globalEDGE Blog Archive September 2008

Although the current state of affairs seems predisposed in dealing with the global banking and equities crisis, another crisis has the potential to dominate our lives much more in the long-term - energy. The supply of fossil fuels will not last forever, and so the race for finding viable replacements to gas, oil, and coal before these become unaffordable to the average person is on.

The heart of business has been and always will be innovation. Therefore, it’s not hard to believe that numerous business schools have begun taking the lead in planning for a post-oil world. According to an article on CNN, this is going to become an increasing trend.  Institutions such as Judge Business School at Cambridge University are committed to the movement away from dependence on fossil fuels. Judge recently held a three-day pioneering conference called Entrepreneurship for a Zero Carbon Society, which brought together the best minds in ecological entrepreneurship to share both ideas as well as business cards.

The credit crisis that has been a major issue in the United States lately has spread fear through European governments as they saw the need to step in with a flurry of major bank bailouts in different countries from Iceland to Germany. The governments of Belgium, Luxembourg, and the Netherlands have been taking partial control of some of their national banks. Furthermore, the government of Iceland seized control of Glitnir bank – the third largest in the country. However, these rapid bailouts are not making banks in Europe feel more secure as they keep on refusing to lend to each other money for all but the shortest periods of time. Meanwhile, shares are falling heavily and the money markets remain frozen.

Think that the United States being in financial limbo has no repercussions on the rest of the world? You’d be thinking wrong. In Nigeria, financial authorities have attempted to construct strong fiscal measures in an attempt to extricate the country’s stock market in the wake of the collapse of major U.S. financial institutions. Nigeria’s two chief government-operated financial policymakers, The Central Bank of Nigeria and the Securities and Exchange Commission have announced new policy measures they plan to enact in order to prevent this hemorrhage of assets in the Nigerian capital market. The plan includes measures set forth by the Central Bank such as reducing the Monetary Policy Rate, reducing the Cash Reserve Ratio, and reducing the Liquidity Ratio. Following three years of spiraling growth and high returns, the Nigerian market is now seeing prices crashing beneath initial quotation.

Never before has the American auto industry witnessed such a myriad of harmful factors that came about with the swiftness and magnitude of the present situation. The credit crunch, soaring gas prices, and an unprecedented collapse in demand for large trucks and SUVs all tangled together to create a perfect storm. The already ailing automakers are now struggling to cope with an 11% slide in U.S. sales so far this year. In the rest of the world, auto sales are either growing or experiencing a much more modest drop. Yet the financial collapse and rising oil costs are worldwide phenomena. So what makes the U.S. so much different?

Ask an American about French business practices, and you’ll probably hear about short work weeks, massive amounts of vacation time, and the penchant to go on strike every month or so. On a more social level, you might hear about free college, free healthcare, and rock-solid job security, but the average American might carefully note that this comes at the cost of sky-high taxes, layers upon layers of bureaucracy, and continually high unemployment.

With ever-increasing gas prices tempting empty wallets and bank accounts all around the world, commuters have been propositioned with a solution that gets them out of their car seats and onto their saddles. No, you will (hopefully) not see horses tied-up outside of your office next time you're at work. International businesses and governments are beginning to sell their constituents a new-fangled-old-school technology that has been proving itself popular both on the streets and in the market place: the bicycle.

Do brands create nations, or do nations create brands? That's a thought provoking question in today’s increasingly global economy. Consumers – regardless of location – determine the fate of every brand. Similarly, the global rise of commerce and transportation in the past few decades has also led to a rise in immigrant workers working on these brands in every part of the world. The article on brandchannel.com that discusses the lessons learned from the list of 2008 best global brands points out that the phrase “Made in ____” should really be expanded to “Made in ____, by ____” – e.g., Made in Italy, by Vietnamese!

A new release by the FTSE Group indicates that South Korea is now worthy of having its name placed among the ranks of the world’s elite “developed” markets. The FTSE’s listing of developed markets is closely monitored by investment fund managers, who use the designation as a means of allocating capital to various markets. South Korea’s new status means that it is likely to benefit from tens of billions of dollars in foreign capital. The boost to national pride from finally being viewed as “developed” is not a bad perk either…

Japan, the world’s second-largest economy, has a shrinking population of working adults and is expected to lose 70% of its workforce by 2050. This forecast is based on Japan having the world’s highest proportion of people over 65 and lowest proportion of children under 15. A recent article in the Washington Post explains that Japan’s social and corporate cultures are the catalysts of this trend.

When the fast money round in the popular game show Family Feud has globalization as one of the questions, “the survey says” …China! But can this help Latin America win the jackpot? That is an interesting question and here’s why…

Got the entrepreneurial spirit or prefer working for a small business? After comparing 181 economies across the globe, the collective knowledge of 6,700 business experts and government officials suggests that Singapore, New Zealand, and United States have the friendliest business climate for startups and small companies (based on a recent World Bank survey).

The Beijing Olympics are over and the Olympic flag has been handed over to the new host for the games. Having done it twice before (in 1908 and 1948), it is London’s turn once again to host the 2012 Olympics. However unlike the last two times, London’s mayor has recently appointed an IBAC (International Business Advisory Council) to advise him on issues related to the globalization challenges and policies to help make the British economy more competitive in the world. The Games are clearly of enormous importance to London and London's business. The main role of the council will thus be to advise the Mayor on developing opportunities, initiatives and ideas that make London a more appealing place for companies and their employees to live and work in.

A recently published report in the Latin Business Chronicle highlights the fact that cross-border trade among Latin American countries has grown significantly in the recent past. Imports, exports and mergers among Latin American countries that were unthinkable a decade ago have begun to play a key role in the business environment in that region. And although several economies in Latin America are complementary (i.e., they compete with one another), new alliances and trade agreements within Latin America have recently surfaced.

The MSU-CIBER (Michigan State University's Center for International Business Education and Research) team that edits the globalEDGE website is pleased to announce the launch of this blog. In this 'International Business Blog' we hope to discuss several topics related to international business and global trade on a regular basis. These topics may include news and general discussion on global economies, cultures, education, regulations, travel, and so on. In addition, we hope to familiarize you even further with the wealth of resources and data available on the globalEDGE website itself.

To make this blog informative and exciting for everyone, we encourage you to engage with us in the ongoing discussions. Feel free to leave comments to the various blog posts or contact us at any time with your ideas or suggestions. Hope you enjoy reading this blog and we at globalEDGE look forward to learning from you along the way. Once again, welcome!