Key economic theories, models, and trends, and how they impact decision making processes at different levels

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Explore key economic theories, models, and trends, and how they impact decision making processes at different levels, vis-s-vis, micro, macro and interna’onal.
Analyze the func’oning of the market and the role of business in the interna’onal
arena.
Interpret various economic indicators across different levels of analysis.
Develop lines of arguments linking theories and evidence on global issues.
Communicate in an analy’cal way how business, na’ons and interna’onal economic
se\ngs are intertwined.
The overall aim of this case study is to analyze the internaAonal business strategy of a company of your choice (preferably from your country or from a country that you know well).
In order to achieve this aim, you need to address the following issues:
1. Cri’cally analyze the recent economic performance (since 2000) of your country. You should use the following indicators.

GDP and Trade to GDP since 2000.
Infla’on since 2000
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Sensi’vity: Internal

2

2.

Cri’cally analyse the market structure of the industry in which your selected firm operates. To describe the market structure, your report must address the following ques’ons:

– Provide performance details on your selected firm, key data and financial informa’on.
– What type of market structure does your industry resemble? (e.g. Perfect compe”on, monopolis’c compe”on, oligopoly, monopoly).
You must support and jusAfy your answers.
Explain the interna’onal strategy of the company using one of the models studied in this course.
iv. Provide an evalua’on of poten’al strategies for the firm that will enable them to overcome the poten’al challenges.

3.

c. d.

Currency and exchange rate against euro (or dollar. Has this country a floa’ng exchange rate? Briefly compare the different exchange rate regimes.

What are the leading exports and imports of this country in terms of value?

– Is there a paaern? That is, in what kinds of goods does it look like the country might have a compara’ve advantage?
– Which trading partners are most important to this country? This can be measured in terms
of total exports, total imports, or total exports plus imports.
– Which countries have the largest trade deficits and trade surpluses with this country?

Sample Solution

This framework outlines the steps to analyze the international business strategy of a company, considering its domestic economic context and industry dynamics.

  1. Analyzing the Domestic Economy (Since 2000):
  • GDP and Trade/GDP Ratio: This shows economic growth and the importance of trade. A rising GDP with a stable or increasing Trade/GDP ratio indicates an outward-oriented economy.
  • Inflation: Low and stable inflation is desirable for business planning and investment. High inflation creates uncertainty and reduces purchasing power.

Data Sources:

  1. Analyzing the Industry Market Structure:
  • Company Performance: Analyze financial data like revenue, profitability, market share, and key products to understand the company’s position.
  • Market Structure: Identify the type of market (perfect competition, monopolistic competition, oligopoly, monopoly) based on:
    • Number of sellers and buyers
    • Product differentiation
    • Barriers to entry
    • Price control
  1. Analyzing the Company’s International Strategy:
  • Identify the internationalization strategy used by the company (e.g., exporting, franchising, foreign direct investment).
  • Analyze the chosen model based on its:
    • Objectives (market access, cost reduction, diversification)
    • Resource requirements (capital, technology, marketing)
    • Risks and mitigation strategies
  1. Evaluating Potential Strategies and Challenges:
  • Based on the economic and industry analysis, identify potential challenges for the company’s international strategy (e.g., competition, currency fluctuations, trade barriers).
  • Recommend alternative strategies or adaptations to overcome these challenges.
  1. Analyzing International Trade and Currency:
  • Currency and Exchange Rate: Analyze the exchange rate regime (fixed, floating, managed) and its impact on exports and imports.
  • Leading Exports and Imports: Identify the country’s main exports and imports by value. Look for patterns suggesting comparative advantage (goods the country can produce more efficiently).
  • Trading Partners: Analyze the country’s top trading partners based on total trade volume. Identify countries with significant trade deficits or surpluses with the chosen country.

Data Sources:

Choosing a Company:

  • Select a company from your country (Kenya) or one you are familiar with. Consider companies with a strong international presence.

By following this framework and gathering relevant data, you can analyze the international business strategy of a company within the context of the global economic landscape.

 

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