Challenges Opportune Regional Integration .Com

Discuss About The Challenges Opportune Regional Integration? Johnson and Martin Ltd (J&M) is a company that manufactures a popular line of clothing for young people. The company’s products are positioned as fashionable and of high quality. Due to the little prospects for the future sales growth, the firm has decided to expand its clothing to the Middle Eastern region (Jullens, 2013). The potential marketing for these products is Turkey, Egypt, and Saudi Arabia. As a marketing consultant, I have carried out market opportunity assessment to determine which is the most prospective market to enter. In this market assessment opportunity, I have examined the investment environment, impacts of the government interventionist policies, the market potential and the effect of regional integration initiatives and related issues. In addition to that, I have evaluated the opportunities and threats in the three markets. This study, therefore, explains the market opportunity assessment for Turkey, Egypt and Saudi Arabia and the opportunity and threat s in each of the three markets. The investment environment is the global economy and the domestic economy , developments in which have an impact on the prices (values) of the assets. My examination of the investment environment revealed that investment climate in Turkey is excellent particularly for the clothing of young people. Hollensen points out that the country has a young dynamic population and a growing middle-class with a lot of purchasing power (Hollensen, 2017). He clarifies that its unique geographical location is critical in attracting many customers since it is strategically situated between the East and the West. An investor can, therefore, make high profit margins, as a result of the high volume of sales. In addition to that, it is one of the G-20 states with the highest economic growth.   Also, the state has a very friendly business climate to the investors, access to a huge national consumer base and other nearby markets and supports expansion for the international investors. A good investor wil l, therefore, make use of such an investment environment Turkey has bonded very well with most of the investors such as India. According to Hollensen, there are as many as 260 Indian companies which operate in Turkey. In the last 14 years, these firms have made humongous sales worth $ 103 million (Hollensen, 2017). Some of these companies include Wipro, Polyplex, and Mahindra among others. Turkey has a verycompetitive and skilled workforce comprising of a young population with flexibleinvestment settingand low tax prices, the country presents an exciting opportunity for clothing investors. Hence, the opportunity Turkey presents for the Johnson and Martin Ltd to invest is perfect Poor implementation of intervention policies by the government has held back the interests of foreign investors in Turkey in the last decades. A report conference that was released by the United Nations about development and trade (UNCTAD) in the year 2013 revealed that the political uncertainty which was escalating at the regional level subdued global economic prospects were preventing foreign investors from investing in Turkey (Joffe, & Vasconcelos, 2014). However, the Government of Turkey has carried out structural reforms to boost investment climate in the country. Moreover, the government has ensured tight fiscal controls, privatization of the economic enterprises of the state, increased flexibility in the labor market and a strong banking sector. As a result, the economy has improved. The Government of Turkey has pursued a well-knownreform program about investment atmosphere whose aim is to attract more Foreign Direct Investment (FDI). Also, the formation of Turkey’s Investment Support and Promotion Agency has attracted investors (Kanat, 2004). ISPAT supports new investors, the business making process and promotes an investment setting that is friendly. It functionsas a support within the government for changesthat ensures investment and runsto promote domestic and global consciousnessof the values of the investment. The government’s transformationsin Turkey have made it easier to starta firm. The government has subsidedpermit necessities and has allowed people to register their businesses via regional commercial registry offices (Tuncel, 2017). Furthermore, the government has instituted a single firm registration form. The Turkish Government policies have ensured that the taxation system is friendlier to investors. According to Tuncel, the normal commercial tax rate was lowered from 30% to 20% in 2006. Market potential is the wholesize of the market for a certain product at a particular time. Turkey has a high market potential that covers more than one billion consumers. Turkey international image for investment is mainly moldedby the various marketplace opportunities both export and domestic-oriented (Kirisci, 2012). The market potential of Turkeyinclude a large and expanding domestic market which is approximately 70 million, a European market that generates a lot of capitalof about (600 million), evolvingRussian, Central Asian markets (roughly205 million) and a distinctand growing Middle East and North Africa markets (approximate 160 million). The strong historic and cultural ties provide Turkey with privateaccess and a center to create abusiness with these states. Hence, the high market potential makes Turkey a prominentinvestor in the Central Asian Turkic Republics. Regional integration has been used as an efficient instrumentfor promoting regional peace, prosperity, and stability, with the added prospect that economic expansion might also facilitate the transition to democracy (Joffe, & Vasconcelos, 2014). Turkey and the EU have worked on these suppositions and have developed various approaches to regional integration. Some of the impacts of regional integration initiatives are discussed below One of the effects of the regional integration initiatives is that it has made Turkey to increasingly become a â€Å"trading state†. Turkey has increased and diversified its economic relations with the Mashreq and Maghreb countries (Kirisci, 2012). After the Arab Spring, the Turkish regime had begun to improve componentsof neighborhood policy with Mashreq and Maghreb countries. The policies aimed at greater economic integration. Nevertheless, there has been up and down due to the crisis in Syria and also issues of stimulating transformation in the Arab world. Regional integration has allowed Turkey to acquire a higher proportion of the market share compared to its neighborhood. As the cold war ended, only 10% of itstranscontinentaltrade was with its neighborhood and this amounted to $3.5 billion (Frieden, 2015). Much of the trade was with Iran and the Soviet Union. Approximately half of the total Turkish foreign trade was acquired by the European Union countries roughly $17 billion. Nonetheless, the situation changed dramatically in the year 2011. Trade with the neighborhood was pricedat about $82 billion and comprised around 22 percent of the Turkeys general trade. Turkish regional integration has displayed other dimensions too.   In the aftermath of the Arabs revolution, the ‘zero problems with neighbors’ policy collapsed. The policy was very crucial since it was the primary source of the soft power of Turkey in the international affairs (Kirisci, 2012). Kirisci explains that the Turkish foreign policy is almost collapsing. In spite of much effort between Turkey and Syria to resolve their conflict, the conflict is too far from being resolved. Currently, Turkey is deeply involved in aconflict with Syria and this is affecting its own security negatively.   In my research, I discovered that although there are ongoing efforts by the government to court worldwide investors, the investment climate in Egypt remains challenging. Egypt has hard controls of currency and shortages. As a result, the country incurs losses and depend on importation of inputs essential for domestic production and manufacturing (Leigh & Blackey, 2016). The government of Egypt, however, remain committed to attracting investors across the globe.   For instance, it has launched a large-scale industrial zone near the Suez Canal. The main objective is to attract multinational manufacturing and logistic businesses alongside the main transnational shipping route. Most of the investors have reported delays of several months in the execution of foreign exchange transfers. In addition to that, labor rules inhibit firms from hiring more than 10% non-Egyptians. Moreover, foreign investors are not permitted to operate simple partnerships or sole proprietorship. A foreign indus try that is willing to import for trading purposes has to do so via a complete Egyptian-owned importer. Egyptian courts rarely recognize foreign judgments. Solving disputes takes a lot of time, with the time taken to settlea case to completion averaging 3-5 years (Leigh & Blackey, 2016). Also, their many hindrances such as regulatory complexity, excessive bureaucracy, the mismatch between labor market demand and job skills, non-tariff trade barriers and slow and cumbersome customs procedures. The world bankhas ranked Egyptamongstthe easiest countries in the Middle East and North Africa to start a business. According to the World Bank, a business can be opened in 8 days when compared to the and 19 and an international of 42. A businesspermit is not available online and has to be done in person at the General Authority for Investment (GAFI), situated in Nasr City with satellite offices in Assuit, Ismailia, and Alexandria. Egypt commenced structural reforms to correct macroeconomic imbalances that existed before President Mubarak’s era. Egypt has a long history of government intervention (Loewe, 2013). A substantial re-orientation happened in 2004 when President Mubarak appointed a new regime which comprised of several former business men. It came up with a new strategy for the industrial policy which was considerably more demand and market-oriented and less interventionist. The objective was to address the market failures which were hindering structural change in Egypt and prevent ‘vertical discrimination’ as much as possible (Gonzalez-Vicente, 2015). The industrial policies were effective in investment promotion, improved the entrepreneurs access to finance and simplified tax rates and procedures. Egypt is the largest textile producer in Africa accounting for about 50 percent of the world production in 2008. Private companies have dominated the downstream industry with more than 70 percent garment production. The Egyptian government is encouraging private investors to invest in both down-stream and up-stream industry (Kaplinsky, & Morris, 2014). Over the past 3 decades, the United States and Europe have been the primary markets for the textile and clothing exports with a market share of 35 percent and 46 percent respectively. Foreign Direct Investment has been an important vehicle for economic expansion in the emerging markets countries. Egypt has become the leading attractor of all the foreign direct investment in Africa. By the year 2008, it had attracted 56 foreign investment firms in the textile industry. The regional integration between Egypt and the United States has led to various economic implications. Improvement in Egypt’s market access to the united states. A potentially significant aspect of a preferential agreement with the United States has advanced access to the US markets for Egypt. (Melo & Tsikata, 2015). Important US quotas and tariffs remain on most of the Egyptian products. The ‘US International Trade Commission reports that out of the top 100 products that are imported from Egypt, only 16 products enter the United States duty-free. 22 of the remaining products face tariffs of less than 5%, 29 face tariffs which range from 5-15% and 26 products face tariffs higher than 15 percent. Hence, the export price of Egypt in the United States markets increases For Johnson and Martin Ltd company, Saudi Arabia is one of the most critical export markets. It is the biggest free economic market in the Middle East and holds 25 percent of the GDP (Rabie, 2013). It has a huge population of customers of about 400 million with high purchasing power. Also, its geographical location makes it a perfect entrance to European, African and Asian markets. The local market is experiencing a rapid continuous expansion. The Saudi Riyal is regarded to be one of the most stable currencies in the world (Alkhareif et. al., 2017). The Ministry of Commerce and Industry (MCI) has ensured that there are no obstacles which might present a barrier in the facilitation of the works of the ‘industrial investment facilities’. It has come up with methodologies and mechanisms of issuing licenses and services for the national factories. The most crucial procedure that has been put forward involves dividing the industrial licensing to two stages: issuing of a tempo rary license that is valid for one year and which is renewable and final licensing that is renewed after every 3 years. The government of Saudi Arabia has employed measures such as privatization among others to attain a more equitable distribution of income and wealth. Since 1980, constant public efforts have been applied to expand the economic base in substitute of the reliance on the hydrocarbon natural resources for the public revenues and economic output (Al-Rushaid, 2010). The government was aware that the economy ‘was simply resource-based and rentier in nature, with economic growth or contraction dependent on the price and output of the oil’. Nonetheless, this economic prospect was no longer plausible. The government accorded the private sector greater role in the development to improve the output, employment, and investment. The government adopted another mechanism to ensure that the private sector’s role in the economy is strengthened. These measures include promotion of non-oil exports, support to SMEs, increase of the competitiveness of the domestic products in local and twenty foreign markets and improvement of the regulatory and investment environment. Research conducted by analysts at Technavio have revealed that the retail market in Saudi Arabia will expand steadily at a CAGR of more than 7 percent by 2020. High urbanization, rising personal income, and high consumer confidence index has allowed private consumption the most imperative component of Saudi Arabia’s economy (Zain, Kassim, & Kadasah. 2017)These factors have also attracted many retailers all over the world into the market by increasing cost and competition in the major urban areas. The increase in competition will, therefore, create more pressure on the profit margins of those operating in the retail sector. The situation will provide investors the opportunity to exploit the new regions with more growth potential. Most of the population in Saudi Arabia are very traditional; however, with the increase in exposure to an international fashion brand, internet savvy, and young population have adopted new styles and designs. Hence, this preference for goods with the n ew design will improve generate capital for the investors. The establishment of the Gulf co-operation (GCC) between Saudi Arabia and the United Arab Emirates (UAE), Bahrain, Qatar, Kuwait, and Oman happened in 1982. The GCC has made progress from a Free Trade Area (FTA) to the Customs Union in 2003 and a Common Market in 2008 (Delgado, 2016). Launching of the common market eased the movement of goods and services. Firms and investors from the GCC states are active in mergers and acquisitions. From 1999, many transactions with a known value of $573 billion have already been made. It is worth noting that these mergers and acquisitions are very important investors in the cross-border M&A abroad. In my research, I was able to realize that all the three countries present the same opportunities. Thereis theexistence of a high demand for value-added products for the young people (Diaz et.al., 2015). Also, there is a market niche that exists in the three countries for branded products. For instance, internet savvy and young population in Saudi Arabia have adopted new styles and designs. Hence, investors can come up with a quality brand that will satisfy them. There is a high potential to invest in Egypt and Turkey due to high cotton production, spinning and finishing processes. Turkey has a high population of young people who are the target for the Johnson and Martin Ltd compared to Egypt and Saudi Arabia. Some of the threats for the company are second-hand clothing which is imported from Europe and the United States. The company might experience stiff competition from other countries such as Turkey, India, and China. Furthermore, popular brands for the young generation might be imitated. Lastly, tradition and culture pose a great threat to some of the products particularly in Egypt and Saudi Arabia who are adopting some of the new fashions. To sum it all, Johnson and Martin Ltd has the opportunity to invest in the three countries. However, market opportunity assessment of the three states is the most effective method of determining the most suitable country to invest. Turkey presents a great opportunity due.   to its location and alarge population of theyoung population. It also produces a lot of cotton and is a major exporter. Turkey has a wonderful business climate that is very friendly to investors. Nonetheless, it’s interventionist policies are holding the country back. On the other hand, Egypt has many drawbacks such as poor control of finances and shortages. The country also has a lot to do to attract most of the investors who do not tolerate excessive bureaucracy among other issues. Saudi Arabia is the third state whose economy has flourished in the United Arab Emirates. Market expansion in the country has attracted many investors who have contributed to the growth of the economy. The country presents a great opportunity due to the young generation that adopting international fashion. In terms of opportunity and threats, Turkey is the most promising since it has many opportunities and few threats. As a marketing consultant, I recommend Johnson and Martin Ltd to consider entering Turkey first. Turkey has a large market niche to be exploited with thehumongous young population. Turkey also provides the friendliest environment for the investors. In spite of the clothing it produces, it will allow market growth due to its location. Moreover, a unique brand needs to be introduced into the market to prevent competition from within and abroad. The best market entry strategy is through a Turkish Agent. The agent will provide information on the local regulatory framework, valuable business contact, and language assistance. As the business expands, the firm may open branchesand make more local savingsto increase the market share. Alkhareif, R.M., Barnett, W.A. and Qualls, J.H., 2017. Has the Dollar Peg Served the Saudi Economy Well?  International Finance and Banking,  4(1), p.145. Al-Rushaid W. (2010). Strengthening of National Capacities for National Development Strategies and Their Management: An Evaluation of UNDP's Contribution. United Nations Development Programme. Retrieved from: https://web.undp.org/evaluation/documents/thematic/cd/Saudi-Arabia.pdf De Melo, J., and Tsikata, Y., 2015. Regional integration in Africa: Challenges and prospects. Delgado, P.A.A.D.L., 2016.  The United Arab Emirates case of economic success: the Federal Government Economic Policies (Doctoral dissertation). Diaz, A., Hill, J., Jenkins, R., Kay, A., Pye, A., Morley, D. and Tejedor Garavito, N., 2015. A SWOT (Strengths, Weaknesses, Opportunities, and Threats) evaluation of university student-staff partnerships in co-creating educational resources, peer support and research within STEM (Science, Technology, Engineering & Mathematics) subjects.  Journal of Scientific Research & Reports,  5(2), pp.161-170. Frieden, J., 2015.  Banking on the world: the politics of American international finance. Routledge. Gonzalez-Vicente, R., 2015. The limits to China's non-interference foreign policy: pro-state interventionism and the rescaling of economic governance.  Australian Journal of International Affairs,  69(2), pp.205-223. Hollensen, S (2017). Global Marketing (7 th . Ed.). 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Leigh, N.G., and Blakely, E.J., 2016.  Planning local economics development: Theory and practice. Sage Publications. Loewe, M., 2013. Industrial policy in Egypt 2004-2011. Rabie (2013). Industry in KSA: Persistent Renaissance. Ministry of Commerce and Industry. Retrieved from: Salahuddin, M. and Gow, J., 2014. Economic growth, energy consumption and CO 2 emissions in Gulf Cooperation Council countries.  Energy,  73, pp.44-58. Tuncel, O. (2017).   Diplomacy in action. Central Bank of Turkey Zain, M., Kassim, N. and Kadasah, N., 2017. Isn’t It Now a Crucial Time for Saudi Arabian Firms to be more Innovative and Competitive?  International Journal of Innovation Management,  21(03), p.1750021. .com boasts a pool of 3000+ experts from different backgrounds, who are solely dedicated to providing premier quality assignment help. Due to the diversity in our expert team, we are capable of providing academic assistance in more than 100 subjects. 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