Global Business Population of Argentina

Question: Describe about the Global Business for the Population of Argentina. Answer: Case of Kallara Tea: Part A Comparison of socio economic environment: Population: The population of Brazil is 207.8 million whereas the population of Argentina is only 43.1 million. There are vast gap between the numbers of population of two countries. As the population are more, the number of people consuming tea will also be more and the labours will be available with low cost in Brazil. As the population is very less, there is less chance of increasing the number of new customers and lost consumers will be very difficult to replace (Waisman, 2014). Urbanisation: With the growing population, number of people shifting from rural areas to urban areas also increasing, this phenomenon is called as urbanization and this has great impact on environment, agriculture, energy, and politics as well as on new business. It generates fairly focussed new markets and frequently includes customers from high income level, which makes them able to spend more. New business is able to take advantages of urbanization if they understand the taste of these newly moved people. The urbanisation percentage of Argentina is 92, which is slightly higher as compared to 86 of Brazil (Porto, Porto Tortarolo, 2014). Unemployment: Business is influenced in several ways depending on the level of unemployment. Higher percentage of unemployment leads to inability to spend more and therefore low demand for products, high demand for lower priceand inferior quality of products. Unemployment also leads to sense of insecurity among the labour force.On the other hand, with high level of unemployment, supply of labour with low wage rate will be available. Labour turnover rate will also be minimising. Unemployment rate in Brazil is 6.8% and in Argentina is 6.5%(Erdem, 2015). Per capita GDP: Standard of living of any country is measured by per capita GDP of that country. Per capita GDP is calculated by dividing the national output by number of population. When the per capita GDP increases, living standard of people also increases and demand for material things goes up as the demands are directly related to economic well-being of any country. A country which is capable to produce more items with less cost and resources is generally acquire valuable things like shelter, food, freedom and clean water. Moreover, people having more per capita GDP will be more conscious about their health and live longer. Per capita GDP of Argentina is 13,588.80 US$ which is far better than Brazils per capita GDP of 8,670 US$ (Lustig, Lopez-Calva Ortiz-Juarez,2013). From the above factors, it can be decided that, though the population and availability of low cost labour is better in Brazil, keeping in mind the urbanization rate and per capita GDP, it will be a wise decision for Kallara Tea to sell their tea in Argentina. Part B Percentage change in GDP for Argentina: Year GDP 2010 10.13% 2011 6.00% 2012 -1.03% 2013 2.41% 2014 -2.51% 2015 2.46% 2016 -1.76% 2017 2.73% 2018 2.77% 2019 2.90% 2020 3.12% Table 1: Percentage Change in GDP for Argentina from the year 2010 to 2020 (Source: statista.com, 2016) Figure 1: Timeline Graph Percentage Change in GDP for Argentina from the year 2010 to 2020 (Source: statista.com, 2016) Percentage change in GDP for Brazil: Year GDP 2010 10.13% 2011 6.00% 2012 -1.03% 2013 2.41% 2014 -2.51% 2015 2.46% 2016 -1.76% 2017 2.73% 2018 2.77% 2019 2.90% 2020 3.12% Table 2: Percentage Change in GDP for Brazil from the year 2010 to 2020 (Source: statista.com, 2016) Figure 2: Timeline Graph Percentage Change in GDP for Brazil from the year 2010 to 2020 (Source: statista.com, 2016) Part C First mover advantages: Some advantages of being first mover are They have the capability to create lasting impression among the consumers that can create brand loyalty and brand recognition They get more time to improve the procedure and make their product perfect They have the opportunity to control resource materials like location or contract with major employees and suppliers. First mover disadvantages: Some disadvantages of being first mover are They have to bear the expenses of creating new market that can be exploited by followers Followers can use their process and technology and can modify them for better performance with cost minimisation Followers can learn from the first movers mistakes and take necessary steps to reduce risks and to avoid attempting costly mistakes. Case of Rio Tinto: (a)The investigations into the emails concerned with three continents involvement in making payments to the global miner to get access over a mining project in West Africa. (b)Legal issue involved with the case was that, huge amount has been paid unethically as bribe to the chief executive and head of iron ore operation group. (c)The possible consequences for Rio Tinto if they found to have acted illegally would be that they have to face prosecution or a fine can be levied (d)Self-reporting can mitigate the prosecution or they can get discount in whatever fine will be levied. (e)The amount involved were $US 10.5 million to Tom Albanese and $US 13.5 million to Sam Walsh and the amount was paid as bribe for payment to a consultant for the huge Simandou iron ore deposit in Guinea. (f)Albaneses concern regarding holding back of a part of amount was to hold some power in his own hand till the first shipment (g)In spite of having bad past experience with Guinea, they thought of giving it another try and felt that payment to an intermediary would work. (h)Guineas rating on corruption index is 25 out of 100 on 2015 index and averaged 21.22 points from 2006 until 2015. References: Erdem, E. I. (2015). Business Views of Democratization in Brazil and Argentina.Itobiad: Journal of the Human Social Science Researches,4(1), 32-45. Lustig, N., Lopez-Calva, L. F., Ortiz-Juarez, E. (2013). Declining inequality in Latin America in the 2000s: the cases of Argentina, Brazil, and Mexico.World Development,44, 129-141. Porto, A., Porto, N., Tortarolo, D. (2014). Fiscal decentralization and economic integration in Mercosur: Argentina and Brazil.Latin American Business Review,15(3-4), 225-252. Waisman, C. H. (2014).Reversal of development in Argentina: Postwar counterrevolutionary policies and their structural consequences. Princeton University Press.