Required: Assume that you are the Managing Director for one of the Multinational
ID: 2819832 • Letter: R
Question
Required: Assume that you are the Managing Director for one of the Multinational Company (MNC) in plan on how to manage your business internationally so that you can take advantages from the OBOR initiatives You are required to answer the following questions in order to prepare the strategic plan: 1. Perform an environmental analysis particularly on the macro-environmental forces to identify the new opportunities and the possible risks or threat of OBOR initiatives on your global businesses. You are required to use relevant analysis tools (i.e. PESTLE) to assess THREE (3) of the macro-environmental forces in order to justify the opportunities and (Total: 25 marks) threats.Explanation / Answer
One belt one road, also known as the Belt and Road Initiative (BRI) is a project initiated by the Chinese President Xi Jinping. Its objective is to build trade routes between China and the countries in Central Asia, Europe and Indo-Pacific littoral countries.
Malaysia is actively taking advantages of the Belt and Road Initiative which will provide the Southeast Asian country with great access to trade and global market
In response to expected flat world trade growth abroad and moderating economic activity at home, China is packaging a series of initiatives to help bolster both. Malaysia can leverage its strengths to play a vital role in support of China’s strategic plan, and to broadly benefit from the opportunities created.
Countries have reacted to OBOR in a varied manner. Some have welcomed it. Others have expressed suspicion that OBOR acts as a pretext for China to dominate the Asia-Pacific and beyond. Regardless, the strategic imperatives for states located along the evolving trade route and potentially affected – directly or indirectly – by OBOR are clear. For a tiny trading nation like Singapore, adapting and leveraging on these changing circumstances are key to long-term prosperity.
Currently, Singapore, as the world’s leading transshipment port and regional oil node, facilitates trade traffic worth almost US$5 trillion. The port, strategically located at the southern tip of the South China Sea, also ships oil in bulk valued at around US$600 billion annually. There has been some mention of how the construction of a new deep-sea port off Malacca (jointly developed by Chinese and Malaysian companies) and extensions in Port Klang will challenge Singapore’s maritime hub status.
The developments of these Malaysian ports raise two primary concerns for Singaporeans. First, if these ports, positioned to the north of Singapore deliver to their full potential, fewer ships will need to pass through Singapore.
One Belt, One Road’ refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road development strategy, an initiative to link some 60 countries across Asia, Africa, Europe and the Middle East by road, train and maritime routes. The Belt-and-Road region currently accounts for some 70 per cent of world population, 30 per cent of global GDP and more than 35 per cent of the world's merchandise trade.
For China, Belt-and-Road will help export its construction and technological expertise to address infrastructure bottlenecks whilst expediting Chinese companies ‘going global’, a major trend witnessed in the recent years.
It claimed that China was posing a severe risk to the finances of a number of countries as a result of its aid activities and excessive lending. The report went on to list seven specific countries whose finances are at serious risk: Mongolia, Laos, Kyrgyzstan, Tajikistan, the Maldives, Djibouti, and Montenegro.
Political Risks China aims to take the lead in a major push to accelerate the economic development of Asia and Africa.
PESTEL. Political, Economic, Social, Technological, Environmental and Legal Factors (business evaluation) A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis.
Analysis of the current situation of the One Belt and One Road
The One Belt and One Road is a strategic policy of probing new economic growth point, and realizing the transformation from “bring in” to “bring in” and “going out”. In view of the economic environment at home and abroad in the current and future period, China’s economy can not be like the previous period as in the high-speed growth, the slowdown has become the new norm. However, it’s necessary to maintain a certain growth rate. Therefore, on the one hand, deepen reform, accelerate the transformation of economic development pattern, adjust the economic structure; on the other hand, through new initiatives to strengthen the implementation of all-round opening-up, to expand economic cooperation, and to promote the “going out” policy. Through exporting the overcapacity, China’s economy is expected to complete the transformation and upgrading as a whole. If implemented smoothly, the One Belt and One Road will be a kind promotion for the transformation and upgrading.
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