromonitor. Meanwhile, China is now the world’s eighth-largest chocolate consumer, up from 10th in 2010.
Global chocolate sales by volume are expected to hit a record 7.5 million metric tons in 2014, accelerating at the fastest pace in three years, according to Euromonitor.
Multinational candy companies have taken note, expanding product lines and acquiring local businesses. In December, chocolate giant Hershey Co. HSY +0.10% agreed to buy Shanghai Golden Monkey Food Joint Stock Co., a Chinese candy maker, to get a stronger foothold in the country. Hershey has said it expects China to become its No. 2 market, behind the U.S., by 2017.
Not all market experts are bullish on emerging-market demand, citing a slowdown that has hit many developing economies’ stock, bond and currency markets.
“Emerging-market demand was supposed to be the bright spot, and I just don’t see this happening if economic indicators have any real correlation to chocolate use,” said Judy Ganes, president of J Ganes Consulting LLC, a firm that specializes in the food and agriculture industries. She specifically pointed to indicators of sluggish growth in big markets such as Brazil and India.
Still, food-company executives say there is plenty of room for demand to grow, given the large populations and relatively low levels of current market penetration in poorer nations.
“When eight to nine out of 10 Indians still do not eat chocolates, it provides an opportunity for growth,” said Mayur Bhargava, general manager of chocolate and confectionery at Nestlé India. 500790.BY +0.71%
In Asia, the volume of cocoa beans ground into basic ingredients, such as cocoa powder and butter, during the first quarter rose 3.7% from the year-earlier period, according to the Cocoa Association of Asia. Investors see these so-called cocoa grindings as a proxy for demand. The next reading is due out this month.
Asia’s rising consumption is eating into global stockpiles. Cargill Inc., one of the world’s biggest cocoa processors, says global demand will outstrip supply by 100,000-200,000 metric tons during the crop year that begins Oct. 1, with inventories making up the balance.
In Beijing last month, 34-year-old Sun Ji spent 4,980 yuan ($800) while stocking up on sweets in a Godiva Chocolatier shop ahead of an August wedding celebration. Not only has his family been eating more chocolate over the past year, but it has become a popular gift for friends and colleagues, said Mr. Sun, who works in information technology, adding that rising prices are unlikely to quell their appetite.
“The price has gone up a bit this year, but increases of 20% or even 30% won’t stop us from buying it,” said Mr. Sun.
—Neena Rai and Dantong Ma contributed to this article.
Write to Alexandra Wexler at alexandra.wexler@wsj.com and Biman Mukherji at biman.mukherji@wsj.com
