globalEDGE Blog - By Author: Ben Jacquier

Although the BRIC grouping of emerging economies does not include a single representative from the African continent, many economic experts and multinational corporations see enormous growth opportunities across the continent.  While most businesses are now aware of opportunities in countries such as Brazil, India, and China, corporations truly utilizing global expansion as a growth opportunity are looking beyond these popular markets.  More than 12 African nations have seen economic growth exceeding six percent for six consecutive years. 

The world of sports is closely intertwined with the world of business.  Sports franchises and leagues function to create an economically-viable product for profit.  Businesses in many industries utilize sports entertainment for its unmatched marketing opportunities.  Global athletic events bring tourism, trade, and international attention to host cities and countries.  Businesses could not function without sports and sports could not function without business.  This week, the globalEDGE blog will take a closer look at business and economic impacts of sports around the world. 

With 4,000 active technology start-ups, Israel has more such firms than any country outside of the United States.  With a population of nearly eight million people, Israel has higher levels of start-ups, engineers, and venture capital investment per capita than any other nation.  High tech products make up almost half of Israel’s annual exports.  While this may appear surprising at first, a variety of factors can be attributed to Israel’s maturation from an agricultural state to a technology hub in recent years. 

For centuries, Dubai has served as a key crossroads for global trade.  The convenient location of the United Arab Emirates between Europe, Asia, and Africa has positioned this growing city to serve as a major logistical intermediary between many foreign markets.  With the development of emerging markets such as China and India, there is a growing opportunity for Dubai to expand its logistical dominance in the modern world economy.  The construction of Al Maktoum International Airport, which will become the largest airport in the world, signifies Dubai’s commitment to this growth strategy. 

When world economies develop, massive urbanization soon follows.  As of 2008, there are now more people living in cities than rural areas around the world.  Countries currently experiencing significant urban growth have an opportunity to learn from developed nations that have experienced similar trends in the past.  With access to modern technology, cities can develop in smarter ways than ever before.  Rio de Janeiro, Brazil, is using thoughtful planning and foresight to establish a new standard for urban development that other regions are likely to follow.  

Government leaders around the world are hoping that business start-ups will fuel economies still struggling since the global financial crisis.  To stimulate such growth, policymakers are shaping programs to promote the development of new business ventures.  What incentives are most effective for stimulating entrepreneurship?  What countries are leading the way for new business growth? 

For small businesses, exporting products to new markets may appear unattainable.  With assistance from partners such as the U.S. Commercial Service, business leaders with minimal international experience can soon learn the basics of exporting.  This can be an enormous opportunity for business growth, attainable without unnecessary levels of risk.  Jim Blasingame of “The Small Business Advocate” recently sat down with Doug Barry, the Director of Marketing and Communication for the U.S. Commercial Service, to discuss such a success story.  One small bio-business used international markets to quickly achieve levels of wealth that otherwise would have seemed impossible. 

During routine trips to the supermarket, shoppers frequently face choices between organic and conventional food products.  While these items may look nearly identical at first glance, they likely arrived on store shelves via radically different supply chains.  Global regions have had varying reactions to the organic food movement.  The future of agribusiness may well be determined by consumer preferences between organic and conventional foods.

The widely accepted “BRIC” designation for the world’s largest emerging economies may soon be in need of a revision.  In fact, some international business scholars have felt for many years that Jim O’Neill’s term for the developing nations of Brazil, Russia, India, and China should be updated to include at least one additional country.  Morgan Stanley publicly stated as early as two years ago that the commonly referenced acronym should be revised to “BRIIC” in order to include the rapidly growing economy of Indonesia. 

This week’s globalEDGE blog series will delve into a topic that is becoming a major buzzword in the global business world.  Cloud computing may be the future of information technology, with countless ramifications on the future of industries, businesses, and individuals.  While the cloud also has implications for the general public, we will focus instead on the “private” cloud- how it is utilized by world governments, multinational corporations and other major players in the world economy.  Throughout the week we will look more closely at risks and benefits, impacts on specific global industries, and financial implications of the cloud. 

A Wall Street Journal article published last week declared that the curtain had officially come “down with a bang” on the global market for personal computers.  With the recent announcement by industry leader Hewlett-Packard that it may be abandoning its PC business, many analysts have come to this same conclusion.  Ever since IBM abandoned its PC business in 2005, many have been predicting that tablets and other technological devices will render computers obsolete.  Is the PC industry really dead, or does the modern world economy offer new opportunities for companies to profit? 

With the local economy struggling, many businesses in Michigan have turned to international exporting as a source for new markets.  The state’s total exports for 2010 reached $44.5 billion, a 36.3% increase over 2009.  Rick Haglund recently posted a column on Ann Arbor.com about the work that trade specialists such as Patrick McRae of the United States Commercial Service and workers at Michigan State University’s International Business Center (CIBER) are doing to support globalization efforts of small and medium-sized local businesses. 

Many international business leaders treat it as a foregone conclusion that the world is flat.  Past posts on this blog have stated that globalization is an unavoidable feature of the current world economy which cannot be ignored by businesses.  Do the statistics support these conclusions?  A recent blog post for The Economist provides numbers that appear to question how prevalent the global economy really is. 

Pecans have long been a steady source of income for farmers in the United States.  Southern farmers produce two-thirds of the world’s supply and U.S. consumers have been the main source of their business.  According to the U.S. Department of Agriculture, the current price of $2.14 per pound for pecans is nearly twice as high as three years ago.  What has caused this sharp spike and what does the future hold for the pecan industry? 

Just as many global businesses are beginning to feel comfortable doing business over the Internet, smartphones and tablets are opening up a whole new avenue to interact with customers.  While still relatively new, the market for mobile applications is expected to grow into a nearly $30 billion per year industry by 2015.  E-Bay’s mobile application has already been downloaded by more than 50 million people worldwide, representing 190 countries and eight languages. 

Wine production is a source of great pride for many French citizens.  Partners throughout the global supply chain are proud to take part in an industry with such cultural importance.  Change is not easily embraced in an industry with so much history and a rapidly aging workforce.  Regardless, to make products more affordable and accessible there has been a push to use plastic wine bottles.  There are clear advantages and disadvantages associated with this trend, but its popularity amongst consumers is becoming increasingly difficult to ignore. 

Comparing major financial cities across international borders is a challenging task for any organization to accomplish.  Using people, business environment, market access, infrastructure and general competitiveness as categories of competitiveness to be evaluated, the Global Financial Centres Index ranked the top 75 favorable cities for doing business.  London, New York and Hong Kong ranked as the top three cities and were considered essentially equal by researchers.  Taken as a whole, the list reveals many current and future trends in the global business world. 

The security of shipping containers carrying products overseas is a very sensitive issue internationally.  Since the smallest margin of error can lead to a devastating act of terror, policymakers want to do everything in their power to guarantee the safety of products shipped across the ocean.  The port of Los Angeles alone received 330,000 containers in January.  The risk of one dirty bomb getting past cargo inspections led the United States to pass legislation stating that every container entering the country must be scanned for weapons.  Is this practical, or is it an unreasonable expectation for security officials to execute? 

Oil is quite possibly the single most important commodity in the modern world economy.  Those countries with abundant sources of the valuable substance are in a strong position to trade with producers around the world who cannot do business without it.  CNBC has put together a list of the top fifteen countries in terms of confirmed oil reserves.  The ramifications of this list are much greater than they may initially seem. 

Valuable copper, gold, and coal deposits enticed international investors to put $1.4 billion into the Mongolian economy in 2010.  As production in China expands, Mongolia is well positioned geographically to capitalize on demand for raw materials.  Although small in terms of population, Mongolia saw its national currency (the tugrik) outperform any other global monetary unit over the last year.  Will this upward trend continue, or will Mongolia fail to capitalize on a promising opportunity for economic growth? 

While the global entertainment industry may appear to be thriving, there are serious threats to its long-term prosperity.  Many countries have been accused of failing to effectively protect intellectual property rights.  Some businesses may be forced to reduce global marketing and sales efforts if this trend continues.  An article in the globalEDGE Business Review estimated that worldwide counterfeiting has increased from $6 billion in the 1980s to over $600 billion today.  Even the most prosperous of businesses would struggle to cope with such overwhelming losses.

After 42 years as the world’s second biggest economy, Japan officially fell behind neighboring China in 2010.  Many projections indicate that China will go on to surpass the United States as the world’s largest economy by the year 2025.

It is hardly surprising that the world’s most populated country would pass its tenth largest.  Japan maintains a significant lead on China when population is accounted for in per-capita measures of wealth.  Regardless, this does draw attention to recent economic struggles in Japan.  Several indicators of the nation’s economic well-being have recently fallen and Standard & Poor’s went as far as to downgrade the Japanese credit rating from AA to AA-. 

As much of the Eurozone has struggled to make ends meet during the recession, Germany has embraced global importing and exporting through a variety of thriving industries.  The country’s 3.6% growth in GDP over the last year can be attributed to a variety of factors in a time when the rest of the Eurozone barely topped 1% growth.  During this same time period, exports from Germany jumped by 21.7% including a 17% increase in sales to China. 

In a survey on globalization conducted by Ernst & Young, the majority of companies responded that diversity of gender, ethnicity, and experience are important components of a successful management team.  These respondents stated that financial performance and overall reputation would be improved by incorporating diversity throughout an organization.  Despite their own advice, many upper management teams are composed exclusively of people from one country.  In order to capitalize on opportunities in emerging markets, it seems beneficial to have managers with first-hand knowledge of business around the world. 

Although hiring of MBA graduates has suffered during the recent recession, it appears that the tides of good fortune are returning.  As consulting firms, investment banks and other top employers commit to aggressive hiring targets, many graduates are gaining  confidence in their ability to land an ideal position.  While some of this wave may be attributable to an improving economy, innovative new outreach programs are also finding desirable jobs where they have never been found before. 

Incoterms are standards for international trade that provide a consistent interpretation of agreements included in global business contracts.  Every ten years, the International Chamber of Commerce makes updates to the standards based on changes in the global business environment.  As of January 1, 2011, the new Incoterms 2010 are officially in effect.  The revisions listed below are a reflection of widespread changes in international business markets over the past decade. 

A recent article from The Economist describes the renewed emphasis that global businesses have put on hiring the best and brightest recruits.  Business leaders support the “Pareto” philosophy that a very slim portion of the world’s workforce is responsible for the vast majority of actual progress.  One influential corporate leader can have more impact on a company’s direction than an entire department of lower-level employees.  For this reason, companies such as General Electric (GE) and Procter and Gamble (P&G) have invested disproportionate resources toward finding and keeping “the vital few.”  In today’s global economy, an important aspect of developing such prominent leaders includes exposure to international knowledge and opportunities. 

Can environmentally conscious consumers convince businesses to develop sustainable practices, or must government regulations force their hand? According to United Nations officials such as Christiana Figueres, the executive secretary of the U.N. Framework Convention on Climate Change, governments cannot be responsive enough to quickly alter the negative impacts of human actions on the environment. As government, business, and academic leaders recently met at the CNN Earth’s Frontiers debate in Cancun, Mexico, many people are asking which organizations are best suited to lead the fight against global warming.

London has always been well-known internationally for its historical and cultural importance. In recent years the city has also developed into a significant force in the technological sector. Innovative businesses were completely absent from London’s economy back in the year 2000, but the roughly 100 new high-tech businesses in east London have received international attention for their significant contributions to global business. While far from reaching the level of California’s Silicon Valley, the so-called “Silicon Roundabout” is joining cities such as Boston and Tel Aviv in the second-tier of global innovative centers.

One of the fundamental rules of logistics is to avoid shipping air and water whenever possible. Packages and vehicles are optimized to reduce the amount of wasted space that could be used to ship additional products. The weight of water is so expensive to transport that many industries design an entire supply chain around reducing the distance that liquid goods must travel from the point of production to the point of sale. For the flower industry, in which the quality and lifespan of goods are often dependent on the presence of air and water, logistical challenges of doing business on a global scale are of high importance.

Doing business abroad is a challenging skill for professionals to master. Each culture has a unique code of ethics that is often contrary to those across the globe. In order to successfully conduct business internationally, it would be ideal for businesspeople to take time consulting with coworkers about past experiences, brushing up on basic language skills, and even participating in detailed training courses.

In reality, there is often not enough time in the day to make all of the ideal preparations prior to a business trip. For business travelers lacking the optimal planning time, there are several applications available for mobile devices that can help them to avoid the most damaging cultural blunders without losing too much of their valuable work week.

Continuous innovation is essential for companies to remain competitive in any industry. Businesses refusing to adapt to product and process improvements have quickly been left in the dust by competitors. Stability in business is based on the ability of management to consistently and effectively adapt to changes in the external business environment.

In collaborative partnerships, suppliers and customers work jointly to develop products that will be popular on the open market. A recent article published by Michael Schrage in the Harvard Business Review shed some light on how to develop partnerships that are conducive to effective collaboration.

The Wall Street Journal brought together CEOs of 100 major corporations to discuss their thoughts on recent economic challenges. During the meeting in Washington D.C., CEOs argued that the only way to increase jobs in the United States is to embrace increased global trading relationships. This plan would necessitate government and business leaders to work together and promote free-trade agreements that would open doors to international markets.

Government, business, and academic leaders are coming together this week from throughout the Western Hemisphere to discuss the pursuit of competitiveness and innovation in the Americas. These distinguished representatives will discuss trends, ideas, and best methods that have been utilized to stimulate economic activity in the region. The Americas Competitiveness Forum (ACF) is being held in Atlanta, Georgia and will be hosted by United States Secretary of Commerce Gary Locke and Atlanta Mayor Kasim Reed. This week’s blog series will dig deeper into the goals of this conference as well as analyzing the state of competitiveness in businesses around the world. 

By supporting India for a permanent seat on the United Nations Security Council, President Barack Obama positioned the United States for a long-term political and economic partnership with the emerging Asian nation. While much focus has been put on the political alignment of the United States and India against their rivals in China and Pakistan, there are also great opportunities for business partnerships to emerge. As is often the case, strengthened political ties may lead to strengthened economic ties as well.

Is it possible that corporate social responsibility, one of the most popular trends in modern business, is an irresponsible goal for any profit-driven organization to pursue? Is the pursuit of the triple-bottom-line (people, planet, profit) contrary to the value that corporations provide for society? Ann Bernstein, the leader of the Centre for Development and Enterprise in South Africa argued in her new book that it is more valuable for companies to focus solely on profit while leaving people and planet to fend for themselves, especially in developing nations.

Restaurants providing local and organic foods are growing in popularity as worldwide consumers have responded favorably to sustainable options. Local foods are typically fresher, healthier, and have less of an impact on the environment. As this trend grows in popularity, the newest businesses to join the sustainable food bandwagon are actually in the Hospitality and Travel industry.

Despite the tendency to think otherwise, it is possible for businesses of any size to have a successful strategy centered on exporting products overseas. While many entrepreneurs and small business owners may believe that they cannot possibly develop a successful international business strategy due to a lack of knowledge about foreign customers, poor foreign language skills, or size constraints, experts in the field of international business would urge them to push those doubts aside. 

A new provision in Section 815 of the United States Senate’s National Defense Authorization Act is very concerning to businesses competing for large government defense contracts. The defense contractors are focused on loosening provisions that would effectively blacklist global suppliers from being included in government contracts.

Many small business owners in the United States struggle to successfully export products to global markets. Without expertise in dealing with international markets, it may be challenging to develop a business plan that is well-suited for customers around the world. Doug Barry of the Trade Information Center at the United States Department of Commerce recently interviewed one man who set an example for other small business leaders to follow.

The issue of euro-area governments exceeding standards for allowable debt has led to calls for tighter regulations and sanctions against nations that do not exhibit fiscal responsibility. While it is difficult for a large and diverse organization such as the European Central Bank to reach a consensus on any major policy, recent scares have opened the discussion of proposed regulatory changes.

The view is a strange one for most foreign visitors to Chinese residential areas. An array of colorful fabric is draped from building to building in all directions. A local resident can often be seen reaching out of a high window to hook a cloth on the end of a long wooden stick. What is this strange ritual that appears unlike anything experienced in many Western cultures?