Essays on International Engineering Management Case Study

Download full paperFile format: .doc, available for editing

The paper 'International Engineering Management' is a wonderful example of a Macro and Microeconomics Case Study. Investing in any country or business is risky. However, investing also has its benefits, as the research will present. Indonesia is a country that offers many benefits for foreign countries, though it has presented major threats. The KHS GmbH from Germany would benefit much by investing in Indonesia due to the available market. More importantly, in Indonesia, the business will have the opportunity of meeting one of its key objectives. That is; it will have the opportunity of reducing the production costs linked to the cheap labor available in Indonesia.

Thus, it is highly possible that investing in Indonesia will increase the profit margin of KHS GmbH. Indonesian Economy The economy of Indonesia in Southeast Asia is the largest, and an emerging market in the world. Indonesia is a member of the G-20 countries. That is; the country’ s economy is part of the newly industrialized country. Indonesia’ s economy is reliant on the domestic market; it has state-owned enterprises, as the government owns about 141 companies in the country.

More essentially, the government directs budget spending. However, private and foreign companies control about 80 percent of Indonesia’ s economy. Indonesia has a fast-growing economy, behind China. The economic performance of Indonesia is currently weak, though a boost is anticipated in the year 2017 or late 2016s. As presented below, the GDP growth has slowed down, the inflation level has abated gradually to an average of 6.9%, and the current account insufficiencies are smaller than projected (ADB, 2015). (ADB, 2015)   The population of Indonesia is at 251.5 million. GDP (PPP), is at $2.7 trillion, 5.0% growth.

5.8% of a 5-year compound annual growth and $10,641 per capita (Heritage. org, 2016). The unemployment level stands at 6.2% while the inflation level is at 6.4%. Regulations on termination and employment of individuals are rigid as it undermines the dynamic labor market law. In the 2014 financial crisis, the government reacted by lowering fuel subsidies, eliminating distortions in the market, and maintaining an elevated inflation consumer price (Heritage. org, 2016). The FDI inflow into the country is at $22.6 billion. The currency used in the country is Rupiah.

The graph below presents the strength of the Rupiah in the last one and a half years, and the annual GDP of the country.   (Heritage. org, 2016) The chart stipulates that growth is expected to accelerate in the year 2017 by at least 5.5%. Regulatory uncertainty will linger to grow, holding back private investments such as KHS GmbH because of the low prices of goods. The chart stipulates there is room for fiscal support, the normalization of the monetary policy is affected by the strength of the currency and inflation (OECD. org, 2015). Production Operation Advantages and Disadvantages in Indonesia Some of the most significant recompenses of starting production operations in Indonesia include the availability of numerous natural resources.

There is also a large population, which creates a ready market for its foreign products. Indonesia stands as the fourth populous country in the world. Thus, the domestic market available is high and open for profitable investments. The high population leads to high unemployment levels. Thus, it stipulates the demand for jobs leads to cheap labor supplied. Additionally, both foreign/domestic investors receive equal treatment though, in some national interest matters, investment limitations are considered (Budiardjo & Reksodiputro, 2015, 24).

References

ADB, 2015. Asian Development Bank: Asian Development Outlook 2015 Update: Enabling Women, Energizing Asia. Asian Development Outlook 2015: Financing Asia'a Future Growth. [Online]

Available at: http://www.adb.org/publications/asian-development-outlook-2015-update-enabling-women-energizing-asia http://www.adb.org/publications/asian-development-outlook-2015-financing-asias-future-growth

[Accessed 4 4 2016].

Budiardjo, A. & Reksodiputro, N., 2015. Giude to Doing Business: Indonesia. Lex Mundi World Ready, pp. 1-41.

Heritage.org, 2016. 2016 Index of Economic Freedom: Indonesia. [Online]

Available at: http://www.heritage.org/index/country/indonesia

[Accessed 4 4 2016].

I-I, 2016. Indonesian Investments: Risks of Investing in Indonesia. [Online]

Available at: http://www.indonesia-investments.com/business/risks/item76

[Accessed 4 4 2016].

Itim International, 2016. The Hofstede center: Strategy - culture - change. 1. Indonesia; 2. Germany. [Online]

Available at: https://geert-hofstede.com/indonesia.html https://geert-hofstede.com/germany.html

[Accessed 5 4 2016].

Lange, S. J., 2010. HRM Issues for German Companies Establishing a Subsidiary in Indonesia. New York: diplom. de.

OECD.org, 2015. OECD: Indonesia - Economic Forecast Summary (November 2015). [Online]

Available at: http://www.oecd.org/eco/outlook/indonesia-economic-forecast-summary.htm

[Accessed 4 4 2016].

Stehle, W. & Erwee, R., 2007. Cultural Differences Influencing German HR Policies in Asia. Journal of Asian Business Studies, pp. 34-47.

Download full paperFile format: .doc, available for editing
Contact Us