Global Dynamics

OECDWEF

Group of 8

OECD• The Organisation for Economic Co-operation and

Development (OECD), is an international economic organisation of 34 countries ( India is not a member) founded in 1961 to stimulate economic progress and world trade.

• It is a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and co-ordinate domestic and international policies of its members

• It consisted of the European founder countries of the OEEC plus the United States and Canada, with Japan joining three years later

OECD• The official founding members are the Republic of Austria,

the Kingdom of Belgium, the Dominion of Canada, the Kingdom of Denmark, the French Republic, the Federal Republic of Germany, the Kingdom of Greece, the Republic of Iceland, the Republic of Ireland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, the Kingdom of Norway, the Portuguese Republic, Spain, the Kingdom of Sweden, the Swiss Confederation, the Turkish Republic, the United Kingdom of Great Britain and Northern Ireland, and the United States of America

• OECD progressively created agencies: OECD Development Centre (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering.

OECD• OECD promotes policies designed to:

Achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;

Contribute to sound economic expansion in Member as well as nonmember countries in the process of economic development; and

Contribute to the expansion of world trade on a multilateral, nondiscriminatory basis in accordance with international obligations.

1) It acts by peer pressure to improve policy and implement "soft law"—non-binding instruments that can occasionally lead to binding treaties.

World Economic Forum (WEF)

• Founded in 1971 as non-profit organisation in Switzerland• Region served by WEF covers worldwide• Best known for annual meeting at Davos, bringing together top

political leaders, businessman, selected journalists to discuss pressing economic issues including health and environment

• WEF Organises series of meetings at regional level too• Political leaders use Davos, being a neutral platform to resolve

their differences• In 2008, Bill gates delivered lecture on creative capitalism that

work to generate profits and solve world’s inequities• 2005 summit was utilised to bring in reduction of green gas

emissions• 2004 summit saw the launch of Partnering against corruption

Initiative

WEF contd…• Global climate changes and AIDS in Africa features heavily

in every summit• Though at times, WEF is criticised for moving away from

critical economic issues• WEF has opened regional office in New York and Beijing• WEF is official observer of United nations Economic and

Social Council and is under supervision of Swiss Govt.• Initiatives taken by WEF include:

– Global health Initiatives (GHI) on PPP basis– Global education Initiative (GEI) for IT education– Water conservation Initiative on PPP basis for RSA & India– Partnering against Corruption (PACI)

WEF contd…• WEF also give away recognition awards• Technology pioneers programme for designing and or

developing new technology , instituted since 2003• Refugee run award: it’s given to charity organisation for

helping the refugees• WEF is also criticised for:• Why programmes are held only in Davos?• Meetings are mix of “pomp and platitude”• Instead of discussing problems with knowledgeable

experts, it is discussed at political level

Group of 8 ( or G – 8)• It is a concept of a forum for world’s major industrialised

economy following 1973 oil crisis• G8 does not have a permanent office or a proper

administrative structure• It elects a president by turn, every year• It was formally created with 6 members in 1975. Canada

and Russia joined later to make it Group of 8• The countries are: Canada / France / Germany / Italy /

Japan / Russia / UK / USA. The invitees are EU and EEC president

• Presidency holder sets the agenda and hosts the summit for the year

G - 8

• Recently UK and France indicated to include the five developing countries who have been participating in the meeting so far as guests

• These five countries are: Brasil / China / India / Mexico / RSA

• In 2007, G 8 agreed to explore means to promote energy efficiency at global level.

• In 2008, G8 along with India, China, South Korea and EU commission established partnership for energy efficiency cooperation

• In 2008, all G8 countries agreed on action plan for climate change to enhance engagement of private and public Fis.

G- 8 • Some facts of G 8 member country

– All countries are amongst top 15 leading export countries with few of them having largest gold reserve

– The G8 countries represent 7 of the 9 largest economies by nominal GDP

– Seven of the nine largest nuclear power producers and 7 largest donors to UN budget are in the G8

– All G8 countries are in top 20 nations ranked by the amount of voting power in IMF

– Majority of global military power rest within G8members– Four of the G8 members account for 98% of world’s

nuclear weapons

G -33• The G 33 is a group of developing countries that

coordinate on trade and economic issues• It was created in order to help a group of countries that

were all facing similar problems• Despite the name, there are 44 member countries that

include India, Pakistan, Sri Lanka, Indonesia, Kenya • G 33 Activities:• Global warming, a result of CO2 emission is jeopardizing

the future of planet.• Some of the effects of global warming are:

G -33

(i)Rapid glacier melt down, reduction in snow caps at poles, rising sea levels are few examples(ii)Changing pattern of monsoon, cyclones and typhoons of unprecedented velocity are resulting in destruction of agricultural patterns

• Capital needed for sustainable development is nowhere in sight

• Eco friendly / energy saving technologies and know how is absent

• Expertise / capacity to protect or promote national interests is weak

Global factors influencing business strategy

Key Strategic decisions relate to:– Access to international markets ( spotting a new market

or building exports)– The extent to which business will be competitive in

international market– The effect of decision making of the existence of trade

blocks– Consideration on the necessity and importance of

acquisitions– Trade Blocks: this influence the ease of access to new

markets and affect relative costs of trading

Factors for decision

• Key factors influencing global business strategy can be summarized under PEST or SLEPT heading

• Under PEST heading, :P = Political S = SocialE = Economic T = Technological

• Under SLEPT heading, : S = Social L = Legal E = Economic P = PoliticalT = Technological

How PEST interconnects

PESTPolitical and Legal Factor

Economic factors and

Currency

Social and Cultural factors

Technological factors and

Infrastructure

How SLEPT interconnects

SLEPT Legal and Regulatory

Social and Cultural

Political

TechnologicalEconomic

and Currency

PEST / SLEPTPolitical

• Political change through coup violence etc. may change the government and thereby future business strategy

• Political uncertainty ( Zimbabwe, Sudan, Venezuela) can lead to a fall in investment decision or business venture

• Political doctrine can affect the ease with which business is conducted

• Legal• Legal system, its efficiency and costs related with legal

systems • Regulatory or open to foreign investment• Tax repatriation• Cap on investment

PEST / SLEPT

Economic: • The factors to be considered are• Tax system• Investment considerations and allowances• Sophistication of financial markets• Commodity prices – oil, energy, metals• Monitory and fiscal policies – interest rates, tax regime,

government aid• Internal bureaucracy• Exchange rates

PEST / SLEPT Social;

• Religious consideration• Impact on local communities• Impact on environment• Ethical considerations

Technological:• Access to bandwidth• PC ownership• Compatibility of technology in business management

Country Rating & Investor’s confidence

Sovereign rating of Country