In this memo shall present a proposal to the Steering Committee of ACME to discuss such factors for Acme which may consider before entering into any of the markets. For this purpose, we shall be discussing United Kingdom as one alternative whereas the second country will be Brazil.
United Kingdom is one of the most important members of European Union due to its political as well as economic significance. In order to initiate a Greenfield project in UK, following factors may be taken into consideration:
UK is going through one of its toughest economic periods in its history due to the credit crisis which emerged from US. However, its performance in the recent past has been credible due to its consistent growth rates achieved over the period of time. From 2003 to 2007, it achieved an average growth rate of 2.7% whereas inflation has remained under 2% during the period. (Economist.com, 2008). The exchange rate parity between US dollar and UK pound has remained under control too as average exchange rate during 2007 remained at 0.5GBP per US Dollar.
UK's population is over 65 million with an average age of 39 years. ...
Out of this population, 65% of the population belongs to working class in which almost 52% of the population lies in the age group of up to 40 years. (The Times 100, 2008) What is also important to note that larger chunk of UK's population is ageing therefore it has been anticipated that there may be shortage of young employable population. It is also critical to note that UK has adopted a very lenient immigration policy which allowed it enjoy one of the largest immigration population in the region. This also however provides it a readily available pool of employable population at relatively lower cost.
UK has one of the strongest and most stable political environments in the world. The institutional support is provided to the new business and the political environment is favorable to the free market economy. As such it provides a strong risk mitigate for investing into a country whose economic progress is not projected favorable in near future.
Brazil is a country of more than 189 million people with GDP size of approximately $1,313.7 billion. GDP per head is $6,938 whereas during the period from 2003 to 2007, country experienced the real growth rate of over 3.5%. It is also important to note that net inflow of Foreign Direct Investment into the country is 2.1% of the overall GDP of the country. This higher percentage of FDI suggests that the country is one of the most receptive in the region regarding the foreign direct investment made into the country. Due to higher growth rates, the inflationary pressures on the economy also remained high i.e. 4.2% during the period of 2003 to 2007. Further, average exchange rate during 2007 has remained at 1.95 per US Dollar. (Economist.com, 2008). Further, the country