BRIC Country Assessment AnalysisBRIC refers to Brazil, Russia, India and China. The term BRIC was...

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BRIC Country Assessment AnalysisBRIC refers to Brazil, Russia, India and China. The term BRIC was created bythe Chief Economist of Goldman Sachs Investment Bank in 2001 and is nowwidely used in business and academia to refer to the four countries that arelikely to have a profound impact on the global economy and businessenvironment in the twenty first century. As part of the globalization theme ofthis Strategy Seminar we want you to become familiar with these countriesand their potential role in corporate global business strategy.• For a more recent commentary on the BRIC countries view thefollowing: Goldman Sachs | BRICs Videos and StoriesExamine each of the BRIC countries to determine their projected economicgrowth, country business environment and country risk. We have gatheredassessments of the Country Risk and Business Environment (Opportunity)from the Economist Intelligence Unit database in the UMUC library. Theseassessments are posted as EIU BRIC Country Assessment Ratings in CourseContent.BRIC COUNTRIESBRAZILEconomistIntelligenceUnit,Brazil Economy,Politics and GDPGrowth SummaryCHINAEconomist IntelligenceUnit,China Economy,Politics and GDPGrowth SummaryRUSSIAEconomistIntelligenceUnit,RussiaEconomy, Politicsand GDP GrowthSummaryINDIAEconomist IntelligenceUnit,India Economy,Politics and GDPGrowth SummaryMAN 6726 : Strate gic Ma na geme nt Pg. 12 Corporate MBA Read the rationale behind these ratings and dig deeper by reading other EIUnews stories about the political, economic, financial, business and regulatoryenvironments in each country.Also, take note of the Personal Disposable Income (PDI) available in eachcountry as an indicator of market size. (you will find the PDI in the 5 YearEconomic Forecast) , PDI is defined as the income households receive fromfirms, plus transfer payments received from the government, minus directtaxes paid to the government. It is the income that households have availablefor spending or saving.Post the resultant ratings for each country in a summary table comparing thecountry ratings for risk, business environment (opportunity). Add the UnitedStates to the table for comparison purposes. Include a brief summary of themain country conditions that contribute to the ratings.Also create a table comparing the Gross Domestic Product (GDP), thePersonal Disposable Income (PDI), Exports (in U.S. $), and Imports (in U.S.$) for both 2011 and 2015 and calculate the amount of growth for each item.Discuss the following business strategy questions.• How would you tradeoff the degree of country risk versus the businessenvironment ratings, taking into consideration the market size asexpressed by the PDI in 2015?• How would you tradeoff the degree of country risk versus the businessenvironment ratings, taking into consideration the market growth asexpressed by the PDI in 2015 versus 2010?• As a result of answering the above two questions, how would youprioritize the BRIC countries in terms of developing a global businessstrategy?Note: Write this up, integrating your answers in a way that demonstrates yourcritical reasoning supporting your prioritization of the BRIC countries.

David · Accepted Answer

BRIC                                                                                                                                              1
BRIC Country Assessment Analysis: 
In the last decade, the concept of the BRICs bloc of developing nations has played an important 
role in geopolitics. The acronym was first used in print by Jim O’Neill of Goldman Sachs a 
decade ago this week. The economist wanted a catchy way to identify a great theme — the rise 
of the world’s largest emerging markets. He identified Brazil, Russia, India and China as the 
most significant representatives of that trend. The notion is supported by the fact that since 2001, 
GDP per capita has increased at annual rates ranging from 2.6% for Brazil to 10% for China, 
using I.M.F.  estimates for 2011.  That performance easily beats the 1% rate managed by the 
United States and major European economies. At the same time other emerging economies such 
as Turkey, Argentina and Indonesia have shown healthier economic growth faster than some of 
the members of BRICs countries. The BRICs concept, however, has just reinforced the fact that 
investors of all sort use it as acronym for all emerging markets. Membership in the club added to 
the international status of Presidents Lula da Silva of Brazil and Vladimir Putin of Russia. It 
almost certainly urged Indian leaders to think more globally and influenced the choice of Brazil 
for the forthcoming Olympics. The four governments have had their own summit meetings, with 
South Africa joining to make the group even more euphonious — the BRICs. 
BRIC Future: 
In a report written in May 2010, Goldman Sachs highlighted the key economic strength of 
BRICs countries collectively which underlines the fact that BRICs countries do not have sizable 
economic powers today and shall act as key growth drivers for many decades to come. 
•  It is now possible that China could become as big as the US by 2027 - in less than 18 
years. 
•  The BRICs could become as big as the G7 by 2032, about seven years earlier than we 
originally believed possible. 
•  Between 2000 and 2008, the BRICs contributed almost 30% to global growth in US 
Dollar terms, compared with around 16% in the previous decade. 
•  Since the start of the financial crisis in 2007, some 45% of global growth has come from 
the BRICs, up from 24% in the first six years of the decade. 
•  Long-term projections suggest that the BRICs could account for almost 50% of global 
equity markets by 2050. 
•  BRICs economies will likely account for more than 70% of global car sales growth in 
the next decade, with China expected to account for almost 42% of this increase. 
Rob Minto (2011) in his analysis of BRICs as an investment choice considers two parameters of 
GDP and equities respectively.  
BRIC                                                                                                                                              2
•  MSCI indices for the four BRICs since 2001 have comfortably outperformed the S&P 
500. Value of $100 invested at the time of O’Neill’s report in November 2001 in each of the four 
BRICs, would now have $674 from Brazil, $451 from China, $459 from India and $414 from 
Russia, against $112 for S&P 500. 
•  On the other side, a longer period stretched back to 1995 would have given an altogether 
different picture. However, Jim was right in terms of its timing on coining the acronym BRICs. 
But equities aren’t the only indicator – or even the main one from the point of view of overall 
economic development. The BRICs countries have seen great GDP growth – China’s economy 
has risen from around $1,000 bn in 2001 to over $6,000bn in 2011. Aside from Russia in 2008-
09,

BRIC Country Assessment AnalysisBRIC refers to Brazil, Russia, India and China. The term BRIC was created bythe Chief Economist of Goldman Sachs Investment Bank in 2001 and is nowwidely used in...

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