Professional Documents
Culture Documents
MYANMAR
Submitted to: Prof. Kshitij Awasthi
Group 5
1 WMP09063 Akhilesh Shukla
2 WMP10056 Anubhav Jain
3 WMP11072 Mangal Dev Singh
Contents
Introduction .................................................................................................................................................. 2
Country Analysis - Macroeconomic .............................................................................................................. 2
Growth Performance ................................................................................................................................ 2
Inflation and Unemployment.................................................................................................................... 3
Monetary Indicators - Interest Rate, Broad Money & Exchange rate ...................................................... 4
Myanmar Trade and Global connect ........................................................................................................ 4
PESTEL Analysis ............................................................................................................................................. 5
Political Environment ................................................................................................................................ 5
Economic Environment ............................................................................................................................. 5
Social and Cultural Environment............................................................................................................... 6
Technological Environment ...................................................................................................................... 6
AAA Framework Analysis .............................................................................................................................. 7
AAA framework explained ........................................................................................................................ 7
Apply AAA Framework .............................................................................................................................. 7
CAGE Framework Analysis ............................................................................................................................ 8
Recommendation.......................................................................................................................................... 9
References .................................................................................................................................................. 10
Introduction
For every company, building and maintaining a local customer base is one of the first steps on the road to
success. Once they have achieved this goal, they are ready to take on the next step: expanding
internationally. Becoming a global company is an impressive feat, and not every business that sets out to
do it accomplishes the goal. To successfully convert your business from domestic to international, you'll
need to consider a new set of factors that might not necessarily affect being a domestic only company.
Creating a strong international presence is rarely as simple as telling your customers you ship overseas
and then waiting for the sales to roll in. There are numerous things to think about when selling and
marketing in another country, and these factors must be considered carefully.
In this project report we will be analyzing whether Airtel should expand internationally in Myanmar. We
will try applying learnings from class and will be formulating international expansion strategy for Airtel in
Myanmar. We begin with PESTEL analysis understanding the business environment, next apply CAGE
framework to understand distances among the business. At last we close the project report by applying
AAA framework.
Growth Performance
The GDP at constant prices for FY16 stands at 44,915 billion kyats1. This corresponds to 6.30% growth over
FY15 (Base 2000). It is projected that the GDP will continue to grow at a rate of 6.8% to 7.1% for the next
5 years1. Though these numbers are too good to be true compared that Myanmars strong neighbors like
China & India are struggling to provide similar GDP growths, however low baseline number to start with
will make these numbers sound reasonable. GDP growth is coupled with high Current account deficit of
avg. 4.5% for the next 5 years (Fig. 1). Gross Debt as % of GDP has shown a declining trend and is expected
to stabilize at 42 -43% which is reasonable compared to 62.3% in 2007. Also promising is that it is expected
that the growth in the central government revenue which has seen a significant jump in 2012 will be
maintained at this level for the coming years. Consistent increase in Investment has been able to offset
increasing difference in net imports and exports and has helped in maintaining almost constant GDP
growth rates (Fig 2). 20132016 forecasted numbers are as published by IMF1.
Fig 1. % GDP change (constant price)
vs. CAB% change1
Political Background
Even the current form of democracy has 25% seat reserved for military, which still provides a strong
influence on the overall decision making. Move by Myanmar towards Democracy and better Human rights
have helped it to become part of Global community (part of ASEAN), as well has prompted US, EU and
Australia to remove sanctions against the country. The country is also marred from ethnic uncertainty and
riots/insurgencies at the border. This is again a political area that needs to be resolved to achieve a long
term solution and stability needed for future business growth across the country.
Economic Environment
Myanmar (Burma) was the center of WWII war between UK and Japan, which lead not only to widespread
destruction of Burma, but also completely destroyed Burmas economic engine. Myanmar did well post
WWII to rebound back from the destruction, even in with all insurgencies. They established a close ties
and working relationship with their neighbors and played dominant role in UN during this period. 1962,
was a turning point not only from political point of view but also the economic point of view, where
Myanmar moved from a federal structure to a socialist structure which resulted in nationalization of all
national assets and a move towards a close economy.
Economic Environment
It reached the lowest point when UN declared Myanmar as a least developed country in 1987. During this
period Myanmar witnessed hyperinflation (~30% avg.) and with steep currency devaluation which was caused
by the closed economy during Juntas 50-year rule. With reforms in place since 2007 onwards, things have
started to look up, with FDI inflows, strengthening of kyat and opening of banking and investment policy. GDP
growth of 6-7% is expected in the years to follow. Myanmars current GDP is mostly derived from agriculture,
forestry, fisheries and livestock, but Myanmars GDP can be jump started with the help of labor-intensive
manufacturing.
Technological Environment
The technological environment is comparatively poorer in comparison to other Asian countries. The
internet is censored and there is very less autonomy to access and post internet blogs or any other
material. The countrys focus towards technological advancement is improving and will improve in years
to come. There are 101 universities and total of 146 higher education institutes in Myanmar.
Myanmar government is fulfilling its technological necessities by importing products from China, India,
Russia and Ukraine. There is huge investment from Indian companies in the area of oil and gas exploration,
IT, hydro-power, and construction of ports and buildings which has benefited the country enormously.
The country is also building a nuclear power reactor with help of Russia to fulfill its current & future energy
needs.
The horizontal axis balances adaptation and aggregation. Adaptation refers to the localization of products
and services provided to a domestic market that reflects the needs of that market. Aggregation refers to
providing standardized global products for common needs in varying overseas markets. Both adaptation
and aggregation are parameters determined by global market characteristics; as the level of adaptation
increases, a product will be more accepted by local markets, but will result in an increase in development
costs, consequently, nullifying economies of scale for global markets. Companies must find the ideal
balance in terms of national and regional market differences as well as in the size of local markets.
Arbitrage is presented as the vertical axis. Adaptation and aggregation form the dimension that
determines the extent to which distances in global businesses can be diminished, while arbitrage derives
the value out of these distances. Typical arbitrage strategy within global businesses can be seen in local
production that exploits wage differences.
Aggregation Both India and Myanmar provide the firm to achieve economies of scale by acting
as an Asia hub to serve large market.
Adaptation Basic mobile communication calling and Internet/Data services are standard and
will not require adaptation. Although, Value Added Services (VAS) must be highly localized
otherwise customer will not find them useful.
Arbitrage Indian and Myanmar both have access to cheap labor but in terms of technical
excellence needed, India will have a better skill set, thus arbitrage possibility seems less possible.
The cultural, administrative, geographic and economic (CAGE) distance framework helps managers
identify and assess the impact of distance on various industries. It also helps to understand the pattern
of trade, capital, information and people flows.
Geographic
Cultural Distance Administrative Distance Economic Distance
Distance
Recommendation
Based on analysis from above frameworks, our group recommendation for Airtel is that it should expand
in Myanmar as market potential is very high. To being with it should start with basic communication
services as that will enable Airtel put a foot in the door and then as they better understand the market
start offering localized VAS products.
References
1. Going Global: How to Expand Your Business Internationally -
http://www.businessnewsdaily.com/8211-expand-business-internationally.html accessed on 30
May 2017.
2. Management Strategies for Global Businesses -
https://link.springer.com/chapter/10.1007/978-4-431-55468-4_2/fulltext.html accessed on 30
May 2017
3. http://www.imf.org/external/pubs/ft/weo/2013/02/weodata/weoselgr.aspx accessed on 30
May 2017
4. http://www.economywatch.com/economic-statistics/country/Myanmar/ accessed on 30 May
2017