Choose one of the countries listed below
The primary objective of the course wrap-up project is to develop a brief executive level analysis of macroeconomic business conditions in a selected country from one of 4 regions of the global economy
. The project is an extension of the Case Study and will involve the newly renamed Blakleyovich Enterprises, International Purveyors of Fine Chalk. However, it will involve analyzing business conditions in a foreign economy
. Specifically, project teams representing the Corporate Economics Department will develop an executive summary report and presentation on current and expected levels of GDP growth, short term interest rates, unemployment, foreign exchange (US dollar denominated) and inflation, with explicit consideration of the current turmoil in the global
The memo is to be addressed to the newly appointed President Ms. Blakleyovich, who has been forced by current U.S. domestic macro-business conditions to consider expanding BE operations by exporting to some (but not all) of the following economic regions: South East Asia, Latin America, Eastern Europe and the European Union. The former President has been dismissed and his strategy of importing chalk has been revoked (i.e., domestic production has been resumed.)
Your team?s first step is to identify which country (and no other) from your assigned region that you have selected for your analysis. (Brief mention should be made in your memo as to the rationale used in selecting this country over the others.) She is interested in expected macroeconomic business conditions in the next 12 to 18 months, with special consideration given to the potential direct or indirect impact on the economy
selected for analysis of fallout from the recent global
financial crisis and, of course, your recommendation . Note it does not necessarily follow that you will recommend BE expansion in this economy
just because it was chosen ?best-of-bunch.?
While, as before, chalk sales are sensitive to domestic GDP (in particular, consumer spending, government expenditures and investment), expected consumer price inflation is also important to the extent it may impact domestic monetary policy and/or distribution (e.g. fuel/transport) costs. Of course, movements in the local currency relative to the dollar will directly impact BE prices and profit margins. It important you recommend which currency to denominate the fixed price contract in regardless of your recommendation. Of course and needless to say, the Board at BE may override your recommendation ? either way.
As with the case study, please use a Times font of 12 points with 1.5 or double spacing. Locate footnotes (2 or 3) to current relevant references ? with complete background information ? at the bottom of the page. It is expected your research will rely greatly on The Economist Intelligence Unit database available in the Gleeson Library with the most recent information provided from other sources. The report itself will not simply summarize the EIU, or any other economic projections put forth by others, but will be an independent endeavor by the BE Corporate Economics Department based on a comprehensive up-to-date rendering of relevant facts and issues analyzed within the modeling framework developed in class.
Each group well develop a 2 page executive summary (with references to your PP slides only) of your analysis of macroeconomic business conditions of the selected economy
(GDP growth, unemployment rate, short term government interest rates, CPI inflation and the relevant foreign exchange rate vs. the U.S. dollar) most likely within the next 12-18 months. This assessment will include why this particular country was choosen, your recommendation on whether to develop BE exporting capabilities in this economy
, and what currency to denominate the contract in if the country is ultimately selected (regardless of your recommendation). Please turn in hard-copy of PP slides with executive summary.
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For purposes of this paper, the focus is on Australia which has one of the best economies in the world. Australia is ranked thirteenth best economy with its per capita income being ranked as one of the best in the world. Its human development index is also one of the best compared to other major economies of the world with its national performance in areas such as the economic freedom, education, protection rights, health and quality of life in general still ranked high. It has one of the best organized governments with clear structures and a working constitution that governs and protects the citizens. Geographically it is one of the largest countries with six states namely; South Australia, New South Wales, Queensland, Tasmania, Victoria and Western Australia (Ralph Kelly, 2012).
Australia generally is a wealthy nation with a population of about 22.2 million; its major cities are ranked as the most livable cities in the world. The Australian dollar (AUD) which is its main currency is stronger than the U.S. dollar (USD) and the exchange rate is 1 AUD equals to 1.03810 USD an indication of a good economy for foreign investment (XE, 2012). A stronger domestic currency is good for the importers but unproductive for the country's exports in the International markets as they become expensive and less competitive. The barometer predicts a decrease in the value against the USD by 2013 with a strong performance before the 2013 down drift. Different categories of business operators expect AUD/USD to go as high as $1.06 and weaken to $1.02 by 2013 onwards (Commonwealth Bank 2012).
Australia's annual economic growth for the last 15 years is 3.6%, the GDP growth rate estimates for 2011-2012 according to World Bank ranges from 3.2% to 3.8% which is a positive indicator. The International Monetary Fund report has also indicated that it is the world's best performing advanced economy, a status that is expected to prevail in the next two to three years. The year 2012 has had a growth rate of 3.1% therefore with all the fundamentals constant, a forecast of 3.3% increase is expected in 2013. The inflation (CPI) for Australia is 2.8% while the interest rate ranges between 3-6%.The interest rate forecast remains constant as sources reveal, the rate has been constant at 3.25% for the last three consecutive months being backed up by the domestic indicators. Inflation is also expected to remain