Podcast
Questions and Answers
Explain how a country's 'ease of doing business' ranking can affect a company's decision to enter that market.
Explain how a country's 'ease of doing business' ranking can affect a company's decision to enter that market.
A low ranking can deter companies due to potential delays, increased costs, and disruption to the distribution chain. Higher rankings suggest a more business-friendly environment, attracting companies.
Identify three indicators, as defined by the World Bank, that are used to assess the 'ease of doing business' in a country.
Identify three indicators, as defined by the World Bank, that are used to assess the 'ease of doing business' in a country.
Starting a business, dealing with construction permits, and getting electricity are three indicators used by the World Bank.
Describe how improvements in a country's 'ease of doing business' ranking could lead to increased foreign direct investment.
Describe how improvements in a country's 'ease of doing business' ranking could lead to increased foreign direct investment.
Improvements signal reduced bureaucratic hurdles and lower operational costs, making the country more attractive to foreign investors seeking stable and efficient business environments.
Explain why countries with low GDP, political instability, and high crime rates might receive low 'ease of doing business' rankings.
Explain why countries with low GDP, political instability, and high crime rates might receive low 'ease of doing business' rankings.
Discuss how the 'trading across borders' indicator can impact a company's supply chain efficiency and overall profitability.
Discuss how the 'trading across borders' indicator can impact a company's supply chain efficiency and overall profitability.
Flashcards
Ease of Doing Business
Ease of Doing Business
How easy it is to start and operate a business in a country, according to regulations.
Problems with Ease of Doing Business
Problems with Ease of Doing Business
Delays in sales, increased costs, and potential effects on the distribution chain.
World Bank Group Report
World Bank Group Report
Summarizes research on how difficult regulations are for businesses in each country.
Ten Indicators
Ten Indicators
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Starting a Business: Key Factors
Starting a Business: Key Factors
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Study Notes
- Ease of doing business is an important factor when evaluating a country as a potential market.
- Businesses may seek alternative markets if they face problems entering a country, setting up premises, or conducting everyday trading activities.
- Problems with the ease of doing business can cause delays in sales, increased costs, and potentially affect other parts of the distribution chain.
- The World Bank Group publishes an annual report summarizing research on the difficulty of regulations for businesses in each country.
- A higher ranking in the World Bank report indicates it is easier to start and operate a business in that country.
- New Zealand and Singapore are ranked at the top, making them good locations for companies based on ease of doing business.
- Somalia, Eritrea, Venezuela, South Sudan, and Yemen are at the bottom of the rankings, making them less desirable locations for marketing goods and services.
- Countries with low rankings may have common characteristics like low GDP, political instability, and high crime rates.
- India's ranking in the World Bank's Ease of Doing Business report rose from 142 in 2014 to 100 in 2017.
- The World Bank uses ten indicators that track a business's life cycle from creation to its end, highlighting potential problems at each stage.
Ten Indicators Produced by the World Bank
- Starting a business: This includes the number of procedures, time, cost, and minimum capital requirements.
- Dealing with construction permits: Assesses the number of procedures, time, and costs involved.
- Getting electricity: Evaluates the number of procedures, time, and costs associated with obtaining electrical power.
- Registering property: Reviews the number of procedures, time, and costs to register property.
- Getting credit: Considers the strength of legal rights and the information required to obtain credit.
- Protecting minority Investors: Assesses the strength of protections for minority shareholders against misuse of corporate assets by directors for their personal gain.
- Paying taxes: Focuses on the number of payments per year, time, and percentage of profit.
- Trading across borders: Includes the documents required, time to export/import, and cost to export/import.
- Enforcing contracts: Examines the number of procedures, time, and cost as a percentage of the claim.
- Resolving insolvency: Looks at the time, cost, outcome and recovery rate for creditors involved in resolving insolvency.
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