BRICS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction of BRICS

BRICS is an acronym used for countries comprising of Brazil, Russia, India, China and most recently included South Africa. In the recent years, these countries have come across rapid economic growth along with political stability due to which these countries have gained strong and increasing international presence. The importance of these countries is due to the fast growing economies of these nations and their influence on the global and regional affairs. All of these countries are among developed or newly industrialized countries, but their rapid economic growth is a significant feature that distinguishes them from others. The countries are primarily focusing on encouraging and developing a collaborative approach among countries and to increase cultural, commercial and political collaboration. On the other hand, these countries are lending special emphasis on challenging the control of western developed economies.

One of the major steps is the formation of a global bank to challenge the dominance of the IMF and World Bank. The official formation of the BRICS forum occurred in 2011 after the official joining of South Africa in 2010. BRICS nations represent 3 billion people of the overall global population with a combined GDP of more than $16 trillion, and the combined foreign reserves of these nations are estimated to be more than $4 trillion. These stats show the importance of these nations as they have maintained sustainable economic growth in the recent years and have taken a step ahead in developing as industrialized nations. These countries as a whole provide many opportunities for foreign investment and individually have different areas to attract foreign investors especially the multinationals. The assessment of threats and opportunities for MNCs in BRICS countries is presented below individually.

Brazil

The country is growing rapidly and is under a transition period hinting towards uncertain and unclear results and outcomes. The country is expected to develop its infrastructure as the 2016 Olympics are planned to happen in Brazil, but the supremacy of bureaucracy, corruption and inefficient planning are likely to saturate the economy of the country. Furthermore, the country has been ranked as low as 116 by the World Bank for the ease of doing business which is the result of the issues mentioned above that are hurting the economy. People are not satisfied and demanding improvements in many sectors and relief in taxes.

Opportunities: The country, although suffering from strong protests of the people, but still present opportunities for MNCs in many sectors. Infrastructure is the most attractive investment for many MNCs as the country offers many opportunities for foreign companies to invest in building the telecommunication, energy sector, roads, ports, etc. Services industry especially tourism, financial and insurance sectors present immense opportunities. On the other the growing usage of mobile phones and internet present opportunities in E-commerce and M-commerce sector.

Threats: As discussed above, the country is not easy to do business. Further justifying the situation the country is suffering from major reforms in providing growth opportunities for multinationals. Taxation in every sector is high which is a very discouraging factor for foreign companies. On the other involvement of bureaucracy is also a barrier for initiating any new project in the country especially by a foreign investor. On the other, the local investors are also hesitant in building infrastructure, and lack of support from the government further makes the situation worse.

Russia

The environment of Russia for business as suggested by the World Bank is not attractive, and the country ranked 123 in terms of ease of doing business. The country is likely to build its infrastructure for the 2018 FIFA world cup, and the facilities will be utilized afterward as well. On the hand the economic and political stagnation and cutting social budgets suggest that the country has not changed with the passage and the environment is still not feasible for doing business especially for MNCs.

Opportunities: The WTO accession of Russia has opened many opportunities for foreign investors in the country as the country now has to abide the rules and regulations of the WTO. Opportunities in many industries will be transformed, and the country will be at transition period and opportunities for companies preferring Russia will be very interested. The government is focusing on economic diversification in order to get rid of the dependency over oil and gas sector and to invest heavily to bring technological reforms.........................

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