Bsb119 Assessment 1 Case Study

Part A

1. Conclusion 1

As is shown in the table, the data of GDP Per capita (PPP) is quite different for two countries ($50,500 and $19,900 for Country A and Country B respectively), which suggests the consumption ability of residents in Country A is much stronger than in Country B also putting residents in Country A in a higher economic position than Country B. There is a huge difference in the percentage of unemployment for two countries (Country A with 3.8% and Country B with 6.9%), it is likely that there will be higher potential in Country A than Country B for purchasing tertiary industry products. The two countries’ figures about population below poverty line (21.9% in Country A and 46.2% in Country B) infer that there are more residents in Country A have the ability to purchase the more expensive products than in Country B. A company selling luxury products would be better set in Country A, where the residents probably have more interest in consuming articles of luxury, meanwhile, the data indicates residents in Country A have stronger consumption ability than in Country B because they are theoretically wealthier and have more disposable income than the residents in Country B based on the figure above. On the other hand, a company which sells inexpensive and cost-effective goods may be better off in Country B because the residents there have lower budget for their general expenditure.

2. Conclusion 2

As can be seen in the table, the figure of Labour Force by Occupation of industry in the two countries (35.9% in Country A and 24.1% in Country B) suggest that it has more mature environment for industry, and provides more opportunity for the industrial company in Country A than Country B ,at the same time ,the supporting policy for industry in Country A may be better than the other. The inflation in the two countries (Country A with 2% and Country B with 6%) indicates it is harder and more risky for foreign company to launch an international business campaign such as foreign direct investment in Country B rather than in Country A due to the instability of the economic environment. Country A’s main exports include wireless communication equipment and computers, which   Country B needs to mainly import overseas. Therefore, it is likely that Country A is more efficient for the computer manufacturing. From the data illustrated above, a computer manufacturing company who is looking for location for FDI would be better off in Country A where has less risk for the relatively stable economic environment as well as the convenience of components needed in production which do not needed to imports from the home country.

3. Conclusion 3

As seen in the table, the overall GDP are similar for the two countries ($1.19 trillion for Country A and $1.15 trillion for Country B), which infer the two countries generally has the similar economic position to each other. However, the UN Human Development Index(HDI) differs from one to another(Country A with .907 and Country B with .774),showing that the comprehensive level of  life for the citizens in Country A is higher than Country. This data likely suggest that the citizens in Country A may have more demand of life than those in Country B, rather than basic life needs, they may willing to purchase in the aspect of spiritual life. Meanwhile, the figure of Internet Users( % of Population ) between two countries( 88% in Country A and  59.5%  in Country B) suggest there are more citizens who can get involved in the internet and gain more information of international company from the home country of the company in Country A rather than Country B. An organic skin care company who is choosing a new export market would be better off in Country A for the citizens there may got more require such as the source and the manufacturing progress about skin care product, also, they may can acquire more information online about the international company and get more familiar with the company which can help the company advertise their products in advance instead of advertising after entering the country.

Part B

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Source: Economist Intelligence Unit (2019)

Part C

  As we know, ABC Company has become successful for their products which are tech-based and they have won an award. Here are some my opinions about the reasons it chose licensing. To begin with, licensing refers to a company transfers the right to use its own patents, trademarks and technology etc. to a foreign company, so the licensor can get the chance to entry into foreign market quickly and easily, allowing a company to “jump” border and tariff barriers (Terry,2012, para. 4 ), which in this case means that it is appropriate ABC Company because it only have a small scale, it can get less commitment of opening a new oversea department. Also, ABC Company doesn’t have to incur manufacturing or distribution costs, which means they can avoid the expensive costs for manufacturing its innovative products or applying the technology to other products (Benefits of Licensing Intellectual Property, n, d.). In comparison, exporting takes extra costs for both time and money. It may take a lot of effort to design new materials for a foreign market such as packaging. Since ABC Company is a small and technology-focused company, it might be better transferring the technology to another country which can help it from being placed severe strain on the resources of firm (The Pros and Cons of Exporting, n. d.). Meanwhile, local obstacles as long as governmental documentation are needed in exporting( Tekle S., n. d. para.18.); it is no doubt that this will postpone the internationalising progress since the sooner the firm release the award-winning product, the product will attract more consumer out of curiosity. To sum up, ABC Company is still in the position which cannot take the high risk of the exporting, licensing can lower the risk also help the firm get into foreign more effectively.