BRIC Countries That You Have Examined in Essay
- Length: 4 pages
- Sources: 4
- Subject: Business
- Type: Essay
- Paper: #94315680
Excerpt from Essay :
BRIC countries that you have examined in the Country Assessment Analysis use the EIU country information to discuss how your selected industry is doing in each country.
Who are some of the key company players (both multinational and local) in your selected industry in each of the BRIC countries and how competitive is the industry in each country, and how that impact might your decision on prioritizing the countries in your global business strategy
BRIC is an acronym standing for Brazil, Russia, India and China highlighting those developing economies of the world which are growing at a rapid pace and if they continue to adopt sustainable growth policies, projections show that within a period of less than 40 years they could collectively represent an economy that is bigger than the G6 in U.S. $ terms.
An analysis of the "Telecom and Technology" industry is done in each of the four countries with stress placed on how well the industry is performing, highlighting the level of competition within each country and the impact on global business strategy.
Brazil has the largest information technology market in Latin America with expenditure in this industry being 5.3% of GDP exceeding the Latin American average by 0.5%. The growth within this sector has also exceeded the GDP growth within the past 20 years and IT expenditure is forecasted at $55bn by 2015.
The economic statistics indicate that Brazil is rapidly experiencing economic growth with GDP per head rising by $6,076 by 2015. The country is forecasted to have high levels of penetration within the mobile sector followed by internet and broadband. Fixed telecom sector is in a decline due to consumers switching towards cheaper mobile phones accompanied by lower calling rates. While total expenditure in telecom sector might decline over the period of time, expenditure and revenue in mobile is expected to steadily rise.
Foreign investors have been attracted to this sector, however the competition remains limited between only few large foreign operators dominating the market namely Telefonica (Spain), Telecom Italia and Telefonos de Mexico (TelMex)/A, Erica Movil (Mexico) and a locally merged company Brazil Telecom and Telemar/Oi. However the intense competition means that calling rates have declined and there is a greater focus by companies to develop bundles of fixed and mobile service their by reducing operating costs.
Broadband has experienced relatively low growth except in high income brackets but this is likely to reverse with the investment plans of the government in a state owned telecommunication firm which will remove bottlenecks and reduce price. Competition will further intensified by the permission given to mobile operators to provide WIMAX service.
While sales of computer are expected to rise, a large part of the population is inaccessible to it due to lack of affordability. Despite the strong foreign competition n imports the prices of computers remain high due to tax, logistics and underdeveloped retail structure. On the other hand IT service spend and software sales will grow at double digit compound annual growth rates in 2011-2015. The software market is estimated at U.S. $5.4m.
The recent economic downturn has severely impacted the "Telecommunication and Technology" sector with the hardest hit on hardware followed by internet and mobile telephone. With the rise in disposable income, growth (although lower than pre-crises level) is predicted in mobile market, internet and hardware. The already saturated mobile market might mean that growth is limited here.
The fixed telecom has experienced increased levels of penetration of about 30% (greater than Brazil, china and Poland) in 2010 but even then the demand remains unsatisfied. The industry is although faces intense competition is dominated by a state owned company Rostelecom (50% market share) and further investment is being made to broaden its horizon to broadband and mobile telecoms. Telecom investment as a % of GDP will slowly decline from 0.9% to 0.4% while fixed telecoms will experience decreasing revenue accompanied by increasing revenue in mobile sector.
Russia's Mobile telecom experienced a boom in recent times being fourth largest in terms of subscription due to rise in real income accompanied by high cost and inaccessibility of fixed lines. Intense completion means that market leaders such as MTS, VimpelCom and MegaFon (combined market share: 83%) would need to focus on marketing and providing value added service.
Internet usage in Russia is well above that in other BRIC countries with an estimated of 40m users in 2010. Broadband would become more available in the near future due to increased competition and Ecommerce is also likely to gain popularity. ISPs include state owned firm along with other cable operators such as Akado, National Telecommunications, Corbina and Centel.
Despite the recession hit, hardware penetration in Russia compared favorably to other BRIC courtiers and demand for PCs is likely to rise owing to rising demand by SMEs and educational institutes. A huge chunk of market share (23.4%) is held by MNCs namely Acer (Taiwan), DEPO (U.S.), Hewlett-Packard (South Korea), K-Systems and Kraft way.
The Russian software market is currently values at $3.2b. However the industry is plagued by piracy issues, brain drain, and lack on infrastructure, small business sizes and general business environment problems. Competition is limited while government tries to encourage foreign direct investment in this part by offering tax incentives for business engaged in innovative activity.
The "telecommunications and Technology" sector is likely to grow from 2011-2015 by an average of 16.9%. Fixed telecoms are dominated by local firms such as MTNL and BSNL despite the increasing FDI since 2005. Fixed telecom subscription is likely to decline while mobile telecoms will experience 9% annual growth till 2015. In spite of rapid growth India's penetration rate is likely to be lower than other BRIC countries. The introduction of mobile number portability is likely to increase completion in the market. With low revue per user companies will try to generate revenue from providing high value added services such as pioneering learning and consultancy services.
Broadband is a relatively unpopular in India with penetration increasing to 2.1 per 100 people in 2015. The high cost of PCs, paucity of broadband connections and low adoption by customers and businesses have led to this figure.
IT hardware spending is likely to increase with foreign manufacturers selling more to the domestic Indian market. 17 pcs per 100 people are expected in 2015 as opposed to just 6 PCs in 2010. However as saturation occurs % growth is likely to fall. Moreover this would also be exceeded by IT service spending which is forecast to rise from U.S. $7.1bn to U.S. $16.7bn. Moreover the software industry is likely to see a shift from lower value business process outsourcing to higher value added subsectors such as IT consultancy. Engineering off shoring, R&D and new technological development.
China is already well developed in telecommunication and technology industry ranking second in the world market after USA. By 2015 it is forecasted to be equivalent to U.S. market size due to appreciation of currency and rising demand. China is investing heavily in information and communication technology, a staggering 24% of the GDP as opposed to USA spending of 16% of GDP.
China's market leaders Hawaii and ZTE are already dominating the international market while software firms are exploiting domestic opportunities. Government interference has proved to be hindrance in sector's development rather than helping drive investment.
Fixed telecom has shown decline as consumers switch towards wireless communication. The fixed and mobile telecoms are dominated by state owned firms namely China Telecoms, China Unicom and China Mobile. Threat of new entry is highly unlikely and so is any realignment within the sector.
Even with china being the largest mobile market, the market is not yet saturated and higher purchasing power would mean more people can afford subscription. However intense completion accompanied by regulation difficulties…