Global business Assessmet 1 PDF

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1.0 Introduction B-Health is an Australian based company which have a huge success on specialize in production and providing baby food over the years in Australia. Throughout the years of experience, Bhealth is now looking expand its business to internationally by exporting the product. Based on the research, New Zealand and Hong Kong has been identified as the possible market. This report will analyses the socio-economic, political and business environment of New Zealand and Hong Kong in order to determine which country is the most preferable for exporting its product. 2.0 Economic Environment To expand its businesses to internationally, economic environment overview has become one of the essential elements to determine whether the market has the potential achieved its businesses requirement. 2.1 Snapshot of the economy As high developed nations, Hong Kong and New Zealand have strong economic outlooks. Both countries also having merchandise trade relationship with Australia. HK’s economy is growing at healthy pace, consumer expenditure and export is the crucial element of driven its economic although the unemployment rate is slightly increase in 2019 ("ESOE secure resource verification", 2019). NZ’s economy will improve slightly in 2019, government spending on infrastructure and housing to support domestic demand. They relied on exchange rate to support export earnings , this might weaken local business confidence and trade tension in key export markets which will affect their economic growth in future ("ESOE secure resource verification", 2019). As shown in table 1, HK’s GDP has increases from 341.4b to 360.3b (2017 to 2018) which mean HK’s citizen income and expenditure has increase over the years. In comparison, the unemployment in HK’s is definitely lesser than NZ’s, which means HK’s having more labor force in the country that helps to decrease the unemployment rate over the years. This is good indication of increasing working per capital which directly increase the income and expenditure level. As shown in figure 1, the percentage changes in GDP indicates that Hong Kong mostly likely will higher than New Zealand. As result, that provides B-health more stable economic with lower risk.

Table 1 Hong Kong

Indicators

New Zealand

2017

2018

2017

2018

341.4

360.3

201.4

206.0

46,080.5

48,231.3

41,572.3

41,615.9

Inflation (%)

1.5

2.3

1.9

1.4

Unemployment (&)

3.1

2.6

4.7

4.5

GDP(US$b) GDP Per Capita (US$)

(2019). Retrieved from https://dfat.gov.au/trade/resources/Documents/nz.pdf (2019). Retrieved from https://dfat.gov.au/trade/resources/Documents/hong.pdf

% Changes in GDP Per annum for Hong Kong and New Zealand 4.5 4

% Change in GDP

3.5 3 2.5 2 1.5 1 0.5 0 2014

2015

2016

2017

2018 2019 Hong Kong Year New Zealand

2020

2021

2022

2023

Figure 1. Percentages Changes in GDP per annum for Hong Kong and New Zealand (2019) Selected data from 2014 to 2024. ESOE secure resource verification. (2019). Retrieved from https://eiu-bvdinfocom.ezp01.library.qut.edu.au/version201935/eiucountrydata/1/Series/AnalyticsTable/CreateAnalyticsTableData#

2024

3.0 Political Environment Political environment is also one of crucial elements that indicates how the government set the rules and regulations that impact the businesses as well as the international trade between countries. Below will discuss how the political risk will impact on the business. 3.1 Political system and risk The governing system of HK’s and NZ’s is very different. HK’s is using Chinese communist party, even though HK’s is part of the China but having different governing system which also known as the Hong Kong Special Administrative Region (HKSAR), a political subdivision of mainland China. NZ’s, an independent member of commonwealth, is ruled by crown acting through a governor general. All the executive power is exercised by the prime minister, who is appointed by the unicameral House of Representatives (Parliament). As shown in table 2, the country risk and business climate of both countries is the same. As for corruptions, NZ’s is better than HK’s. In comparison of political stability, if the result is nearly at 2.5 which is strong if is less or negative which means a weak. In this case, NZ’s is clearly has a better stability than HK’s. As Picture 1 shown, HK’s score higher than NZ’s in overall (90.2 and 84.4). Conversely, looking at the government spending has clearly shown that the HK’s is much more higher than NZ’s which indicate HK’s tax system is efficient than NZ’s HK’s public debt is equivalent to 0.1 percent of GDP and NZ’s is equivalent to 26.4 percent of GDP. In terms of political environment, Hong Kong provides the better choice to B-health because of their open market freedom is much better than New Zealand. Table 2

Data

Hong Kong

New Zealand

Country Risk

A2

A2

Business Climate

A1

A1

Rank 14/180, Score 76/100

Rank 2/180, Score 87/100

0.85

1.59

Corruptions Perceptions index

Political Stability

(Insights & Kong, 2019) (Insights & Zealand, 2019) ("Political stability by country, around the world | TheGlobalEconomy.com", 2019)

Picture 1. Business Environment • Ease of Doing Business ratings, Trading Across Borders and Enforcing Contracts, relevant industrial and consumer trends, quality of infrastructure, potential for online business, etc. 4.0 Business Environment It is important to investigate the external factors of the business environment of the country before making any further actions. Plus, this will affect the business operations and profitability of the firm. Below will have a further discussion on it. 4.1 Ease of Doing Business Ratings Table 3 : Ranking of doing business Country Global Rank Starting a Business Getting Electricity

Hong Kong 4th 5th 3th

New Zealand 1th 1th 45nd

30th 44th 27st

Enforcing Contracts Resolving Insolvency Trading across Borders

21st 31th 60rd

Table 2 above shown that overall, both countries global rank is very similar despite that NZ’s is the first over the world compared to HK’s. By looking at the 5 different variables such as starting at business, getting electricity, enforcing contract etc. New Zealand clearly has higher ranking than Hong Kong but when comes the trading across border HK’s is much more better than NZ’s. Hence, Hong Kong would be more excellent choices when comes doing business with them for B-health Australia.

5.0 Weight index Hong K Kong ong Variable

New Zealand

Weighting Score

Adjusted Score

Score

Adjusted Score

Market Potential

25%

8

2.00

5

1.25

Unemployment

15%

5

0.75

2

0.30

Political risk

15%

6

1.50

5

1.25

Country Risk

15%

4

0.60

6

0.90

Ease of doing business

30%

8

1.60

7

1.40

!00%

Total

6.45

5.00

B-health choice of country is determine by the overall weighted index that is tabulated from 5 different factors. The reason of B-health country choice of selection is mostly evaluated base on the country’s Ease of doing business. Overall factors such has country risk, political risk etc. It’s obvious that Hong Kong has a higher advantage than compared to New Zealand. From the forecasted results, the sales value in Hong Kong is also predicted to likely increase over the upcoming years whereas New Zealand will likely increase as well but insignificantly. 6.0 Conclusion

Based on the above analysis, it is recommended that B-health should commence exporting internationally with hong Kong. Although the New Zealand would be a suitable location on for the company to conduct business with, Hong Kong is more suitable to the particular products. References ESOE secure resource verification. (2019). Retrieved from http://www.portal.euromonitor.com.ezp01.library.qut.edu.au/portal/analysis/tab (2019). Retrieved from https://dfat.gov.au/trade/resources/Documents/nz.pdf (2019). Retrieved from https://dfat.gov.au/trade/resources/Documents/hong.pdf Insights, G., & Kong, H. (2019). Hong Kong: Risk Assessment. Retrieved from https://globaledge.msu.edu/countries/hong-kong/risk Insights, G., & Zealand, N. (2019). New Zealand: Risk Assessment. Retrieved from https://globaledge.msu.edu/countries/new-zealand/risk Political stability by country, around the world | TheGlobalEconomy.com. (2019). Retrieved from https://www.theglobaleconomy.com/rankings/wb_political_stability/...