Meet the BRICs

Chapter Four Case

Case 4-1
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

Who are the BRICs

The BRIC countries, Brazil, Russia, India and China, while much larger in scale and scope than other emerging markets, symbolically represent trends that are developing throughout the world Over the next few decades BRIC will become a larger, powerful force in the world economy China and India will be the dominant global suppliers of manufactured goods and services, while Brazil and Russia will become the principal suppliers of raw materials. Collectively, they will become the largest entity on the global stage
Case 4-2
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

BRIC Situation
The BRICs are on the verge of rapid growth in consumer products Observers note the endemic problem of recency bias, which is the dubious expectation that the current trend will continue into the future The BRICs face futures of widespread poverty and distorted income distributions
Case 4-3
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

Conditions for a market economy to grow consistently

Sound macroeconomic policies and a solid macroeconomic background, as seen in low inflation, prudent public finances, and supportive government policy Strong political institutions that endorse transparency, fairness, and the rule of law Openness to trade, capital flows, and foreign direct investment High levels of education at both the primary and secondary levels
Case 4-4
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

Challenges
The failure to achieve these standards jeopardized current economic performance and long-term growth potential Political uncertainties and social assumptions in each country limit their potential The emergence of the BRICs will challenge the well-being and sustainability of the global environment

Case 4-5
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

Questions
1. Map the proposed sequence of evolution of the BRICs economy. What indicators might companies monitor to guide their investments and organize their local market operations? 2. What are the implications of the emergence of the BRICs to careers and companies in your country? 3. Do you think recency bias has led to overestimating the potential of the BRICs? How would you, as a manager for a company assessing these markets, try to control this bias? 4. How might managers interpret the potential for their product in a market that is in the absolute large but on a per capita basis characterized by many poor consumers? 5. In the event that one BRIC country, if not all, fails to meet its projected performance, what would be some of the implications to the economic environment of international business? 6. What are the relative merits of GNI per capita versus the idea of purchasing power, human development, and green economics as indicators of economic potential in Brazil, Russia, China, and India?

Case 4-6
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall