Global Perspectives

Global Perspectives (MGMT 8110- 18 S)

Reflection Assignment

Fair Trade

Emerging Markets

Submitted on- July 16, 2018

Fair Trade

Major points- Fair trade is a social movement to make global trade fair for all workers and farmers so that they can earn nearly equal and have improved life style & better working conditions. It might also result in sustainable development because farmers work closely with environment and if they are given decent working conditions then they can help in making business a sustainable one. It encourages to secure worker’s right because in normal trading environment, a farmer who actually grows food, gets only a small portion of its selling price, whereas retailers earn more.

WFTO (World Fair Trade Organization) has following principles- making global businesses a fair trade, improve working environment, providing transparency in business policies, equality in wages and employment opportunities, encouraging corporate social responsibility, preventing environmental degradation, sustainability in business.

Connection of fair trade with global business and how it is important to me as global business manager- At global business level, there are many international companies who do not want to implement fair trade because higher authorities and corporates are earning more and they do not want to break their business chain.

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Also, if they regulate fair trade then prices of their product may rise which eventually may result in decrease of sales. Basically, they are concerned about their revenue. On the other hand, fair trade organisation is concerned about organization of global exchange markets and operating pattern that help to redesign the distribution channels and value chain market (Fridell, 2007).

Fair trade organisations have tried to make alternative markets in the past where trading activities were re-designed with fair activities proposed by NGOs. The first stage of alternative trade was done in South and was made into reality in 1940s in US and in 1950s in European countries (Redfern & Snedker, 2002).

It is important to note that alternative trade market is different from mainstream market. The traditional market chain does not rely on reputation of business who offers fair trade products in market but it is based on evidences of fair trade activities that are promoted by products who have fair trade label on them. This specific labelling has advantage as it helps the fair-trade products to enter into traditional markets. From business manager’s view point, it is important to consider the short range of products that come under fair trade as it limits to only agricultural products. But if a company is manufacturing compound products which are a mixture of small different products then it is hard to get a fair-trade label because 20 percent of the total mixture should be made from fair traded products or ingredients. But once a product is labelled as fair traded then it is differentiated from other products that makes the company better from others among consumers.

Emerging Markets

Major points- Emerging markets are those which are developing rapidly and are emerging economies in the developing nations. Examples are China, India, Brazil, South Africa etc. Emerging markets are being identified as having rapid growth in economy, with in developing countries, higher investment return rate for business etc. International companies see most opportunities for business in these emerging countries as of higher consumer rate, growing economy, which leads to high income thus higher rate of spending money. Almost all multinational companies are inclined towards emerging markets.

Importance of its connection with global business and to global business leaders- The reason of venturing in developing nations is that there is significant difference between population growth of developed and developing countries which makes a difference between consumerism in both. International businesses see higher consumption in emerging nations than in developed countries so they will get higher return in developing nations. This is the reason why Walmart is interested in opening a number of franchises in India. Not only companies from developed markets are making profit in emerging countries but also emerging companies from developing nations are growing rapidly in advanced markets. China is one of the biggest emerging market and it is important to know “the effect this country has on world economy” before investing money into it. For example, the low rate of its currency is a main concern. As China’s most of the economy is based on its exports and it is good for other developed nations to import from them because of difference in currency exchange rate. But China has recognized this matter and its government has stopped its currency to be used in global trading system (Emerging Markets, 2017).

So, in this way it has created problems for other nations and has affected world economy. Even though there are lot more opportunities to do business in emerging markets but it is crucial to consider issues like political instability, corruption and financial instability in those emerging countries. If a global corporation is thinking to set up a manufacturing plant of bioethanol in Brazil as it has a lot of reservoirs of raw bioethanol then company has to be concerned about rising corruption in this country. So, it can be concluded that emerging markets have become a focus point for all multinational companies because of higher growth rate but there are also a chance of financial crisis and political issues in those countries.

References:

Paul, I., & Eaton, S. E. (2017). Emerging Markets: An Overview. Canadian Points of View: Emerging Markets.

Valiente-Riedl, E. (2016). To be free and fair? Debating fair trade's shifting response to global inequality.