GSBS6003 Economic Component Of Pestle Analysis In India And New Zealand Assessment Answer

pages Pages: 4word Words: 890

Question :

Written Report (20%) & Presentation (10%)


Report Overview – Working in groups and acting as the employees of a consulting company who have been hired by the Australian Trade Commission (Austrade), you are required to develop a business style report and presentation. Austrade’s mission is to help Australian companies succeed in international business by providing advice, market intelligence and support to Australian companies to reduce the costs and risk involved in selecting and developing international markets (Austrade, 2011).  You have been hired by Austrade to write a report on the comparative attractiveness of two countries (of your choice) for Australian companies interested in developing their international markets.  Your task is to conduct a comparative assessment of the attractiveness of your chosen countries based on a number of dimensions. The dimensions you choose to construct this assessment is in part up to you, however, they should reflect your learning related to characteristics of the political economy and country attractiveness for investment*. For example, you may utilize components from the PESTEL or other frameworks presented during this course to construct your report.  In light of the limited time you have to complete this report it is recommended that each group choose only four dimensions on which to base their comparative analysis. As a research exercise, your report must provide empirical data on both countries so that you can make a reasonably robust recommendation.  Ultimately, your report should provide Austrade with recommendations on which of the two countries are likely to present fewer risks and challenges to Australian companies considering international expansion.  Your report should produce a rational evaluation of the business environments’ (rather than simply discussing market size or potential) so that Austrade can provide advice to firms on what to expect when conducting business in these countries. 

Learning Objectives (written report) - This assessment builds on your understanding of political economy, country risk and foreign direct investment (FDI). It requires you to build on and demonstrate your understanding of how various aspects of the political economy affect country attractiveness for investment. As a research exercise this project also evaluates your ability to identify and retrieve valid information to inform your analysis. Your ability to communicate in writing with sufficient clarity to convey complex information in an international business will also be developed and evaluated through this assessment. 

Advice - To conduct a comparative analysis, you must convert your raw data describing the dimensions of the political economy and use it to make a meaningful argument that explains to your customer (Austrade) the relative attractiveness and risks of the business environment of each country.  The following tips for comparative writing may help 

  1. Identify in your frame of reference (in this assignment your frame of reference is your analysis of the four dimensions you have selected); 
  2. make sure you explain to the reader the rationale behind your choice of grounds for comparison; 
  3. write your report using comparative language. For example, you can indicate the precise relationship between the two countries on a particular dimension by using the word "whereas" and you can make links between country A and B in the body of your report by using transitional expressions of comparison and contrast e.g. similarly, likewise, on the contrary, conversely, on the other hand..  

Your ability to analyse your data is a primary concern of the examiners of the report (i.e. your ability to draw out the implications of the data for the reader). This can be done by consistently explaining the significance of the data presented).  For example, if you present information on the political systems of your chosen countries you need to go one step further and explain/suggest/indicate whether these political systems will create distance between Australia and these countries, or whether the political systems of these countries are welcoming to foreign investment.  

The level of research undertaken must provide you with enough evidence to make a well-informed decision or reasonably robust recommendations to Austrade.  If there is a paucity of relevant information in one-area you are expected to compensate by using more data in another section of your report. As this is a research exercise, the more relevant the data you have, the easier it will be for you to write the report. Rememberwhen collecting data, only use data that you can demonstrate to be relevant (i.e. data that can be convincingly used to demonstrate the relative attractiveness or unattractiveness of each of your chosen countries for investment.)  The time you have to complete this project is limited and therefore there are understandable limits on the amount of data you can collect.  You should aim to have similar data on both countries so that you can make a good comparative assessment. Finally, all data should be discussed in a logical and coherent manner.  Your data should logically build to the conclusion/recommendations. You must clearly and concisely communicate your arguments to the reader. 

Writing, referencing, formatting, submission and word count – Please use size 12 font (Arial or Times New Roman), 1.5 line spacing and ensure that your project is a maximum of 2500 words in length (excluding an Executive Summary, Table of Contents, Appendices and Reference List). You are required to submit this assignment electronically through Turnitin. All sources consulted should be consolidated in a Reference List at the end of the report, in a consistent format in accordance with the format outlined in the Student Manual.  You may also wish to add appendices to the report. Do not to include data in the appendices of the report that is not referred to in the main body of the report. The appendices should be consistent with and used to complement the discussion in the body of the report.  Deadline – see Course Outline. The final marks of both components of the assessment are peer moderated. 

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Answer :

GSBS6003 Globalisation – Group project assessment

The following task will emphasize on comparative analysis of economic component of Pestle analysis in India and New Zealand for determining the scope and opportunities of Australian companies for Foreign Direct Investment. The study will critically compare the financial attractiveness, rate of inflation, interest and tax from the perspective of India and New Zealand. 

Comparative Analysis of India and New Zealand (Economic Aspect)
Economic AttractivenessAs far the GDP of the country is concerned, India has raked 140.78 crore with an increasing growth rate of 6.81 % over the first revised estimation of GDP in 2017 (Statisticstimes.com, 2019). In this context, it could be stated that the GDP of India has experienced an expansion of 2.57 times from the year 2005 to 2019 presently. An increasing GDP suggest a good trend for investment which is need for FDI. The GDP of New Zealand accounts for 205.02 billion US dollars in the year 2018 representing 0.33% on global economy (Tradingeconomics, 2019). The country exported nearly $39.8 billion price of goods in the year 2018 (Workman, 2019). The nation is a strong supporter of free trading which could prove to be attractive for Australian trades of Foreign direct investment. 
Tax System India abides by a well-constructed tax system. There are certain mandatory taxes which any company operating business in India needs to pay such as property tax, fuel tax, central sales tax etc (Investindia.gov.in, 2019). However, owing to the slumping of the economic growth, the corporate tax rate is reduced to 22% which was 30% previously. As far manufacturing of fresh investment is concerned, 15% rate of tax is levied which is favourable for FDI from the perspective of Australian companies (The Economic Times, 2019)The tax rate is flat by nature with personal tax being around 33% for every individual earning above $70000 and the corporate tax are only 28% (Newzealandnow.govt.nz, 2019).
Interest Rate India has tilted more towards industrial policies through liberalisation of foreign capital. However, owing to its low interest rate of around 5.15%, after Reserve Bank of India took the initiative of lowering the repo rate by approximately 25bps. The low interest rate needs are not very much favourable from the perspective of FDI. As per the estimates of interest rate by September 2019, the country experienced a record low interest rate of 1% which is not at all favourable for attracting FDI currently (Fxempire.com, 2019).  
Inflation Rate The inflation rate in India is unpredictable by nature as a result of which Uncertainty is being created within inflation rates resulting in redistribution of the money from the lenders towards the borrowers (Tradingeconomics, 2019). However, the rate of inflation rose around nearly 3.99% by September 2019, with an enhancement of 3.28% than the month of October, which will not work in favour of foreign direct investments In case of New Zealand, the rate of inflation has even lowered to 1.5% as compared to 1.7% of the previous October month (Rateinflation.com, 2019). The lower rate of inflation rate might work in favour for FDI from the Australian Perspectives. 


From the above, mentioned table it can be analysed that India will be a more profitable venture of FDI for Australian companies in comparison to New Zealand. The increasing growth rate of GDP by 6.81% of India will be a much more favourable option for FDI than that of New Zealand. The corporate tax rate is also higher in New Zealand than that of India (22%). The interest rate is NOT much favourable for either countries, However, New Zealand has recorded a lowest of 1% interest rate in recent times which might be a huge threat for conducting international business. However, the inflation rate in India is high than New Zealand which will be reducing the monetary value, thus affecting return on Investment. However, on an overall note, India is arguable the better option for FDI in comparison to New Zealand.