Tag Archives: BRICs

08.11.2012 | How To Win The Olympics

The 2016 Olympics in Rio might be different.

At the 1996 Atlanta Olympics, Great Britain fared poorly. They took home only one gold and ranked #36 among medal winners. At Beijing in 2008, their medal count was 47 and they ranked #4. And now in London, 2012, they are faring even better. What happened?

After Atlanta, the UK decided to elevate their Olympic performance. With money from the national lottery, they funded athletes’ living expenses, training, nutrition, physiotherapy. Combining world class coaches, talented athletes, consistent funding and wise leadership, they got Olympic gold.

Or, we could say that…

TALENT times MONEY equals MEDALS.

And that takes us to Rio De Janeiro, Brazil and August 5, 2016. Western Europe and the US have been top Olympic medals winners. However, emerging economies are becoming more affluent and allocating more resources to women. Argentina is using a levy on mobile fund subscriptions to fund elite sports. Former communist nations continue to focus on athletic performance. Meanwhile though, most euro zone nations have less money to spend.

Does a shift in worldwide affluence portend a new Olympic order?

To see the current Olympic ranking, this Huffington Post interactive is superb. It not only presents bubbles to show medal winners but then weights them according to GDP and population. Based on her GDP, for example, teeny Grenada is actually faring quite well. The Guardian was my source for information on the UK Olympic turnaround and I found the Olympic “success” formula in an insightful FT article. This Globe and Mail article is also excellent.

Posted by: adminEcon
Tags: 2016 Rio Olympics, Argentina, Atlanta Olympics, Beijing Olympics, Brazil, BRICs, emerging economies, Olympics, Olympics gold medals, training athletes, UK
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08.01.2012 | Coach and the Chinese Consumer

Reporting their 4th quarter earnings yesterday, Coach, the handbag and accessories retailer, disappointed investors when they said that US department store and factory outlet sales had slowed. They did report, though, that sales of their handbags and accessories were up by 60% in China.

Like 2 halves of a whole picture, Coach’s marketing plan for China and the description of the new Chinese consumer ideally fit together. Coach is targeting a Chinese urban consumer who is increasingly affluent and aspirational–precisely what a McKinsey Report on the 2020 Chinese consumer projects.

Here are some of McKinsey’s numbers:

Chinese Urban Households: Disposable Income/Proportion of Urban Population

Household Type: Annual disposable income	2010 (total of 226 million households)	2020* (total of 328 million households)
Affluent (More than $34,000)	2%	6%
Mainstream ($16,000 to $34,000)	6%	51%
Value ($6,000 to $16,000)	82%	36%
Poor (Less than $6000)	10%	7%

*estimated

Coach says that it will have 125 locations in China by the end of FY2013, that sales in China will be up by 33% to $400 million, and that “tier 2 and tier 3″ cities were exceeding their expectations. Meanwhile, McKinsey says that Chinese consumers will be more affluent, more urban, more mobile, more educated, aspirational and older at each stage of life.

With US economic growth “muted” and China’s annual growth rate predicted to be close to 8%, doesn’t it make sense that US multinationals ranging from Starbucks, the Gap and J. Crew to Coach all have China as a part of their competitive strategy?

To compare an analysis of the Chinese consumer and Coach’s business plans, you can read McKinsey’s “Meet the 2020 Chinese Consumer” here and read the transcript of the Coach 4Q 2012 investor call here. Also, this article from Reuters on the Chinese consumer was enlightening.

Posted by: adminEcon
Tags: "Meet the 2020 Chinese Consumer", BRICs, Chinese consumers, Coach handbags and accessories, Dunkin' Donuts, economic growth, emerging markets, GDP, globalization, McKinsey report, multinationals, Starbucks, the Gap, US recession
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03.12.2012 | BRIC Cell Phones

The Tibetan town of Namche Bazaar has yaks, donkeys and cell phones. Located along the route to a Mt. Everest base camp, the town attracts local traders who provision climbers. With the former carrying products and the latter, market information, the animals and phones are an interesting combination.

Between 2001 and 2012, cell phone subscriptions in India and China have soared. Currently approaching one billion in these 2 BRIC countries, the increase far exceeds the minimal upward trend in developed nations like the U.S.

The Economic Lesson

By “moving” information, cell phones enable people to share prices and negotiate transactions. Cell phones have also become the foundation of mobile banking networks. Instead of cash, text messages are used to make purchases at local stores, to make deposits, and to transfer money. Because cell phones create information and financial infrastructures in 21st century developing economies, they propel economic growth.

Another growth yardstick? Beer consumption.

An Economic Question: In addition to facilitating market transactions, how might cell phones contribute to economic growth in an emerging economy?

Posted by: adminEcon
Tags: BRICs, cell phones, China, economic development, economic growth, India, market transactions
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08.30.2011 | Emerging Economies

The world is shifting.

More than one-half of the world’s car sales, mobile phone subscriptions and oil, copper and steel purchases came from emerging markets during 2010. Here you can see the same story through these export and import, global GDP, and foreign investment charts. Or, you can look at this Forbes slide show to see that half of the world’s self-made female billionaires are Chinese.

How to remember the emerging economies? Just think BRICs, MIST, and CIVETS. For the developed world, this list includes countries ranging from Australia and Austria to Spain, Sweden, Switzerland and the United States.

Memorably, in his 20 minute TED talk about the developing world, Hans Rosling asks us to “Let my dataset change your mindset.”

The Economic Lesson

As emerging economies increase their participation in world trade, we can think of Adam Smith (1723-1790) and David Ricardo (1772-1823). In a factory, Adam Smith says specialize through division of labor. When each worker has a specific task, output multiplies. Increasing output requires bigger markets in order to sell what has been produced. As mass production enables us to move from local markets to regional specialization to free world trade, as David Ricardo explained, the entire world benefits from the efficiencies of comparative advantage.

An Economic Question: After looking at iPhone component facts here, explain how the global economy has shifted.

Posted by: adminEcon
Tags: Adam Smith, BRICs, comparative advantage, David Ricardo, emerging economies, female billionaires, global GDP, Hans Rosling
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05.11.2011 | Brand Matters

Not so long ago, an apple was just a piece of fruit and a “google’ (actually spelled googol) was 10 raised to the 100th power. Mention apple today and most of us think of iPhones and iMacs. However, Apple is not just a technology company. As with Google and Coca-Cola and McDonald’s, firms can be about more than a product. They are also an image and a message. They are a “brand.”

Ranking the most valuable brands in the world, a global brands agency, Millward Brown, said that Apple, #1 on the list, had a brand that could be valued at close to $153 billion. That total, though, is not about sales nor profit nor revenue. It represents a cash value of what Apple means to us.

Separate from what firms produce, a brand gives firms value. Directly, it adds to the firm’s assets. Also, a brand gives a firm more pricing power. As one branding executive explained, “Apple is breaking the rules in terms of its pricing model. It’s doing what luxury brands do, where the higher price the brand is, the more it seems to…reinforce the desire.” Perhaps corresponding to Apple’s #1 rank, Research in Motion’s Blackberry lost 1/5 the value of its brand and Nokia fell even further. You can read the report here to see how brand value was calculated.

Finally, the top brands list illustrates the growing financial power of developing economies. China Mobile is #9 on the most valuable brands list. In a financial institutions valuable brands list, Chinese, Russian, and Brazilian banks were among the top 20, preceding Bank of America.

The Economic Lesson

From most competitive to least competitive, the four basic competitive market structures are: perfect competition, monopolistic competition, oligopoly, monopoly.

An Economic Question: If you imagine a competitive market structure continuum, with perfect competition on the far left and monopoly on the far right, where would you place Apple? How does Apple’s “brand” affect its position and its price making capability?

Posted by: adminEcon
Tags: apple, brand, BRICs, competitive market structures, oligopoly
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