Conditions of International Business - Article Example

Article The world’s most expensive clubs” Or Isn’t it beyond the reach? China’s investment in Blackstone shows us the concept of foreign direct investment along with global political economy. The idea of such investments is not new to the market; in fact, this concept is growing rapidly with no stops. Companies or countries place large pools of funds/ money in private-equity funds whereby allowing them to utilize it without seeking the whereabouts. The private-equity companies, in other words investment companies promise high rates of return without disclosing the distinct nature of where the funds are applied i.e. the investor acts as a silent partner. However, the nature of sovereign-wealth funds has transformed from money to precious metals. Governments use this method to secure the domestic market for liquidation. This implies that these assets are of highly liquidated nature and can be altered easily. The oil-producing countries have also come within its grip and are losing or rather investing their wealth in such funds. A company adopted a similar approach in the oil commodity. They then invested their wealth in holding bonds, bank deposits in a similar pattern like central banks. The alarming fact is that no company discloses the application of the funds except for the ones in Norway that provide regular data and statistics. It may be possible that these mysteriously applied investments will be very well lost in the future with no accountability. It happened in one of a developing country wherein a mushroom growth took place in the early eighties. These investment companies conned the unsuspecting public and lured them by promising huge percentage on their investments. The Government kept silent and this approach encouraged the high profit paying companies to get bolder and bolder till the public was convinced to accept them as legitimate companies. The problem further compounded due to no action by the State Bank. The margin of profits increased as the public committed their funds by selling their immovable assets. All categories of people brought in their investment to these companies expecting a higher return on their deposits. Advertisements in each and every newspaper further cemented the authenticity and indisputable legitimacy of these fraudsters. The profits were rolled over and the depositor’s received their profits on monthly basis, basking in the realm that a good investment had been made. The bubble burst when the government realized that the funds were been diverted from the scheduled bank and the treasury of the Government was fast losing money to these con artists. No sooner was the action taken and people in droves started to approach the managers of these companies for the return of their deposits that true facts started to stare in their faces. The higher ups evaded the public on rush to their offices and let the lower staff make excuses on their part. The public scenting fraud approached the police and cases were registered with them. Company after company stared to disappear with the savings of the unsuspecting depositors. Huge rallies were taken out to protest against the inaction of the and for the return of their savings, but all to no avail. The Government seemed helpless and the police in cahoots with the company owners further complicated the issue. Only resourceful people with clout were able to draw out some of their savings from these fraudsters. All the rest were left with taking out processions and pleas. Suits were filed in courts and the lengthy, cumbersome legal battle did little for the return of the poor common man. Nevertheless, since these funds are applied abroad so it can be controlled by political pressure and the consequences of these investments may have to be faced by the countries involved. Reference list: Economist Finance & Economics: ‘The world’s most expensive clubs’ www.Economist.com May 24, 2007 Hong Kong Article 2 “Cleaning up” Or Clean Environment – a Global Concern The concept of globalization and environmental health has become a matter of deep concern in Today’s World. The adverse effects of technology and the use of chemicals have led to global warming, which would result in an eventual melt down of Earth. This significant issue was pressed on in G-8 Summit Conference to figure out means to prevent such a catastrophe after the Kyoto Protocol finishes in 2012. Kyoto Protocol was an agreement signed on by various powerful nations of the western world. It was initially a step towards encouraging a global friendly atmosphere. It addressed the fact that many constituents mainly gases from greenhouses were trapping large amounts of heat in the earth’s surface whereby resulting in hot and humid climate. This agreement was signed in 2001, and even since effective measures are being taken to control this menace. In a study entitled Impacts of the Kyoto Protocol on U.S. Energy Markets and Economic Activity, the Energy Information Administration (EIA), an independent statistical and analytical agency in the U.S. Department of Energy, has projected that meeting the U.S. targets under the Protocol will call for significant market adjustments: Reductions in CO2 emissions will result in between 18 and 77 percent less coal use than projected in the EIA Reference Case in 2010, particularly affecting electricity generation, and between 2 and 13 percent less petroleum use, mainly affecting transportation. Energy consumers will need to use between 2 and 12 percent more natural gas in 2010 and between 2 and 16 percent more renewable energy, and extend the operating life of existing nuclear units. To achieve these ends via market-based means, average delivered energy costs (in inflation-adjusted 1996 dollars) must be between 17 and 83 percent higher than projected in 2010. The amount prices must rise is uncertain. Accounting procedures and international trading rules for greenhouse gases are not finalized. Forecasting technological change and public response to it under various pricing scenarios is an inexact science. The more stringent the need for domestic emission reductions, however, the more costly the adjustment process will be. However, a problem lies at hand i.e. the biggest contributor of these gases is USA which is continually opposing the protocol as it fears it would bring a downfall in its economy. Looking on the brighter side of things, quite some measures have been implemented and this protocol has borne fruits. In a challenge to safe the world, Nations are considering the use of bio-chemical products in place of lubricants that burn and of making investments in Earth-friendly industries. Several harmful chemicals and their waste is being substituted by less intense nature chemicals. The use of solar energy in cars is being stressed on, so as to do away with the smoke and gases that are released from cars especially the old ones. Initially such investments would be costly, but as further investments grow, the results would be remarkable and products would be available cheap to the ordinary man. In general, one can contribute towards this good cause and use products that are environment friendly. Beside Kyoto Protocol and new methods should be embraced to tackle this problem. Perhaps, more pacts should be signed and implemented upon by the leading Nations to create an example for the rest to follow. The important fact of all, USA must be made eager to join hands for the purpose of this Mission because its success lies chiefly in the contribution of USA. Reference list: The Economist: June 02, 2007 p.13 http://www.eia.doe.gov Article 3 “Pepsi Repairing a Poisoned Reputation in India” or Will Pepsi Survive in India? This recent incident in India is a revelation for all the Multi-National Corporations who intend to do business in foreign countries. A well-known international brand namely Pepsi Co. faced a lot of charges and allegations on the grounds of certain experiments, carried out to examine the contents of soda drinks. The outcome was unfavorable which when released, raised a lot of chaos and riot. People took on the streets with anti-cola campaigns and banners to disregard the use of this product. It was established that Pepsi contained pesticides and its nutritional value was negligent as compared to natural products. Moreover, it consumed more than 80-90 million liters of water everyday in a place like India, where people at large are deprived of clean drinking water. The Government of India also took strict measures and publicized a great deal against all colas and regarded it as a hazard, especially in children. Sale of coke was banned in all schools and at government canteens to show full support for the activists and socialists then. People’s tribunals gave the hydro-pirates notice to quit the country immediately. Circumstances like these asked for immediate action of the company as to handle the aggravating issue. However, due to no evident response or claims the company could not defend itself, and lost customers largely. This picture showed everyone the pros and cons of doing foreign business. Therefore, a premise was set up that suggests that certain factors need to be recognized while doing foreign businesses, primarily the reputation of the company; others like the emotions and sentiments of the people, their attitude towards the product, strict quality control assurance and possible business risks that might have to be faced. On the other hand, the contribution of Pepsi Co. in setting up water pumps and wells for the people in rural areas cannot be overlooked. Unfortunately, this deed was misinterpreted and the social activists and environmentalists rose their voices that India was in jeopardy of losing the under ground water pipes. What is of notice here is the fact that the laboratories resorted to setting up standards which they thought would be adequate for the consumption of pepsi. Surprisingly, no safety standards were released which could have identified the discrepancies of pepsi. As a result of this, Pepsi Co. induced political pressure and in a matter of days these circumstances cooled down on their own, except for in few states. Overall, this incident brought a change in the attitudes of the people and Pepsi Co. as well. The company reduced its water consumption from 35 liters to 8.6 liters per day, whereby the concept of reserving water sources was adopted. Pollution of water in Plachimada (a state in India) was condemned and health awareness programs took a leap in mass media. One can opinionate that lesson was learnt at both the sides. People realized the importance of water and its universal uses and the company accepted its shortcomings to some extent. Water was being devoured and the importance of the environment reservoirs was realized. Campaigns have expanded to encompass dam projects since nature does not distribute water uniformly. Reference page: 1. Diane Brady : ‘Pepsi Repairing a Poisoned Reputation in India’ Business Week, p. 46 June 11, 2007 2. Vandana Shiva : ‘Coke Pepsi and the Politics of Food Safety’ www.zmag.org/Sustainers/Content/2006-09/06shiva.cfm September 06, 2006 Article 4 “Diabetes Drugs in Doubt” or Diabetics – Be Careful! Testing of drugs has always been a problem for scientists whether it is on humans or animals. The repercussions of a clinical trial drug can never be 100% known. Sometimes, it is possible for a scientist to test a well-known, widely used drug and draw viable/defective report of its long-term side effects and dangers. Such was the case of Avandia a diabetes drug of GlaxoSmithKline (GSK). A doctor named Dr. Nissen after thoroughly testing the drug noted that patients who are on this drug are a greater chance of heart diseases than those diabetics whose are not on it.This discovery led a panic of attack on the patients who took Avandia as a daily dosage and the company GSK, itself. Nissens study, a meta-analysis of 42 clinical trials from around the world involving 28,000 diabetic patients, concluded that those taking Avandia had a 64% greater risk of dying from heart disease over a seven-year period and a 43% greater risk of heart attack than patients on other diabetes drugs. The report prompted the Food & Drug Administration to issue a safety alert on Avandia and calls for congressional hearings, sending Glaxos stock down 8% on the day it was released. After that, several comments of renowned doctors became headlines in newspapers. Some suggested that Dr. Nissen’s finding were intriguing, while others condemned it by declaring that the sample size taken of patients was literally small… ‘Like a second in many years’. The concept of testing drugs grew increasingly high. Researchers from all around the globe trotted from place to place before placing their drug in the market. Eventually they landed at the less developed countries of Asia where they knew they had better chances of testing. “Deep poverty turned South Asia into the world’s largest clinical-testing Petri dish. Individuals who participated in (such) clinical trials usually were not educated. Offering $ 100 maybe undue enticement; they may not even realize that they were being coerced.” (Sean Philpott) Scott Carney says “Given the rising cost of drug research in the United States and Europe, more and more drug companies are conducting clinical trials in developing countries where research can be done at a fraction of the cost. Now, pharmaceutical companies can rest assured they won’t lose profits to a domestic market…. for the clearance of any drug. Observers say the number of studies conducted by multinational drug companies has sharply increased since then.” Dr. Rushakoff says the final answer on the heart risks of Avandia wont be in until Glaxo completes a large clinical trial of Avandia it is currently conducting, called RECORD, meant to determine cardiovascular risks. That study will be completed in 2009. Federation of Drug Association FDA does not allow the production of any drug unless tests are carried out and evidence of its safety has been reached. This perquisite allows carrying out drug research and testing, immaterial of how and on whom it is done. And the reality is that since people are ready for being tested for ABCD drug easily, they should atleast be made a little aware of what results it might have on it. Secondly, in developing countries where this is a common activity, no one should be pressurized into it. It is critical to note that since drug testing is booming in the developing countries, its implications are not being publicized which makes it all the more dangerous for the public. Reference page: 1. Catherine Arnst: ‘Diabetes Drugs in Doubt’ Business Week May 23, 2007 2. Scott Carney: ‘Testing Drugs on India’s Poor’ www.wired.com/medtech/drugs/news/2005/12/69595 December 19, 2005 3. Sean Philpott, managing editor of ‘The American Journal of Bioethics’ Article 5 “An Aggressive Telecom Investor Looks East and West for Quarry” Or Telecom – A Quest for Success! Altima is a Telecommunication Company, a subsidiary of Alfa Group. It is based in Russia with its head office in Moscow. A Mikhail Fridman who has built an empire worth billions owns and runs it. The Company has assets worth $ 20 billion, almost half of which was earned recently. These statistics show that the Company holds a promising future and is in its booming period. Altima wants to conquer outside its geographical boundaries and experiment in European and Asia continents. However, it is in for a stiff competition from Telenor of Germany and Cukurova from Turkey. The overall reputation of Altima is a debate on its own. Many have perceived it as an argumentative, persevering, yet confident corporation. The CFO namely Mr. Tejio Pankko dismisses all such allegations and shows his strong intentions to pursue his dream of making Altima the New Vodafone. It is a widely felt that Russian business outside the local limits are involved in corruption which this company specifies promises is not the matter in this case as it is regularly audited by Pricewaterhouse Coopers. Mr. Tejio Pankko considers that the use of cell phones would increase rapidly as people will tend to rely more on their mobile sets for any work, in the future. Another interesting aspect of Altima is that lately it has been giving its management a make over by taking in ex-heads of famous companies under its banner. Currently it is pursuing to take over a Swedish company, TeliaSonera and enter China and Hong Kong. We can rule that this company at least has a promising future and one can expect wonderful things from it. It would not be long before it becomes the next big Telecommunication Giant. Reference list: Victoria Shannon: ‘An Aggressive Telecom investor looks east and west or quarry’ The New York Times May 28, 2007 Read More