INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison (1)

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1 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Derik Curley Southern New Hampshire University INT 200: Global Dimensions in Business Timothy Balconi September 17 th , 2023

2 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Section One In the pursuit of expanding into new markets with a product like digital cameras, it is paramount to leverage the insights derived from collected data to make informed business decisions. The data points at hand offer a window into the complex interplay of economic and political factors within each target market: Mexico, Germany, and Brazil. Gross Domestic Product (GDP) serves as a foundational indicator, shedding light on the overall economic size and activity of a country. A higher GDP implies a larger market and the potential for heightened demand for consumer electronics such as digital cameras. Notably, Germany, with its impressive GDP, signifies a robust market with substantial growth prospects. Purchasing Power Parity (PPP) reveals consumers’ relative purchasing power within each market. It plays a pivotal role in assessing the affordability of products like digital cameras. A higher PPP implies that consumers possess greater buying power, making the product more appealing. Germany's lofty PPP, for instance, hints at strong purchasing power among its populace (Dunung, S.P., 2020). Further delving into economic metrics, Gross Domestic Product Per Capita provides insight into the average income level in a country. For digital cameras, markets with a higher GDP per capita often emerge as more enticing. In these markets, consumers can more comfortably afford non-essential items like cameras. In this regard, Germany stands out with its high GDP per capita. Political systems, an equally critical facet, can significantly shape business landscapes. Different political systems, such as Mexico's federal republic or Brazil's federal presidential system, come with their own regulatory environments and potential challenges. A thorough understanding of how political decisions impact trade relations, exemplified by

3 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison NAFTA/USMCA in Mexico's context, is indispensable in the decision-making process (International Trade Administration. n.d., Mexico, Germany, and Brazil). The economic classification of a market, whether developed or emerging, offers a glimpse into its maturity and growth potential (Dunung, S.P., 2020). In the case of digital cameras, developed markets like Germany may exhibit saturated demand, while emerging markets like Mexico and Brazil can present lucrative opportunities due to the increasing affluence of their consumers. Membership in economic blocs, such as USMCA, MERCOSUR, or the EU, can profoundly affect trade dynamics. For instance, EU membership empowers Germany with access to a vast and integrated market. Conversely, Mexico's involvement in USMCA streamlines trade with North American partners. To wield these data points effectively, it is vital to assign weights based on specific business objectives and product characteristics. Factors may vary in significance depending on the goals. For instance, when prioritizing market size and growth potential, GDP and GDP per capita could hold more weight. Conversely, if ease of conducting business is paramount, political stability and favorable trade agreements take precedence (Dunung, S.P., 2020). While these economic and political data points establish a sturdy foundation for decision- making, crafting an ideal strategy for market entry necessitates comprehensive market research. This should encompass consumer preferences, competition analysis, and industry-specific regulatory intricacies. By combining these insights with the data presented, a well-informed and successful market entry strategy for digital cameras can take shape.

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4 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Section Two Category Mexico Germany Brazil Political System Federal Republic  Stable and decentralized governance.  Potential for consistent regulations across states.  Need to navigate federal-state relationships and regional variations. Federal Parliamentary Republic  Political stability and strong institutions.  Transparent and accountable governance.  Reliable legal framework and ease of doing business. Federal Presidential Republic  Separation of powers between branches.  Potential for a complex regulatory landscape.  Need to understand federal and state-level dynamics for effective navigation. Economic Classification Emerging Market and/or Developing Economy  Indicates potential for growth and market expansion.  May offer cost- effective labor and production.  Consideration of economic volatility and regulatory challenges is crucial. Developed  Signifies stability and a mature market.  High purchasing power and consumer demand.  Competitive landscape and saturation in some sectors. Emerging Market and/or Developing Economy  Presents growth opportunities in a dynamic market.  Economic volatility and regulatory complexity.  Consideration of infrastructure challenges and income inequality is essential.

5 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Category Mexico Germany Brazil Economic Blocs Impacting Trade USMCA, NAFTA, the Pacific Alliance and MERCOSUR, are Mexico's economic blocs impacting trade.  Enhanced trade relations with North American partners through USMCA.  Access to a large consumer market.  Membership in the Pacific Alliance promotes economic integration across Latin American countries.  Mexico has expressed interest in becoming an associate member of MERCOSUR, a South American trade bloc. While not a full member yet, this could potentially impact its trade relations with MERCOSUR countries (International Trade Administration. n.d., Mexico.) The European Union (EU), is Germany’s economic blocs impacting trade.  Reduced trade barriers within the EU.  Opportunity for streamlined cross- border business operations. (International Trade Administration. N.d., Germany.). MERCOSUR and BRICS are Brazil’s economic blocs impacting trade.  Membership in BRICS signifies engagement with major emerging economies.  Opportunities for expanded trade and investment with South American and BRICS countries. (International Trade Administration. N.d., Brazil.).

6 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Category Mexico Germany Brazil Gross Domestic Product In 2022 Mexico’s GDP was $1,414.1 in Billion U.S. dollars (IMF, Mexico, 2023).  Indicates a substantial market size.  Suggests opportunities for market entry and growth.  Consideration of potential market saturation and competition is crucial. In 2022 Germany’s GDP was $48,636.03 in Billion U.S. dollars (IMF, Germany, 2023).  Reflects a highly developed and robust economy.  Signifies significant consumer demand and purchasing power.  Attracts businesses seeking a mature and stable market. In 2022 Brazil’s GDP was $8,995.03 in Billion U.S. dollars (IMF, Brazil, 2023).  Highlights Brazil's status as a major emerging economy.  Offers opportunities in a dynamic and growing market.  Consideration of economic volatility and regulatory challenges is essential. Purchasing Power Parity The Purchasing Power Parity of Mexico is, $2,458,000,000,000 (Dunung, S. P., 2020).  Indicates the relative purchasing power of Mexican consumers.  Suggests affordability for consumer products like digital cameras.  Attracts businesses looking for a cost-effective market. The Purchasing Power Parity of Germany is, $4,171,000,000,000 (Dunung, S. P., 2020).  Reflects strong purchasing power among German consumers.  Implies a high standard of living and potential for premium product sales.  Appeals to businesses targeting affluent markets. The Purchasing Power Parity of Brazil is, $3,240,000,000,000 (Dunung, S. P., 2020).  Highlights the relative purchasing power of Brazilian consumers.  Indicates potential for affordable consumer goods.  Consideration of economic volatility and pricing strategies is essential.

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7 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison Category Mexico Germany Brazil Gross Domestic Product Per Capita According to Dunung, S.P., Mexico’s GDP per Capita is, “$9,318.”  Signifies a lower average income level.  Suggests price sensitivity among consumers.  Target market for budget- conscious products. According to Dunung, S.P., Germany’s GDP per Capita is, “$44,769”  Indicates a high average income level.  Implies a higher willingness to spend on premium products.  Attracts businesses offering high-end goods. According to Dunung, S.P., Mexico’s GDP per Capita is, “$9,895”  Similar to Mexico, suggests a lower average income.  Potential for price sensitivity and value- focused consumer segments.  Requires cost- effective pricing strategies. Section Three Germany (Most Appropriate):  Stable political system and strong institutions.  Developed economy with a high GDP and GDP per capita.  High purchasing power and potential for premium product sales.  Transparent and accountable governance.  Access to the large EU market with reduced trade barriers. Mexico (Second Most Appropriate):  Emerging market with growth potential.  Considerable GDP and population.  Relatively affordable GDP per capita.  Proximity to the United States, a key trading partner.  Membership in USMCA facilitates trade with North American partners. Brazil (Least Appropriate):

8 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison  Emerging market with economic volatility.  Lower GDP per capita compared to Germany.  Complex regulatory landscape and potential for political instability.  Market opportunities but with higher risk. Potential for value-focused consumer segments. Rationale:  Germany (Most Appropriate): Germany is ranked as the most appropriate market due to its stable political system, robust institutions, and developed economy. The high GDP and GDP per capita indicate a strong market with high purchasing power. These factors are particularly advantageous for products like digital cameras, where consumers are willing to invest in premium quality. Furthermore, Germany's transparent and accountable governance ensures a reliable business environment. Additionally, access to the EU market with reduced trade barriers enhances market potential.  Mexico (Second Most Appropriate): Mexico follows as the second most appropriate market. It is an emerging market with significant growth potential and a large population. While its GDP and GDP per capita are lower than Germany's, they still indicate a substantial market size. The proximity to the United States, a major trading partner, provides additional opportunities. Mexico's membership in USMCA streamlines trade relations in North America, making it a viable market for digital cameras.  Brazil (Least Appropriate): Brazil is ranked as the least appropriate market among the three. While it offers market opportunities due to its emerging status and sizable population, the country's economic volatility, lower GDP per capita, and complex

9 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison regulatory landscape present challenges. There is also a potential for political instability, which can impact business operations. For businesses willing to navigate these challenges, Brazil may still hold opportunities, but it carries higher risks compared to Germany and Mexico. References Dunung, S. P. (2020). Global Business Management (Vol. 1.0). FlatWorld. IMF. (April 7, 2023). Mexico: Gross domestic product (GDP) in current prices from 1987 to 2028 (in billion U.S. dollars) [Graph]. In Statista. Retrieved September 17, 2023, from

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10 INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison https://www-statista-com.ezproxy.snhu.edu/statistics/263580/gross-domestic-product- gdp-in-mexico/ IMF. (April 7, 2023). Germany: Gross domestic product (GDP) per capita in current prices from 1987 to 2028 (in U.S. dollars) [Graph]. In Statista. Retrieved September 17, 2023, from https://www-statista-com.ezproxy.snhu.edu/statistics/295465/germany-gross-domestic- product-per-capita-in-current-prices/ IMF. (April 7, 2023). Brazil: Gross domestic product (GDP) per capita in current prices from 1987 to 2028 (in U.S. dollars) [Graph]. In Statista. Retrieved September 17, 2023, from https://www-statista-com.ezproxy.snhu.edu/statistics/263774/gross-domestic-product- gdp-per-capita-in-brazil/ International Trade Administration. (n.d.). Mexico - Trade Barriers . Privacy Shield Framework. https://www.privacyshield.gov/ps/article?id=Mexico-Trade-Barriers International Trade Administration. (n.d.-a). Germany - Market Challenges . Privacy Shield Framework. https://www.privacyshield.gov/ps/article?id=Germany-Market-Challenges Internation Trade Administration. (n.d.). Brazil - Market Challenges . Privacy Shield Framework. https://www.privacyshield.gov/ps/article?id=Brazil-Market-Challenges International Trade Administration. (n.d.). Mexico – Country Commercial Guide . Privacy Shield Framework. https://www.privacyshield.gov/ps/article? series=a0pt0000000PAuRAAW&type=Country_Commercial__kav International Trade Administration. (n.d.-a). Germany – Country Commercial Guide . Privacy Shield Framework. https://www.privacyshield.gov/ps/article? series=a0pt0000000PAtqAAG&type=Country_Commercial__kav Internation Trade Administration. (n.d.). Brazil – Country Commerical Guide . Privacy Shield Framework. https://www.privacyshield.gov/ps/article? series=a0pt0000000PAtOAAW&type=Country_Commercial__kav

INT 220 Module Three Assignment 3-2 Economic and Political Environments Comparison (1)

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