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globalEDGE Blog Archive August 2016
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On June 23rd, the United Kingdom made a monumental decision to exit the European Union. However, the magnitude of impact which the Brexit will have on the British economy remains uncertain. Following the vote, significant increases were predicted in the UK’s economic welfare and consumer confidence, although future statistics may indicate otherwise. After a week of collecting official data, the numbers forecast that consumers are spending more, the value of the pound has weakened, and tourism has increased in the UK. Simultaneously, interest rates have taken a historical cut, while inflation has begun to rise.
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Central banks are responsible for determining the monetary policy by setting the interest rates to balance investments and savings, which helps to keep economies fully employed and inflation stable. The natural rate is the interest rate that helps to achieve the balance, and federal reserve policy makers believe that the rate is at 3%, down from 4.5% prior to the recession. The 1.5 percentage point decline in the natural interest rate provides less ability to counteract future economic shocks.
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Over a week ago, Indonesian president Joko Widodo announced that he would like to lower the country's corporate tax rate. In addition, he is considering a more drastic change of converting one of the nation's islands into a tax haven.
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Just four years ago, the Mongolian economy grew by 17% and attracted billions of dollars in foreign investment, according to World Bank data. Today, there is a mounting debt crisis and the risk of a possible default from the Mongolian government, with GDP only growing about 1.3% for the first half of the year. Currency has also plummeted nearly 10% against the dollar in the past month alone, and concern continues to grow as more investors pull their funding from the country.
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[This blog is based on the Article Snapshot for my article with Michael Giebelhausen, HaeEun Helen Chun, and J. Joseph Cronin Jr. in the Journal of Marketing, July 2016. A six-minute radio dialogue between Michael Giebelhausen and Tomas Hult about the article is on the globalEDGE Business Beat]
Consumers experience a "warm glow" and heightened service satisfaction when they participate in a provider's voluntary green program (and vice versa), an effect that can be dampened or heightened depending on how participation is incentivized.
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[This blog is based on the Article Snapshot for my article with Constantine S. Katsikeas, Neil A. Morgan, and Leonidas C. Leonidou in the Journal of Marketing, March 2016. A six-minute radio dialogue between Neil Morgan and Tomas Hult about the article is on the globalEDGE Business Beat]
An assessment of performance outcome measures in marketing reveals significant problems with how such outcomes are conceptualized and operationalized and performance areas in which empirical knowledge of marketing's impact is limited.
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For years Americans have seen manufacturing jobs relocated overseas in an effort to lower production costs. The loss of these jobs has put millions out of work, and has done nothing to help the economy. There is a push to relocate these lost jobs back to American soil, to help recreate the jobs that have been lost. However, the question is, will the returning of these factories actually create more jobs?
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The latest economic numbers for the second quarter of 2016 were published Monday, and they do not paint a bright picture of the Japanese economy. Data shows the economy in Japan barely grew, expanding only 0.2%, lower than the already diminished target rate of 0.7%. The stalling growth was somewhat expected, considering April earthquakes and the impact of Brexit, but was still worrisome considering the large drop from 2% growth in the first quarter.
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In the latest globalEDGE Business Beat, MSU's International Business Center Director Tomas Hult talks with 5 guests on a wide range of interesting topics. Included are discussions on voluntary green programs and their implications, customer satisfaction and its impact on stock returns, innovation inside companies, and the current state of international trade agreements. Check out the new Business Beat segments to gain insights into the international business world!
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In 2012, the UK-based oil exploration company, Tullow Oil, discovered oil in Kenya's northwestern Turkana region. Over four years later, the country is now announcing its plans to go forward with the production of crude oil.
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Afghanistan may not seem like the ideal location for business opportunities. The country faces frequent blackouts, bombings, equipment shortages, and a consumer market that is untested. Despite these challenges, three Army veterans and a civilian who served in Afghanistan have decided to take on these challenges through their company, Rumi Spice.
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A study conducted by the University of Cambridge and Nesta, in partnership with KPMG, recently covered the development of the alternative finance industry in the United Kingdom. In the U.K., the industry expanded by 84% in 2015 £3.2 billion, and equity based crowdfunding was 15.6% of the total amount of seed and venture stage equity investment in the United Kingdom.
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Austria's foreign minister, Sebastian Kurz, has threatened to oppose any attempts by Turkey to join the European Union. Kurz claimed he will use his position in the EU foreign ministers' council to vote against further negotiation chapters with Turkey. His announcement was made Sunday, following a recommendation by Chancellor Christian Kern to completely terminate said negotiations. Several other Austrian government members have echoed their sentiments, citing the recent coup, the respective purges, and Turkish president Recep Tayyip Erdogan's powerful rule. While recent events have tensed Turkey's relationship with the EU, not all nations are ready to give up negotiations just yet.
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Avocados are experiencing a sudden shortage in the market, as New Zealand bandits have been reportedly stealing the delicious creamy fruit. In the past five months, 40 large-scale thefts from New Zealand’s orchards have been reported, with 350 avocados being stolen at a time.
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For anyone conducting their business internationally, being aware of and understanding cultural differences is often essential for success. Issues such as directness, cultural values, and punctuality vary across countries, and expressions can have very different meanings in foreign cultures. By researching a country’s culture and customs first, you can impress and gain the respect of your international colleagues, helping to build relationships which will be crucial to the growth of your business in the new market.
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Australia's central bank recently cut interest rates from 1.75% to 1.5%, a direct consequence of the country's faltering job market and record-low inflation. The Reserve Bank of Australia hopes to boost the labor market as well as induce economic growth via this interest rate cut. After a decade-long mining boom, the Australian economy gradually shifted towards less commodity-dependant growth, helping the nation avoid a recession. Unfortunately, there are many indicators that Australia's gross domestic product (GDP) is losing momentum. Economic growth of 1.1% in the first quarter of 2016 has been largely attributed to the dominance of net exports. Analysts suspect such exports to contribute minutely to overall economic growth. Data from the Australian Bureau of Statistics reported the country’s trade deficit rose to $3.2 billion ($2.4 billion) in June, while exports declined 1%, and imports increased 2%.
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[This blog post is based on a presentation I gave in a business-academic panel “jam session” at the American Marketing Association Summer Educators’ Conference, August 6, 2016. The slides with charts and data can be downloaded here].
The strategic importance placed on leveraging global supply chains has seen an exponential increase in the last decade. The world is now connected in a cogwheel fashion, where all 195 countries leverage inbound and outbound elements of global supply chains, and what happens in one part of the world – seemingly far away from where you are – oftentimes has an effect on what you do, perhaps even as a bullwhip effect; that is, small changes in some parts of the world has large cause-effect relationships with other parts.
Tremendous inbound and outbound growth in supply chain traffic has been seen in Asia, with lots more inbound in the last decade than ever before. But, the idea of “supply chain management” is still driven by the U.S. and to some degree Europe. These global supply chains are important given that customers expect the world to become more globalized than the companies expect to have to deliver in the next 20 years. This mismatch needs to be solved.
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Whether it's a ride-share app, a search engine, or a social media platform, tech companies have struggled to expand their businesses overseas. Many successful U.S. tech companies expect to thrive in the world's second largest economy, but the results have been less than satisfactory.
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The Bank of Japan announced a new stimulus plan last Friday. This new plan involves the annual purchasing of the equivalent of $58 billion USD worth of ETFs. This is an increase of approximately $26 billion from last year. The bank notably yields negative interest rates. However, those will not be affected in this new round of easing.
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“Girl power” was made popular by the pop group Spice Girls in the mid-to-late 1990s. The phrase is typically used as a reference to female empowerment and independence, and has also been linked to modern-day feminism. The “girl power” phrase came in vogue in 1987 in a song by London-based all-girl group Mint Juleps and their “Girl to the Power of 6.” The pop-punk due Shampoo also had a single titled Girl Power in 1995. But, Spice Girls, without a doubt, set the phrase on fire in the mid-to-late 1990s.
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The Trans-Pacific Partnership (TPP) has been a largely controversial topic from the day discussions began. As the largest regional trade agreement in history, the agreement would set new terms for trade and business between the U.S., Canada, Mexico, Australia, and numerous other Pacific Rim countries. As a whole, this group of member countries is responsible for nearly one-third of world trade. Needing the approval of Congress, the TPP has become a topic of discussion in the 2016 U.S. presidential election. While the nominees of both major parties are both against the agreement currently, there are a number of reasons why dropping the partnership all together may not be the best idea.