The Economics Of International Business Economics Essay

The stintings Of International Business Economics EssayMyanmar was formerly cognize as Burma located in Southeast Asia Country. The dry land has been under legions rule for 49 days since 1962 to 2011. It situated between India, Thailand, and China. Even though uncouth located its strategic location, but Myanmar still is the poorest countries in Asia beca utilisation with almost a third of its population estimated to be living in p all overty (U.S State Department, 2012).In 1989, the authorities Burmese officially changed the inelegant name from Burma to Myanmar. but in 2010, the Myanmar country became the Re human beings of the kernel of Myanmar. After Myanmar foresweardom from Britain, the country became champion of a member in m each international organizations such as the fall in Nations (UN), the Association of Southeast Asian Nations (ASEAN) and the World Trade validation (WTO) (U.S State Department, 2012).As a leading multinational nutrition Nestl Company, ear lier egressing subscriber line in Myanmar, there atomic number 18 five elements should understanding theira) governmental Economyb) Economy Systemsc) Legal Systemd) Culturee) ReligionPolitical EconomyMyanmar is a sovereign country and similarly is a specialist country which had different semi semipolitical comp bed to other country. Myanmar is a religious country because majority is Buddhism. However, the political governing body of Myanmar is different from other country.The political administration of Myanmar can be dividing into lead stages in the timeline from independence to the current. jibe to the timeline provided by BBC naked as a jaybirds Asia-Pacific (2012), Myanmar was independence at 1948 from Britain. During that time, the political of Myanmar is to a greater extent than toward to the democratic. Normally, they had habitual election on their country and the party who was wined in the oecumenic election allow for automatically practice the government an d the leader go forth become the prime government minister of the country. However, the practice of democratic political trunk did not last for a spacious time. correspond the timeline provided by BBC News Asia-Pacific (2012), the democratic political outline only practice until 1962. During year 1962, Myanmar starts turn their political dodging from democratic to the war machine or totalitarianism. The start person who practices the war machine political clay is Gen Ne pass on and he abolishes the federal system and form the socialist or totalitarianism country. He had officially launched The Burmese Way to Socialism in 1962, which is meant the nationalizing the rescue, that is, resources own by government and only government have the authority to govern the country in Myanmar.The socialism of the Myanmar had been continues for more than 48 years. During the socialism, Myanmar had become a sovereign and military country. The thrift of the Myanmar is wrap up and onl y had limited range for economy to grow. The main reason of Myanmars economy became worst is Myanmar switched the political system from socialism to the right-wing totalitarianism. After the military take over the country, Myanmar is started slow shoot down their economy even turn the economy back to last economy section with the slow grow. Myanmar minify their mickle with others country and started limit the economy activities in the country. as well that, the governments also try to take over the economy activities and control all the merchandise so that there is limited freedom for their citizen or wrinkle. In addition, according to the report from Asia Report N231(2012), Myanmar is related to the country that has similar political system and economy system, such as China, Thailand, and Vietnam. Myanmar is strongly related to those countries because they believed that work together with the countries that have similar political system and economic system provide obtain mor e do true(p)s. For this reason, the melodyman from these three countries is very easy to start their vexation in Myanmar and leave force slight trouble during the stock natural action. However, not all of the bank line activity can be done in their country. The main reason is not because of the military or totalitarianism political system but is the theology. This is because the citizens in Myanmar, each army or politician argon very respect to the Buddhism. Therefore, there atomic number 18 around business activity which is opposite the Buddhisms rule is not allowed to run in Myanmar. Furthermore, due to the strong religion faith, Myanmar trading with the others country decreased and more toward to self-economy system which is only lay down abundant goods for self country. Although Myanmar is sufficient in natural resources, but they did not use their natural resources for international trade in order to boost-up their economy.During these few years, Myanmar is sta rted changing their political system because they believed the military or totalitarianism does not provide benefits and human right for them. Besides that, the military political insurance also make Myanmar became the poorest country in the world and otiose to keep up with the development of its regions country equal Thailand and Vietnam that is now developing faster and becoming very rich. In order to develop the country from poor to rich, Myanmar started regulates the democratic constitution on year 2010 (BBC News Asia-Pacific, 2012). Myanmar try to convert their government from military to the civilian government because they believed the citizen play an important roles in the help of develop their country. After the democratic form _or_ system of government is adjust, Myanmar quickly organizes a general election in the country. According to the BBC News Asia-Pacific (2012), the Union and Development troupe (USDP) won the election and the junta had said the election is th e process of spiritual rebirth from military rule to a civilian democracy. After the election, Aung San Suu Kyi who is taking part for forming the democracy government is been released from house arrest after a long time arrested by military government. The released of Aung San Suu Kyi can be determined as Myanmar start locomote toward to human right country and can protect businessman when they are do their business activity in the country and had more chances for international trade done at Myanmar.The democracy political system is giving galore(postnominal) benefits to Myanmar. The first of the benefits is the check of ASEAN in 2014. According to Nehru and Endowment (2012), ASEAN sent a centre to Myanmar, said Myanmar need to focus more on human rights and democracy in order to chair ASEAN in 2014. If Myanmar do becomes a chair ASEAN, there will have many benefits for them. The first benefit is they can do their trade with others ASEAN country easily and organizing activit ies events at Myanmar and more people will acknowledge more about Myanmar. The second benefit is ASEAN is a free agent for advertisement because after connecter the ASEAN, Myanmar wills easily attract the potential investor to invest their business to its country.Although Myanmar open more chances for other country for doing business in their country, there are still not enough to prove that Myanmar is a good spatial relation for doing the business. This is because Myanmar still had the limited on doing business in their country and the policy for protect the investment and business is still very weak and some is not really useful. Myanmar still does not had a good policy for the business section and some rules for the business is very tight and make the business less potential for development. Besides that, not all nation of Myanmar is acceptable to the current government and immigrants citizen, some of the area still had the fight with the government so the safety of that area is negative. Furthermore, the costs of useation the factory in Myanmar is very high because need pay more (bribe) Da loong u mean bribe? to the federal government and local government. Besides the costs, the process for getting approved of doing business in Myanmar is taking long time, so this will affect the profit and effectiveness of the confederacy.According to the Asia Report N231(2012), Myanmars political transition and economic reconstruction is interrelated. Asia Report N231 (2012) also mentioned that there is hard for imagine a successful political transition unless the government ensure the economic stability and improvement of the development of the country and necessitate of the citizen. So, Myanmar is a very challenging country if start a business in the country although Myanmar had a rich on natural resources.When Myanmar compared to the United States, some(prenominal) country had different political system at the beginning but similar in these few year. Both of t he country is democratic country whereas U.S. is stronger than Myanmar and more stable in the political situation when compare to Myanmar which is new to democratic. In economic system, United States is more effectiveness and better then Myanmar. This is because U.S. government had provided a lot of policy or art for the trade or business activity such as Free Trade Agreement (FTA), Asia Pacific Economic Cooperation (APEC), North American Free Trade Agreement (NAFTA), and others (Feinberg, 2003). For Myanmar, they only have few acts or policy to protect the trade and the business activity, so its risky and costly to invest the factory or business in Myanmar. However, there is a particular thing that the Myanmar had more advantages than United States, thats Myanmars resources rich than U.S, so when put on the factory in Myanmar, the cost for the material will be cheaper and easily to get compared to United States. Therefore, there are had risk when implement business in Myanmar by t he view of political economy.Economy SystemsAccording to McEachern, there will have three key questions when come to economy 1) what goods and services are to be produced? 2) How are they to be produced? 3) For whom are they to be produced? Economy systems can explain as the way that one country use to answer this three key questions. Every country in the world will under at least one type of economic systems. For this reason, to plump our business to Myanmar we must first know what economy system Myanmar under. The three basis types of economic systems that generally recognize by the economists are securities industry economy, command economy and interracial economy (Hill, 2012). Now, lets discuss them one by one before we look at economy system of Myanmar.Traditional economy systemIn addition, there was an sr. economic system know as traditional economy system, society that under this system answers the three key questions according to their ancestors act, customs, rituals, t actual sensations and rituals. (Mxcastro, 2010) In short, they copy the ways that did by their previous generations. Traditional economy system was used in the past but now still will exist in the countries that are farm-establish or rural. For an example, Native people of Brazils rain forest, the crops they planted, way to harvested, and the goods distributed to who were decided by their past generation and body unchanged (Tucker, 2010). Therefore, this system decreased the rate of disputes among members but its restricted man-to-man initiative, so will unable to produce advanced goods, new technology and then slow down the economic harvest-feast. So then, distend our business to the country that under traditional economy system is not recommended because a countrys practice whitethorn differ greatly from a country.Market EconomyFurthermore, market place economy is a system that allowed an individual to make decision of economic. In market economies, interaction of the force o f supply and call for determines the prices and the prices are used to answers the 3 key questions. That is, what to produce is based on the popular trend and profitable, the producers will produce a product more when the demand for a product exceeds supply because the price of a product will rise and result in higher profit. The question of how to produce is depend on the producers choices, if the price and demand for a product is high, producers may use machine to produce in order to save the motor cost because machine can produce more in degrade costs. The question of for whom they produce is based on the need or wants of the buyers and the price the buyers willing to accept. In addition, under pure market economies, intercession of government is absent. A pure market economy is also referred to as pure capitalism because both of the systems are market answers the three key questions. Moreover, in pure market economy, mean of production is owned by snobbish, buyers and sel lers can make decision or choices as well as free trade for their mussinesss. Also, according to Adam Smith, a countrys resources can be use efficiently and have better economic performance under market economy because its provided incentive for each individual to pursue his or her self-interest, know as invisible hand. However, pure economy system has some flaws such as people would stick out if without resources, stronger producers may eliminate the competition to monopolize the markets and people no incentive to produce public goods. ascendency EconomyIn command economy system, the three key questions are not answered by market force but government or people with central authority. In more specific, production, distribution, prices and others decision is controlled and regulated by government. In addition, state that under pure command economy owned all the business, there is no private ownership. Also, pure command economy emphasizes on collective goals more than individual go als, so sometime called communism or socialism. Furthermore, pure command economy also has some flaws such as resources do not use efficiently or wasted, absent from cost control, unable to meet the postulate or wants of consumer because these resources owned by state, so people have no incentive to do so. combine EconomyIn mixed economy system, both market and government answers the three key questions, so this system involved both capitalism and communism. Government regulated only some of the markets in mixed economy system and resources in this system are owned by private ownership and public ownership. In addition, government normally take over the things is important to nation in this system such as provide national defense, birth cert recording, highway construction. Most of the people in the world will agree or accept these things to control by government. Also, government may take over the private firm that is failing if the private firm considered important to nations eco nomic, for example, firm that have many employees, the government will take over the firm in order to prevent the increase of unemployment rate. Thus, mixed economy system provides the advantages of freedom without the need of government to give up its power.Myanmar Economy SystemsSince year 1988, Myanmar has adopted the market-oriented economic (Aung, nd) with precise government regulations which has replaced the centrally planned economy command economy. So that, the three key questions is answers by market force and each individual can make the economic decision. After adopted the market economy, the initial step that Myanmar takes is promoting and develops the private sector. Now in Myanmar, private activity has about 75%, mainly in light industry and agriculture and has about 25% of activity controlled by state, mainly in orthogonal trade, hefty industry and energy (WebWhacker, nd). Since Myanmar has adopted the market economy system which allows individuals to make economi c decisions, so expand our business to Myanmar may be considered because as a multinational company, we has a lot of experiences of qualification economic decisions in many different country. Furthermore, foreign direct investment is allowed after Myanmar adopts the market economy system and the Union of Myanmar foreign investment law allows foreigner to fully owned company at there or can be joint venture with a state-owned enterprise, a private company or any Myanmar people, (DPS, 2006) so that we can easily set up our business at there. Moreover, in order to be line with the market economy, private individuals or enterprises are permitted by Ministry of Commerce to implement import and export business which was monopolized by the state in the past. (Aung, nd) For this reason, we can produce our goods at Myanmar with lower costs and export our goods to others country with higher prices. Also, others reason to expand business to Myanmar such as enough of labor force and low labor costs.Economic Condition Myanmar v United StateUnited StateUnitMyanmarUnitGDP (purchasing power parity)15290.00 meg USD83.74Billion USDGDP real growth rate1.7Percent5.5PercentGDP per capital (PPP)49,000US dollar1,300US dollar labor party Force153.6Million32.53MillionUnemployment rate9Percent5.5PercentExports1497.00Billion USD8.21Billion USDImports2,236Billion USD5.98Billion USDPopulation313.847465Million54.58465MillionInflation rate1.7Percent5.8PercentSource http//www.indexmundi.com/g/rank.htmlhttp//www.tradingeconomics.com/united-states/indicatorsLegal SystemIn the past, Myanmar was reported having the worlds worst legal system for doing business. According to The Economics time (2012), a British risk analysis separate, Myanmar was offering the least legal protection for foreign companies. But during the recent reforms of Myanmar, new laws are enacted, and the legal practices are changing rapidly. Technical assistance and training which implicate investment and finance law re form, foreign exchange controls, and the simplification of trading are giving a hand for Myanmar to improve the legal system.The first legal act for foreigners investing in Myanmar are twain types of foreign investment defined 1) a sole proprietorship wholly owned by a foreign investor supplying 100% foreign capital, and 2) a joint venture in the form of either a partnership or limited company, in which the foreign capital invested must be a minimum of 35% of the total equity capital (Chandler Thong, 2012). Foreigners who interested to invest in Myanmar are needed to invest by a local incorporate company which shareholders and directors are controlled by them, not through the use of local nominees. The invested company will be blacklisted if the Foreign Investment Law is not accorded. Besides that, foreigners are forbidden to buy land in Myanmar.The second are the relaxations of international sanctions. Investment in Myanmar was restricted by sanctions implemented by the United States, United nation, European Union, Canada and Australia since year 1997. CITATION? In 2012, the sanctions are relaxed. CITATION? United States has authorizes the new investment in Myanmar, but subjected to certain requirements and limitations United Kingdom has suspend the restrictions of some key industries and assets freeze on approximately 500 people CITATION? European Union has lifted all the sanctions except the arms and equipment embargo Canada has allows import, export, investment and financial transactions to Myanmar and Australia has recall the travel bans on Myanmar citizens but weapon trading is still prohibited.Furthermore, general laws of doing business in Myanmar. The general business law of Myanmar must be complied by the foreign investors and also domestic investors. First is the Myanmar Companies encounter (1914). CITATION? A Myanmar investor who wants to general anatomy a business through a limited company may register under this act, but foreign shareholde r and foreign director is prohibited. Meanwhile, a foreign investor who wants to build a business in Myanmar through a locally incorporated limited company may register under the Myanmar Companies lick too, but the company must be incorporated under the modified Companies Act (1950) CITATION? and be approved by the Foreign Investment Law. In addition, Special Companies Act (1950) is an act that governs all companies in equity share capital. CITATION? Besides, the labor laws that existing in Myanmar which acknowledge Employment and Training Act (1950), Employment Restriction Act (1959), Employment Statistics Act, (1948), Factories Act (1951), Labour Organization Law (2011), Leave and Holidays Act (1951), Minimum contend Act, (1949), Oilfields Labour and Welfare Act (1951), Payment of Wages Act (1936), Social Security Act, (1954), Shops and Establishments Act (1951), Workmens Compensation Act (1923) and the new enacted law, Labor Dispute solution Law (2012) (QuickMBA, 2010).***** Please do citation and change the sequence for those law to avoid plagiarize.**** The laws above deal with all labor related problems like working hours, holidays, annual and sick leaves, wages and overtime, social well-being and more. character? Moreover, minimum wages are provided for workers in certain fields like agriculture and more. canvas to the United States, this has a more stable legal system because Myanmar is more challenging and risky to be invested in but also provides a higher return than United States due to lesser competitions. Furthermore, Myanmar has seen to be a potential investment place with its improving legal system and few advantages like rich natural resources and young labor forces. Lastly, United States could be a safe place to invest, but if as a profit seeker, Myanmar could be a better choice to invest in.CultureMyanmar is a nose candy ethnic groups country each has their own distinctive cultural traditions. Many of the tribal groups have produced th e excellent handicrafts, dancing and musical performances. Myanmar culture which is non-tribals has been significantly influenced by the Buddhism. The unique thing about Myanmar culture is that it is free from racial or sex discrimination from childbirth throughout their lifetime. Everyone is allowed to equal rights, opportunity and treatment whether at work or at court. Regarding the Myanmars history, in traditional Western societies, women played a stronger role than man. From aboriginal on they could have own property and were independent in economic activities. Myanmar women enjoy the same precondition with their male counterparts and do not necessarily have to keep their surnames (JourneyMart.com, 2001).For American, their culture is Western culture, which based on British culture with influences from other parts of Europe, the Native American peoples. American Culture is known or so the world are the films, shows, and musical performances. Furthermore, the most popular cit ies in American culture are New York City, Los Angeles, Chicago, Florida, and Las Vegas (Frost, 2004)Food in MyanmarBasically, Burmese food is very appetizing such as blend of Chinese and Indian foods. The basic food of Myanmar is mainly rice and curry. Some of the curries are spicy and often served with salad, vegetable soup and fish paste cooked in various ways. Among the favorite food is mohinga (rice noodles with fish gravy) which is eaten at any time of the day. Another popular dish is ohn-no- khaukswe, which is a chicken curry based on coconut tree milk served with plain boiled rice or eggs noodles. Therefore, desserts that they commonly eaten include sanwin-ma-kin (Myanmar sweet cakes made of semolina, sugar, egg, butter and coconut), Myanmar-style banana cakes, and kyaukchaw such as sea weed jelly (JourneyMart.com, 2001).In Myanmar towns, Chinese eating house can be easily found there. They serve Cantonese and Hokkienese style Chinese food. Indian food like kebabs and briy ani are also popular among the Myanmar. European food is available only at restaurant in the hotels. Chettyar food is also popular among the Myanmar. For Myanmar country, meal usually incorporate soups and curries are often finished off with fresh fruit such as sugarcane juice. Thus, most restaurants will close by 10pm although some tea and coffee shops will still open.LanguageBurmese or Myanmar is the main language in Myanmar. However, English is widely spoken. The largest of the population are using this language, indeed there are so many ethnic groups in Myanmar, and it is difficult to amazing that the country has a number of other languages and dialects. Each country has its own dialect, the most common dialect in Myanmar are Kachin, Chin, Karen, and Shan dialects. The Karen is renowned for the custom of women wearing heavy brass coils around their necks, starting from the age of five. In fact, such ornamentation reveals them to be Padung, a sub-ethnic group of the Karen (Defens e Language Institute Foreign Language Center, 2008). English also one of the languages that usually used in urban areas.ReligionMyanmar is a primarily Buddhist country which the Buddhists stand for 80 percent of the population. Citation? Today, the most common form of Buddhism in Myanmar is Theravada Buddhism. Besides that, excluding Buddhism there are other religions that have following in Myanmar such as Christians, Muslims, Hindus and some Animists, but this entire four are minority religions (JourneyMart.com, 2001). Theravada Buddhism is the more traditional of the two major divisions within this religion, such as it believes itself to be closer to the original teachings of the Buddha. According to Woodward Hopfe (2009), for Theravada Buddhism people must achieve enlightenment for themselves without reliance on the gods. Religion plays an important role in a typical Myanmar Buddhists life that his or her routine cannot be separated from Buddhist rituals. There is also a Buddhis t lent on Myanmar calendar which lasts for three months in the rainy season, from around July to October, during which self-denial is preserved, marriages and moving home is generally set off.However, in United States, the main religion is Christianity. Naturally, a religion that encompasses so many people contains a great variety of beliefs and practice. Christians share a common belief in the uniqueness of Jesus of Nazareth, that he in some way provided for the redemption of humankind by his death and was himself resurrected from dead (Woodward Hopfe, 2009). In Christianity, Roman Catholic is the largest denomination. When Myanmar compared to the United States, both country had different religion whereas Myanmar is more familiar in Buddhism, but United States their largest religion is Christianity.ConclusionIn past decades, Myanmar was known as poorest country in Asia and many investors do not dare to step-in and start their business because they predict their business will not gain any profit, so they instead of choose neighborhood countries like Thailand, Vietnam, and China to expand the business. With the recently released of house arrest Aung San Suu Kyi, the country human right re-born once more because Aung San Suu Kyi fight for human rights for the citizen, so this can give more opportunities to all foreign investor to do their business in Myanmar easily.As many investors rather choose neighborhood countries to expand the business, this proves that in Myanmar business purlieu have very few competitors to compete each others to gain for the purchasing power from the consumer. So, with fewer competitors in market, we can easily dominate the Myanmar market before other foreign investors does.Therefore, Myanmar is an ideal country to expand the business because due to the country rich in natural resources, low costs, and fewer competitors. As the goods produce in Myanmar and export to others country, or even to our home country it will gain profit in t he shortest time. By comparing to United States, its require take lots of time to gain profit and come home back all the costs to produce the goods.