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International Business 2
Contemporary international business agenda is occupied by the two issues of vital importance. Firstly, the growing unprecedented animosity between the triad economies of the Federal Republic of Germany, the United States and Japan and the BRIC economic block represented by Brazil, Russian Federation, India and China is escalating, with the most sophisticated economic warfare involved. Secondly, the need to change contemporary business approach is alarming.
The objective of this paper is to provide a comparative study of the Brazil and German economies with the focus made on integration of the political and economic systems of the analyzed countries. Secondly, considering the twofold nature of this assignment, the way the Woolworth Company propels the fundamental alteration of the business attitude towards prioritization of the environment and the principle of sustainability is discussed.
Political and economic system of Brazil presents a unique mixture of the well rooted Eastern school of classical capitalism and the new methods of intensive government intervention traditionally developed in the countries of Latin America. Although these methods of market regulation seem to be paradoxical and contradictory, the economic development of this country is the best probative evidence demonstrating its efficiency.
Setting GDP as criteria, Brazil is nowadays considered as the sixth largest economy in the world. Benchmarking by purchasing power parity Brazil occupies the seventh position. Generally, the economy is described as free market and internal market-oriented. Moreover, it is important to emphasize the fact that this economy is one of the most dynamically developing, demonstrating 5% annual gross domestic product growth. It is anticipated that in the forthcoming decades Brazil would take place among the five most influential economic frameworks globally. In accordance with the world economic forum findings, the evolutionary steps taken by Brazil significantly increase its competitiveness, leaving behind India, China and Japan, hereby demonstrating the relative supremacy of the BRIC economic models and approaches over the Western traditional ones.
The gross domestic product of Brazil is estimated to be $2.5 trillion, with the gross domestic product per capita reaching approximately $13,000 (World Bank, 2013 a).
27.5% of the gross domestic product is formed by the industry, while 67 % and 5.5% are attributed to services and agriculture, respectively. The population below poverty line is reported to be 8.6%. 20% of the able-bodied population is involved in agriculture, 14% of the entire nation workforce is engaged in the industries and 66% are employed in the services sector of the economy.
Although the economy seems to be brilliant and rapidly developing, the infamous financial crisis 2008-2010 revealed that the economy is still not capable of withstanding strong financial avalanches. The crisis hits the most vulnerable area of Brazil, with the population engaged in industries experiencing massive layoffs and wage reductions.
Politically, Brazil is characterized as a strong presidential democracy, with the most influential decision coming from the administration of president. Local authorities, irrespective of the fact that Brazil is a federation have no bargaining power, while the Congress is legally following the doctrine advocated by the president. On the one hand, strong government intervention has a number of positive traits, in particular it is possible to save bankrupting bank or to procure state funding to the interests of economy which are in need. Furthermore, the government can control and prioritize the interests of economy which should be developed and which can solidify the international macroeconomic standing of the country. On the other hand, this approach significantly diminishes business activism and limits the financial instruments which are typical for a free market democracy
The federative Republic of Germany has the largest domestic economy in Europe and the fourth largest economy in the world. The country adheres to the traditional postulates of industrial capitalism, prioritizing innovation and globalization. In general terms, the economy of the country is export-oriented, what is the most distinctive issue in comparison with the BRIC economic block.
Despite the fact that the country does not have sufficient deposits of raw materials, the industry is the main source of gross domestic product, contributing to the 30% of the entire revenues collected, while services which are directly linked to the industries generate 70%. Agriculture is insignificant and contributes to less than 1%. The country is known to be the leader producer of wind turbines and alternative power technologies globally.
Overall, the economy of Germany is extremely competitive, because of its application of production- service mix, i.e. the services industry cannot reasonably survive without production sector and vice versa (World Bank, 2013 b).
Furthermore, the country is known for having accumulated significant financial resources in order to tackle financial instabilities, which have become frequent nowadays. Evaluating the repercussions of the recent financial crisis, it can be concluded that Germany overcomes them with unprecedented alacrity, abstaining from massive layoffs and wage reductions because of the financial resources accumulated in the Federal Reserves.
The federative Republic of Germany is positioned as a federal parliamentary democracy, with the biggest powers vested to the Chancellor and his/her government. In the context of this essay it is necessary to highlight the fact that the government intervention is minimal, and is confined exclusively to the issues connected with protection of the economy from financial fluctuations and instability.
The comparison of the Brazilian and German approaches to the economic development evidences that the key determinants of the differences are the government intervention to the economic prioritization and the orientation of the industry sector. In Brazil, public authorities commonly interfere with the economic development, whereas in Germany authorities influence is minimal and is exercised only in the events of necessity to safeguard the economy. However, the most important discrepancy between the regarded economists is that the German economy is more export oriented, hereby becoming more dependable on the purchasing power of its partners, while Brazil relies predominantly on its internal market.
Woolworth New School of Business
The majority of the international operating business institutions have proclaimed their adherence to the fundamental principles of the corporate social responsibility in general and the sustainability principle in particular. In other words, they declared that the balance between the return on investment and the protection of the natural environment should be always observed.
The practice however demonstrates that Good Business Journey, the initiative launched by Woolworth South Africa Company is indeed practical. The propaganda of these company advocates the idea that current business approaches should be changed to the environmentally friendly and these attitude must be cultivated at all levels, including the school.
The program identified the most important aspects of the contemporary international financial system, that are energy, water, waste, sustainable farming, sustainable fishing, transferring of the goods and social development of the communities.
Multiple probative evidences suggest that the promulgation of social responsibility policies is not sufficient to defend the environment against the most rapacious technological exploitation, which is known to be taking place nowadays. Business people are focused on making the biggest revenue as possible and leading luxury lifestyles, without any preoccupations regarding the well-being, and physical and mental health of their progeny.
The company started to explain to children at school that the environment must be prioritized and safeguarded from total annihilation at all cost. The principle of sustainability becomes of paramount practical importance in this regard (Woolworth in Schools, 2013). No one in this company disputes the fact that natural resources should be excavated and used for the needs of the humanity. However, the company strongly argues the idea that the resources must be taken reasonably and they should be replenished, in order to make the existence of the other generations possible and comfortable. These ideas must be embedded on the subliminal level, and should be practical, while currently they remain declaratory. Teaching and advocating the importance of sustainable development from the school bench seems to be the most effective idea to ensure full compliance with the declared policies and the needs of the coming generations.