MNE2601 SUMMARY OF CHAPTERS.

MNE2601 SUMMARY OF CHAPTERS. Learning unit 1: Entrepreneurship in emerging economies (Chapter 1) AIM The aim of this topic is for you to explore the nature of entrepreneurship and what is meant by emerging economies. After completing this unit, you should be able to: • explain the concept of emerging economies Urbonavicius (2015) defines emerging economies as the transitional economies of Central and Eastern Europe, Asian nations that are increasing their free-market systems; countries in Central and South America; and finally, countries in Africa. Each of these regions face unique challenges. Emerging economies are those economies in search of growth opportunities and offer new products and services to their customers locally and internationally. Such economies are marked by unique challenges of culture, values and infrastructure limitations. They may experience challenges with the acceptance of new, non-traditional business models. p.2 • evaluate the opportunities and challenges facing BRICS (Brazil, Russia, India, China, South Africa) countries Table 1.2 Disadvantages and Advantages of different BRICS countries for entrepreneurs (see also section 4.3) Opportunities Challenges Brazil • Rich in natural resources • Diversified economy • Favourable labour costs • Social infrastructure lacking • High tax burden on individuals and corporates • Low levels of investment in education and skills development • High levels of inflation and public debt Russia • Rich in natural resources • A leading economy • Has the largest consumer class • Relatively politically stable • Skilled labour force • Hit hard by 2008 financial crisis • High levels of inflation compared to other emerging economies • Low levels of investment in social infrastructure • Low levels of investment in business resulting in businesses not always being competitive • Lacks institutional strength and political willingness to implement serious reforms that help to sustain growth India • Growing young population gives a competitive edge and drives economic growth • Public sector finance is poor • High levels of debt • Low spending on development • Private companies in key sectors (IT outsourcing, pharmaceuticals and textiles) are a key asset • Poor infrastructure, low levels of internet penetrations and burdensome bureaucracy • Risk-averse environment China • Industrially competitive and diverse • High levels of economic growth • Strong foreign investment • Strong levels of development with regard to infrastructure and technology • Environmental issues pose a threat to sustainable growth • High levels of inequality lead to social tensions • Factory employment is close to maximum capacity • The supply of cheap labour is shrinking, urban wages rise and more people leave rural areas for urban areas South Africa • Gateway to Africa • Good natural resources • Relatively stable politically, mature economy and sound corporate governance structures • Good infrastructures • Business finance available • An advance banking system • Expanding consumer market • Youthful demography • Skills shortages due to a poor education system inherited from the previous dispensation • High levels of unemployment poverty and inequality • Corruption and crime • Economically small in comparison to the other BRIC countries • High levels of bureaucracy and regulatory compliance • Natural challenges, such as drought and the spread of HIV/AIDS • discuss the challenges facing small and medium enterprises in South Africa 1. Lack of access to capital 2. Lack of skills training 3. Crime 4. Capital-intensive structure of the formal economy that makes it difficult for the small business to find its own niche 5. The regulatory environment, which makes it difficult for the small business to be sustainable 6. High unemployment levels that may have a bearing on the demand for goods 7. Reliance on exporting primary raw materials 8. Lack of understanding of market needs 9. Lack of support for research and development