Global Business Management

Question: Write an essay on Global Business Management. Answer: Introduction: Marketing strategy is the techniques that an organization implements in order to acquire desired goal in a market place. Every marketer should spurn out good strategies so that company the company gains profit and sales rate of the product increases. Strategies are made by scrutinizing the market sales of other companies (Wilson, et al.,2012). Competitive advantages can be obtained and an organization can increase their sustainability rate in global market place. Long term goals of an enterprise can be deduced by analyzing the initial situation of the company and the present placement of the organization in the market place postulates the growth rate of the company. The purpose of planning is to take required actions and necessary steps to develop a concrete place among the competitors. Australian mango industry wants to spread their market in Asian market place(Marques, et al., 2014). Australian mango has been successful many places. Indonesian market is not unexcavated by Australia but they want to re institutionalize their business in Indonesia. That is why the Australians now want to extend their business in Indonesia. Economic Environment: The team that was generated by the company for reestablishing the Australian mango market in Indonesia analyzed the market to generate the economic status of Indonesian Market and to evaluate the sale of market in past 3 years. Pricing strategy can be suggested as the economic strategy(Hartley Claycomb, 2013). Economic strategy calculates component of accounts, market condition, paying ability of the customers, margin of trade and actions of the competitors. Economics in business deals with the financial issues that can arise in organization and management. A market involves many systems that affect the price of the product. A product rate may vary from market to market due to the disparity in valuation of money and culture of the market. Economic condition of a country influences the market condition. As an emerging market of Asia, Indonesia has the largest economy in the Asia and hold a significant position in world economy. Indonesia is currently holding its commendable position in market place with 75.5% of the market share while Malaysia has 35.5% of market economy and Korea has overtaken Malaysia by 2.5%. Indonesia is mostly dependent on the domestic market and feasts on the market investments made by the private conglomerates. Indonesia has great potentiality and it has not gone unnoticed by the international company (Nugroho, 2016). The key aspect of Indonesian market is production of fruits and vegetable. The price of fruit depends on the seasonal availability and production quantity. In countries of Asia, Mango is the fruit that has never ending popularity and the fruit is known as the king of fruit(Mitra, 2014). Australia wants to take advantage of the love that the Indonesians have for this fruit. They have studied the market statistics of past 3 year and have formulated a strategy according to it. In 2013, mango sales from May-July were about 45%, in 2014 it was 59% and in 2015 it was 65.9%. Indonesia has stabilized their market which can support export market of mangoes from Australia. Indonesia is the closest neighbor of Australia so it is beneficial for Australia to renew their business with them. The population of Indonesia is nearly 250 million; this means that Australia will be gaining profit over $2000.3 million. In 2015, 70% of mangoes were sold in the market of Indonesia from May to June. Political environment: Political analysis of the country was also necessary to structure out strategies as how to reestablish their export service (Nissinen, 2016). Indonesia is a country which shares genial relationship with other countries who wants to do export business with them. Indonesia commands considerable influence on the issues regarding economy and protection of significance to U.S interest. U.S is the greatest investor in Indonesian market as the country contributes to stability and most importantly to peace. If one is considering future outlook, Indonesia has greater prospect than any other developing countries. The issues that dominate the business climate of Indonesia are Poor infrastructure of the organizations, corruption and constant dispute between the investors (Hadiz, et al.,2013). They possess the principle values to become influential face of the global economy. Their domestic market supplements the power they need to grow in business. The country still likes to do business internal ly. Their private consumption reportedly accounts over 60 percent of total GDP. The growth rate of GDP has been 4.5 percent in 2001 and in 2015 it has reached to 6.1%. in other there is growing discontent about the rising price of fruits and vegetables, but Indonesian market is stable in case of food items and their political culture shows that exporting food items can be profitable for Australian market. Social and cultural environment: Social culture of Indonesia is analogous. They are the kind of people likes to adhere to their culture. But they support multi cultural as they have strong influence of Hinduism, Christianity and Buddhism in their culture. Their official language is Bahasa Indonesia. India and China has a lot of influence in their culture. They share the same passion for the fruit mango. Australia will benefit doing business with them as the growing time of mango in Indonesia differ from the growing time of mango in Australia. Analyzing for the strategy that needs to be chosen: The three key competitors who can hinder the growth of Australian market in Indonesia are Toza Juice, Indojaya Makmurabadi and Indo fruit Co. Ltd. Amongst them Toza fruit suppliers are the most ferocious marketers who exports mangoes to other countries and also has strong hold on the Indonesian fruit market. But our Australian organization has maximum access to markets all over the world. Over 8 percentile of mango that is 4000 to 5000 tons of mangoes gets exported every year and the difference in production season has made Australia leading exporters of mangoes. Supplier power should be assessed in order to scrutinize their power and measure the control they have over the market(Huxley, 2013). Switching of cost keeping on view their cost can add more power to Australian company. The buying power of the consumers should also be taken into consideration so that the price that the rate of the product is affordable to the customer. Lead competitors of the market should be kept on guard. What kind of product they are selling in what rate should always be noted (Jobbe Ellis-Chadwick, 2012). If they are supplying equally attractive product at lower rate and service then the customer are bound to incline their favoritism towards them. Power is the significant element to which one should hold on to. If the security level is low and the market culture of the place allows various entrants at a time then competitors can ruin the potentiality of growth of the business. Durable barriers of capital and strategies can never let the take advantage of the weakness of the organization. Analysis of Porters four components of market has assisted to understand the strategies that can be undertaken by business authorities to be triumphant. Product, place, people and price intensify the level of competition among the organizational rivals. Profitability comes to those who inspects the market and strategize the price of the product considering people and the place. Recommendations on the respect of key strategies: According to the theory proposed by Porter price of the product should be calculated on the aspect of place and people. Indonesia is a developing country and 79.9% of people belong to mediocre background that is why the price of mango should cost 1364250 rupiah for a tray of 689 mangoes. Mangoes should be kept in warehouse and proper temperature must be employed so that the mangoes do not suffer any injury(Narayana, et al.,2012). A proper packaging need to be done meticulously and it is the duty of the logistics team to see that boxes are sealed properly. Mangoes need time to mature and the temperature plays a very important role in the ripening process of mangoes. The ultimate goal of Australian mango association is to supply quality product. Proper documentation are to be made in order arrange cargoes for export purpose, the temperature control of the cargoes need to be checked (De Mooij, 2013). Recording the date of departure of the shipment needs to be taken into account to calcu late the time that it will take to reach the needed destination (Jaafar, et al.,2014). It is the purpose of the lead tea member to list down the necessary information about the procedures from packing to shipping. Conclusion: Australian mangoes have great demand in the market of the world. Indonesia and Australia were involved in mango export business but due to some changes in regulation of Indonesian market the export business was terminated. Days have passed after that incident now again Australia wants to establish their export business in Indonesia. Indonesian economic cultural has tremendously changed since then; the country has flourished and has made a respected position in global market place. Mango is the fruit that every Asian country adores. Australian production time of mangoes differs from that of Indonesia, so Indonesians will be able to satiate their cravings for mango in off seasons also if Australian export business initiates again. Reference: De Mooij, M. (2013).Global Marketing and Advertising: Understanding Cultural Paradoxes: Understanding Cultural Paradoxes. Sage Publications. Hadiz, V. R., Robison, R. (2013). The political economy of oligarchy and the reorganization of power in Indonesia.Indonesia,96(1), 35-57. Hartley, R. F., Claycomb, C. (2013).Marketing mistakes and successes. Wiley. Huxley, T. (2013).Disintegrating Indonesia?: implications for regional security(No. 349). Routledge. Jaafar, M. N., Kamaruddin, R., Che Mat, M. H., Nordin, A. A., Farook, R. S. M., Shakaff, A. Y. M., Zakaria, A. (2014, August). Market-driven-technology-push initiative: the application of controlled environment agriculture production system for mango-on-demand. InXXIX International Horticultural Congress on Horticulture: Sustaining Lives, Livelihoods and Landscapes (IHC2014): IV 1111(pp. 297-302). Jobber, D., Ellis-Chadwick, F. (2012).Principles and practice of marketing(No. 7th). McGraw-Hill Higher Education. Marques, J. R., Hofman, P. J., Macnish, A. J., Joyce, D. C. (2014, August). Evaluation of temperature management and packaging options to reduce under-skin browning in'Honey Gold'mango fruit. InXXIX International Horticultural Congress on Horticulture: Sustaining Lives, Livelihoods and Landscapes (IHC2014): IV 1111(pp. 405-408). Mitra, S. K. (2014, August). Mango production in the world-present situation and future prospect. InXXIX International Horticultural Congress on Horticulture: Sustaining Lives, Livelihoods and Landscapes (IHC2014): IV 1111(pp. 287-296). Narayana, C. K., Rao, D. S., Roy, S. K. (2012). Mango Production, Postharvest Physiology and Storage.Tropical and Subtropical Fruits: Postharvest Physiology, Processing and Packaging, 259. Nissinen, M. (2016).Latvia's transition to a market economy: political determinants of economic reform policy. Springer. Nugroho, Y. (2016). Citizens in@ ction: Collaboration, participatory democracy and freedom of informationMapping contemporary civic activism and the use of new social media in Indonesia. Wilson, A., Zeithaml, V. A., Bitner, M. J., Gremler, D. D. (2012).Services marketing: Integrating customer focus across the firm(No. 2nd Eu). McGraw Hill. Global Business Management Question : Discuss about the Global Business Management ? Answer : Introduction The global business environment could be defined as the environment in different sovereign nations with the factors exogenous to the local environment of the organizations affecting the decision-making on resource use as well as capabilities. It is also observed that the international business environment could be classified into external environment and internal environment when it comes identifying the business opportunities in the global environment. When an organization wishes or starts a business in a global environment, it has to focus on certain areas including the external and internal environment. Most importantly, the organization has to think of the business opportunities that sustain the growth or success of the business. While focusing on the business opportunities the organization should focus on both the present opportunities and historical scenario. Thus, in order to evaluate that area with a real scenario, report considers the country Eritrea in African continent. The report starts with providing an appropriate interpretation of Eritreas political as well as economic structure and its culture attitudes. Furthermore, the report also highlights Eritreas economic co-operation with other nations when it comes to establishment of the business. Based on the discussion and the evaluation, a suitable recommendation has provided that could help to countrys present international business strategies. Political environment It is observed that Eritrea has become an independent republic. The Ethiopian Peoples revolutionary Democratic Front in 1991 deposed Eritreas hard line communist dictator Mengistu. It is identified that the Erirean Peoples Liberation Front gained the control of Asmara without the involvement of Mengistus troops to fight. After having the control over Asmara, the Liberation Front of the country has formed a provisional government. As mentioned by Hirt and Mohammad (2013), the Eritrean independence was held with the contribution of UN and the new Ethiopian government. The people in Eritrea opted for the independent republic. Thereafter, Ethiopia recognizes Eritreas sovereignty on May 3, 1993 and demanded for a new era of cooperation between the two countries. However, this cooperation did not lust for long. The history clearly states that Eritrea and Ethiopia disagreed regarding the demarcation of their borders in 1998. In the month of December 2005, an International Court of Arbitrati on ruled Eritrea had violated international laws when it attacked Ethiopia in 1998 (Sousa et al. 2013). The conflict with Ethiopia remains high across a closed as well a heavily fortified border. It is further observed that threat of war is said to have been implemented by the government to strengthen the society. Although, in 1997 Eritrea demanded for the existence of the multi-party politics, the nation is presently known as the one-party state. On the other side, a demanding report on the human rights abuse, the UN accused Eritreas government against the humanity. According to the estimation done by UN, hundreds of thousands of Eritreans left the country and they are on the journey towards Sahara and the Mediterranean to Europe. While addressing the political environment of the country, it is also learnt that President Islaias Afewerky has ruled the country since it became an independent country. In 2009, UN imposed sanction on Eritrea for its support of Islamist insurgents in Somalia (Gebrewold 2013). Likewise, in 2015 reports accused the government of Eritrea of crimes against the humanity. The political environment of Eritrea also helps to learn that once the United States established the diplomatic relations with Eritrea in 1993 based on the he independence as well as the separation from Ethiopia. It is further observed that the United States supported Eritreas independence; however, the ongoing government detention of political dissidents and the constraints on the civil liberties as well as the allegation of human rights abuse have contributed to strained US and Eritreas relationship. Furthermore, it has also been learnt that at the Eritrean governments request, the United States has stopped providing the bilateral assistance to Eritrea. Thus, the United States has no military-to-military cooperation with Eritrea. The governments of Eritrea as well as ruling party have the control on the economy. It is identified that the United States and Eritrea have poor bilateral trade. The Eritrea is known to be the common market for Eastern and Southern Africa, which has a trade as well as investment Framework Agreement with the United State. Eritreas political environment and relationship with the other country helps to observe that Ethiopia turned down the offer from Eritrea to utilize its well equipped and developed Assabs harbor for import and Export. The country Ethiopia is relied on the use of the railway link to the port of Djibouti. As stated by O'Mahony (2013), due to the continuous tensions with Ethiopia, as well as possible resumption of the war with Ethiopia, the current government of Eritrea is controlling the liberty with human as well as peoples rights. The country has withdrawn the compulsion of exit visa to people under 30 and it has extended the national military as well as public service from 18 months to an open-ended period for the young people. Economic environment or the conditions of Eritrea As put forward by Hepner (2013), the economy is largely based on the substance agriculture with 80% of the population involved both in farming as well as in herding. Thus, as the consequence, a strategic plan for the rural development is the remedy to enhance the developing process. This plan would further help to build a strong strategic agriculture base, which includes the capability of providing the abundant raw materials to the industrial units. The tourism sector in the country has the huge potential to attract and make the foreign investment. The coastal water over which the country has exclusive fishing rights constitutes 52,000 square kilometers of probably the richest and for the most unexploited waters of Red Sea. This provides an enormous opportunity to develop fishing industry and tourism industry. The scenic as well as the topographic diversity of the country and the history are assets to develop a strong tourist destination. The overall GDP covered by the agriculture (1 7%), industry (29%) and services (54%) (Bariagaber 2013). As mentioned by Puddington (2013), Eritrea is one of the worlds most isolated and economically stagnant countries, has been run under the emergency rule. The overall economy of the country remained undeveloped for long time and the implementation of the laws extremely fragile. As the result, almost 9% of the population has left the country in the present days. The economic freedom snapshot The economic freedom status: Repressed Economic freedom score of 2016 is: 42.7 Global Ranking: 173rd Regional Ranking: 45th Notable success: None Concern: Implementation of the laws, management of finance The public sector of the country remains the increasing source of formal employment as well as the informal economy accounts for non-mining private sector activity. It is identified that a repressive fundamental government continuous to deal with the private sector and keeps unexpected poor investment climate. Culture Attitude: the country is suffering expected changes in the government and inappropriate implementation of the laws is affecting citizens of Eritrea. The continuous struggle of Eritrea for self-determination as well as independence created the sense of nationhood on based on general economy. There are other changes occurred in the cultural aspects of the country that are well discussed with Hofstede culture model. Power distance- The power distance index of Hofstede helps to measure the degree to which the less powerful members of the community or the organizations accept and expect that power is distributed and shared unequally. Hence, the inequality indicates that the followers and the leaders who run the nations or the organizations promote the extent of inequality in the country. For example, the Eritrea has 33 on the distance scale of Hofstede analysis compared to US, where the power distance is very high (60). Thus, it can be mentioned that Eritrea has wide gap between the wealthy as well as poor (Desta 2013). The country needs to develop a strong belief in equality for the wellbeing and value of each citizen of the country. This happens as the leaders who run the nations have poor communication with the citizens and the inadequate implementation of the laws could be the major cause of inequality in the country. Individualism- Individualism is the one side versus its opposite, collectivism that is the extent to which the individuals who are united in a group. On the contrary, while considering the individualistic side of the people, there should be ties between the individuals and the society, which should be loose. Hence, Eritrea cannot be considered as the individualistic with a low score on Hosftede culture dimensions. In Eritrea, people do not stress on personal achievement as well as individualistic rights. As the leaders or the government failed to implement the regulations, people only think of own personal interest. Masculinity vs. Femininity-This attribute is referred to the distribution of the roles between men and women. As put forward by Lichtenfels and Rouse (2013), in Masculine society, the roles of men as well as women could overlap. The men are expected to behave assertively. The current scenario of Eritrea indicates that the men rule Eritrean societies. Therefore, the less amount of power is in the grip of women. Eritreas international trade from past to now It is observed that international trade is characterized by its deficit. Thus, the deficit of $499 million increased to o $534 million in 1999 because the value of the export dropped to $26 million compared to the import of $560 million (Messaoud and Teheni 2014). It is learnt that large trade deficit are the vivid sing of Eritreas under-developed economy because of that large range imports do not start to be matched by its output of the exportable goods. While focusing on the large trade deficit, it is necessary to focus on the balance of the trade, which remains as the major difference between the financial value of exports and the imports of output in specific period. Thus, the positive balance is known as trade surplus and if the balance is largely relied on the exporting more than the imported goods, a negative balance is referred as the trade deficit. The overall imported goods accounted for an enormous 89.7% of the GDP in 1998 in Eritrea (Munemo 2014). However, in the same year than an epidemic of cattle disease stopped the large livestock exports to Arab and Yemen, whereas as the time of outbreak of war with Ethiopia, the productivity of the country declined. Furthermore, it is also observed that although the way ended in 2000, the exports of Eritrea is likely to remain as declined or low for the long period due to its destroyed farms and the infrastructure. It has affected the financial resource of the country and the country observed a large displacement of its population. Figure 1: The exports of Eritrea (Source: Lichtenfels and Rouse 2013) The major exported products of Eritrea are such as salt, livestock, foodstuff, textile, flour, sorghum, whereas the major import goods include foodstuff, fertilizers, machinery, spare parts and construction as well as military hardware. At the time of the war, there was sharp increase in military hardware imports, which was the major reason on the defense to jump from 9% of the GDP in 1997 to 44% in 1999 (Mosley 2014). It is further identified that Ethiopia was Eritreas major trading partner until 1998 considering only 65.8% and 64% of the total exports. In addition, other trading partners of Eritrea are such as Sudan, Italy, Saudi Arabia, the United State, Yemen and UAE. The country Sudan was supposed to be Sudans second largest export destination n 19997 considering 17% of the exports, which rose to 27.2% in 1998. During the last phase of the war, in 1996 and 1997, the major trading source for the imported goods was Saudi Arabia, Italy, and the UAE. As put forward, Bereketeab (2014 ) in 1998 Italy would become the most significant supplier of the import followed by UAE. Figure 2: Major trade partners of Eritrea (Source: Munemo 2014) While focusing on the present decade, the Eritrea is observed to be exporting $53M making the country the 166th largest exporter in the world. The last five years of the trade implies that exports of Eritrea have risen at an annual rate of 80.6%, which was $27M in 2009 and now it is $53M in 2014 (Arslan and Zaman 2014). In addition to this statistical information, the Copper Ore has become the most recent exports, which represent almost 94% of the total exports of the country. Another significant export is Precious Metal Ore, which holds almost 2.93% Figure 3: Shared of imports by country to Eritrea (Source: Desta 2013) The current platform of the international trade also helps to learn that exports from Eritrea is amounted to US$443 million in 2015, it is increased to 29.09% since 2011 (Hirt 2014). However, it is -24% down from 2014-2015. As put forward by Madichie (2015), the international exports of Eritrea accounted for 99% of the overall value of its international shipment. The statistics provided by the International Monetary Funds World Economy outlook Database, the total GDP of Eritrea is around $8.7 billion in 2015 (Yohannes 2014). On the contrary, the exports accounted for almost 5.1% of overall Eritrean economic output. The following are the export product groups that represent the increasing dollar value in Eritrean global shipments throughout 2014. Gems, precious metals: $5.5 million (1.4%) Ores, slag: US$424.8million: (95.9% of the total exports) Aluminum: $8117000 (0.18%) Live animals: $503,000 (0.11%) Copper ores as well as concentrates propelled the ores, slag and ash category as the largest-growing among the fast 10 export categories. On the contrary, the fastest-declined category among the top 10 Eritrean exports was gems and precious metals which decreased by -98.3%. As put forward by Tesfayohannes, Tessem and Tewolde (2015), Exports in Eritrea rose to 72 USD in the year 2015 from 60 USD million in 2014. It is also observed that the average of the exports in the country is around 74.39 USD million from 1992 until 2015. Figure 4: Eritreas exports in the last decade (Source: Hirt 2014) Eritrea Trade Last Previous Highest Lowest Unit Trade balance -833.000 -750.00 -157.08 -833.00 CAF Million [+] Exports 72.00 60.00 200.00 11.00 USD Million [+] Imports 905.00 809.00 905.00 214.47 CAF Million [+] Current Account -143.00 -93.00 188.10 -167.00 USD million [+] Current Account to GDP -1.20 0.20 39.99 -39.00 USD Million [+] Table1: Eritrea Trade balance (Source: Burlando, Cristea and Lee 2015) Characteristics the governments attitude to international trade, both outward and inward It is observed that while there are significant opportunities, particularly in the extractive industries, the government of Eritrea maintains the command economy with the activities performed by the government predominating over the private organizations. As opined by Arouri, Youssef and Elgin (2014), unreliable exchange rate, import regulation, unrealistic exchange rates, limitation on the profits, getting the consent of the construction permit unless the government and country travel transactions wok to undermine the trade as well as investment sanction the project. On the contrary, the large investors of United State should be aware of the global sanction regime placed on the country. As the consequence, there is very little direct investment made by the large investor the United States. The country Eritrea does not have increasing number of investors due to the continuous war that is ended in 2000. Therefore, the country has lost the opportunity of exporting and importing of goods Ethiopia. As opined by Hirt (2015), nevertheless, at the end of the last year, the government emphasized on the old currency and issues new currency, creating major issue in liquidity because there was a continuous insufficiency of the supply of the money. Furthermore, it is also identified that Eritreas labor pool is well equipped and qualified in comparison with the neighboring state. It is identified that the war with Ethiopia and its aftermath have deprived the Ethiopia of major economic role as the external trading. While specifically focusing on the current impact government attitude on international trade, it is pointed out that the country has lost multiple opportunities of making the business relations with other countries. According to the viewpoint of the demonstrators that have raised the voice against the characterization of the country, Eritrea is demonized by the global system that never wants Eritrea to become independent state. The current government is trying to enhance the country with the constrained resources as well as under the persistent threat of the largest neighbor as well as earlier occupying power. The investment opportunities in Eritrea are observed to be most promising in the minding, minerals, and energy as well as agriculture sectors. It is observed that foreign activity in financial services, domestic wholesome trade, and domestic r etail trade is prohibited. Attitude towards foreign direct investment- The five indicative development plan 2014-2018 of Eritrea helps to observe that the country encourages foreign direct investment as well as enacts the competitive fiscal regulations as well as the packages to assure a fair return for risk while increasing the benefits to the host country. However, the policies of Eritrea disapprove that pronouncement. The Foreign Finance Special Investment (FFSI) proclamation provides the confirmation of foreign investment, particularly controls the FDI in financial services, domestic wholesale trade, domestic retail trade as well as commission agencies. As stated by Desta, Tedla and Zerom (2015), the investment opportunities in Eritrea are most promising in the extractive industries and agriculture sectors. The country Eritrea prefers to gain controlling interests in any wide undertaking and it takes the stand of smaller entities while targeting the multinational organizations. As opined by Evenett and Fri tz (2015), poor consistency, greater level of government commitment to structural reform persistently hampering Eritreas growth and development. It is further observed that investors in Eritrea deal with the risk including lack of transparency in the regulatory techniques and constraints on the possession as well as exchange of foreign currency and repatriation of profits. The country faces the difficulties in accessing any part of the country outside of Asmara and the government faces the trouble in acquiring the license as well as construction consent. Constraints on Foreign Control- It is observed that foreign financial investment constrains the foreign investment in the financial services and domestic whole trade but it allows investment in the other sector. GSE or the ruling party of the country controls most of the large businesses in the country. In addition, the GSE has the special interest towards the large venture and they are always on the favor of collaborating with the small organizations. It is further observed that in the year 2005, the Government of Eritrea suspended all private construction activities and relying only on the state-run firms for this particular operations. One of the major economic reforms was supposed to be conducted in 2013 but the president of the country did not aim to facilitate provision of construction consent to private firms. Investment Trends- It is observed that the Government of the State of Eritrea tends to maintain a command economy collaborating with the government bodies dominating over the private firms. It is also identified that many of the major firms are either the party owned or military owned. The government of the Eritrea started encouraging some of the significant forms of international investment in 2012. Likewise, some of the currency reforms were introduced in 2013. An increasing number of broader reforms that would impose restriction on business licensing as well as imports considered as underdeveloped such as energy, fisheries as ready for enactment in 2013 (Tomsik et al. 2015). However, the president of the country does still not approve them. As the consequence, the areas that remains underdeveloped such as energy, fisheries as well as tourism. Furthermore, it is also observed that investors in Eritrea face the challenge including the poor transparency in the regulatory process. While focusing on the international business trend in Eritrea, mining is observed to be nations successful economic sector. In addition to this all these, an increasing number of reputable international organizations are present in Eritrea either implementing minerals exploration or mining. Nevertheless, it is also observed the country remains unable to process the raw materials since, there is no reliable power for smelting and the raw materials are exported to other countries constraining the return. As stated by Carbonell and Allison (2015), the increasing GDP growth in the current years has been controlled and led by the foreign investment in the mining industry. Notwithstandin g, due to the lack of transparency, the size of mining, the overall profits and the earning appears to be trailing off as the result. Moreover, it is also learnt that the government of Eritrea put the limit on the possession and the exchange of foreign currency and the limit was on the transparency in conversion as well as transfer policies. Potentiality for formal economic co-operation with other nation through relevant trade grouping The relations between the Eritrea as well as Eritrea and EU were found to be tightened in the first of the independence. The European Commission started its delegation in Asmara in 1995. In the last 20 years, the EU has actively worked collaborating with Eritrean authorities to increase or the standards or the livelihoods of Eritrean people. In the first 10 years, the development cooperation between the European Union and Eritrea emphasized on the reconstruction following devastation at the time of the war and independence (Brink 2015). The European Development Fund is the major EU instrument for the improvement cooperation with Eritrea. Hence, the funding is provided by the voluntary donations by the members of European Union. Initially, European Development fund focused on restoring microeconomic stability as well as viability. When it comes to the initiative of holding the foreign currency, the countries in relations with the Eritrea had to face major difficulties. The foreign organizations have been seen to be unable to covert nakfa intro foreign currencies. For instance, the foreign air carriers have millions of unconvertible nafka in the local banks. It is further identified that monetary stability in the country is fragile, which reflects the excessive creation to fund chronic fiscal general deficits. The issues remain for long time with the inclusion denomination of bills such as availability of 20 nafka with no explanation. The government of the country imposed a limit on cash withdrawal of ERN 10,000. This has fuelled the continuous prevailing issues (Madichie 2015). Furthermore, while focusing the economic cooperation with other nation, the country Eritrea made the tentative moves to strengthen the relationship with other neighbors in the region in 2012 by reengaging with Australia and the regional Intergovernmental Authority on Development. According to the UN report fund, the Eritrean government had reduced the direct support of the Islamist militant group in Somalia. Nevertheless, it is also observed that Eritrea prolonged to violate the UN Security Council resolution and recommendations that arms ban remain for long. It is also observed that corruption is the major issue in the country. The control of the government over the foreign exchange effective and it gives a sole authority over the imported goods. According to the data provided by the International Crisis Group, the senior military officials are the major culprits in the mentioned trade. These officials have corrupted the relationship with other nations. On the contrary, the regulati ons do not allow independent media to run in Eritrea and governmental bodies have built the control on all broadcasting outlets. As stated by Mosley (2014), Eritrea is classified as the least developed country under the list formed by CDP (Committee for development policy) of the UN economic as well as social council. It is found out that due to the continuous liberation war and the recent boarder conflict with Ethiopia, the economy of Eritrea has suffered from the continuous setback based on this scenario; the country is trying to fight back. When no budget is disclosed by the government as well as the statistical basis is constrained, the reasonable estimates imply the economy of Eritrea is widely based on the agriculture involving the significant portion of subsistence agriculture and increasingly developing mining sector. Mining, fisheries, and tourism are sectors with the considerable potential. It is also identified that Eritrean society has made enormous effort in respect of soil preservation as well as water harvesting. However, they still have to focus on the import of every part of its food requireme nt that might have put significant strain on the foreign exchange. The statistical record mentioned that in the 2015, the government of the country launched a significant reforms aid at minimizing the informal trading sector as well as enhancing the banking sector. The country is also reviewing its economic policies and it has engaged itself in the discussion with the international trade partners as the ways of enhancing its human resources. This could be done through the target initiatives in both vocational training and education. The current economic cooperation with other nations of Eritrea helps to observe that the major purpose of European Union cooperation with Eritrea is to provide enhanced livelihoods of the Eritrean population through the poverty reduction as well as the achievement of Millennium Development Goals. Thus, Eritrea could provide sustainable social and economical development. When pursuing countrys economic and social development, Eritrea is dealing with the considerable challenge. As put forward by Woodward (2016), Energy security could be one of the major condition for the enhancement of all economic as well as social sectors and the enhancement of livelihood of all citizens. Poverty reduction as well as the expansion of the economic output, especially in the higher productivity sector, could require a considerable increase in electricity generation as well as distribution. The discussion on the economic cooperation with other nation, it is observed that country did not have the ability to reinforce the relationship with other country in terms of trade and investment. The continuous war with the Ethiopia and other nations has largely harmed the both physical and financial resource of the country. The country suffered from continuous economic crisis. However, the relationship with EU once strengthened countrys policies of international trading. Personal view regarding Eritreas international trade using some of the explanatory theories in hill While discussing the international trade opportunities in Eritrea, it is learnt direct trade investment in Eritrea is unavailable. However, rough estimates could be developed based on the trade statistics of trade partners. Moreover, the preliminary data for 2015 imply that Eritrea has gained a big deficit of USD 150 million (Kohl, Brakman and Garretsen 2016). On the contrary, as the economy across the world has taken a deep turn making it easier to start the business by introducing the technology as well as reducing the capital requirement. The discussion makes it evident that Eritrea is on a quest to form its nation with sweat but not debt. Although, the country is impoverished by its war for independence, the country is rich with the sprit, resourcefulness as well as the knowledge. The country has built the belief and the principle to recreate itself with the expertise of its citizens. After receiving the independence, the country has become very concerned about their strengths in ward, developing the self-efficiency as well as rejecting the outside assistance that did not further more towards the political as well as economical economy. Apart from the relationship with EU and Ethiopia, Eritrea has the opportunity to make an effective business relationship with UAE. Thus, as the positive consequence, Eritrea has been sourcing from large Dubai. As UAE has been supplying goods to Eritrea for local consumption and distribution to the neighboring markets, the country could increase the business opportunities. Describing the nature of the advantages- The geographical proximity of UAE emerges as the effective and the ideal partner for the under-developing country like Eritrea. The import and export goods from UAE are shipped straight to Eritrea as well as onwards to Ethiopia and Sudan. The major fact is that these nations do not have a well developed manufacturing platform, which means these nations must have to import most of their requirements for customers and the capital goods. The present scenario indicates that there are about 2500 manufactures organizations in Eritrea that are contributing to the growth of employment. Considering two other theories of trade While discussing the internal trade and its strategies, the organizations are seen to be using some particular theories for the growth and establishment of the business. Among different trade theories, two significant theories are classical theory and absolute advantages. Classical or country based trade theory- This theory was developed in the sixteenth century and it is one of the earliest efforts to enhance an economic theory (Lester et al. 2016). Based on the principle of this trading theory, the country needs to the determine its wealth by the amount of the gold as well as silver holding. In general, it can be mentioned that, the country should maximize its acquisition of gold as well as silver by promoting exports as well as preventing imports. The major objective of the country is to have a trade surplus or to build a situation where the values of the exports are larger than the value of the imports. This theory can be applied to the business environment of Eritrea, as after forming the relationship with UAE, the country has started exporting the goods to the destined country. With the contribution of the government, the local organizations have taken the initiatives of exporting the goods the neighboring country such as Dubai under UAE. Absolute advantages- This is another significant trade theory mostly applied by the countries that prefer to make business relations with other nations in the same continent. This theory emphasized on the ability of a country to provide or produce goods more effectively than any other nations (Gilpin 2016). According to this theory, the trade between the nations should not be restricted by the policies developed by the government of the nations. The principles of the theory states that trade should grow or flow naturally in accordance with the market forces. If two countries are considered in a hypothetical way; for example, if Eritrea could produce a good cheaper or faster than the country Ethiopia, then Eritrea gain the advantages as well as could focus on specializing on producing that goods. Likewise, if country Ethiopia was effective at producing another goods it could also focus on the specialization. Thus, both of the nations could gain certain advantages by applying this theo ry. However, the governmental policies and the nature of becoming the individual producer makes it difficult for the country rely on such theory of business. Moreover, the continuous war with Ethiopia made it worse for Eritrea. On the contrary, as UAE produce high quality and large rage of goods, Dubai may not come to make deal of gaining absolute advantages. Present position using the extended form of Porters Diamond of national competitiveness Factor Condition- This condition is about creating its own significant factor such as potential resources and technological foundation (Dowlah 2016). While focusing on the international trade opportunities in Eritrea, the resource base of the country indicates that mining is the major resource of Eritrea based on this particular resource, the country could gain competitive advantages. Hence, Eritrea does not have face the shortage of raw materials and production of mining can be done with the existing producer. Thus, the country has the opportunity for global trade with such a significant resource. Figure 5: Porters Diamond of national competitiveness (Source: Dowlah 2016) Demand condition- As put forward by Gilpin (2016), when a particular market for particular product is locally wider than the foreign markets and as the result local firms pay significant attention to the product than the foreign markets, this scenario could lead to the competitive advantages at that time when the local organizations start exporting the product. However, in Eritrea, the most demanded product exist in the mining sector and the country does not have those large local market- local firms; thus, the country has to depend on the foreign organizations only. Related and supporting industries- This happens when the local supporting industries are competitive and the organizations gain more cost effective and innovative inputs (Hazari 2016). This particular effect is reinforced when the suppliers remain as the strong global competitors. When it comes to export of resources, mining products are highly demanded; thus, Eritrea could be the significant supplier. The country could dominate the global market if the government reinforces international trading policies. Firm Strategy, structure and Rivalry- This principle of the porters diamond helps to observe that local conditions affect the firm strategy (Turnes and Ernst 2015). For example, UAE companies prefer to be hierarchical and Eritreas companies prefer to be smaller. Thus, this strategy as well as structure helps to determine the type of industry contributes to the excellence of the nation. The current state of Eritrea evidently is affecting the local organizations in its all industries. For instance, the Ethiopia- Eritrea border dispute is included within a series of domestic political conflicts in each state and this further linked to the instability in Somalia. This scenario has minimized the trading opportunities of Eritrea. The porters national diamond competitiveness helps to identify that Eritreas competitiveness is less as the industries in Eritrea have poor capacity to innovate as well as upgrade. Organizations should gain competitive advantages against worlds best competitors due to the pressure as well as challenge. However, due to unfavorable situation such as continuous war, unfavorable political environment minimized the opportunity of the local organizations in Eritrea. Recommendation for possible improvements to the nations present international trade strategy Focus on the communication- It is evident that communication service in Eritrea is under developed due to poor country structure. In fact, it is also observed that communication sector is among lowest in the world. Therefore, by gaining advantages from the major resources, the country should largely focus on the technology. Technological advancement might contribute to the business expansion. Foreign organizations could enter the market if the country has the technological base. Focus on the transport service- The intensive discussion provides the insight that transport service in Eritrea is under developed. The inadequate transportation network is the consequence of armed conflicts that destroyed the infrastructure and the discouraged the maintenance work. The road network of the country should be extended, especially in the mining sector and in the free-trade zone. In addition, the border areas should be developed for export and import of the goods from the countries Eritrea currently in a relation with. Reforms in the government policy- As the government policies as well as trade flow are largely affected by the government policies as well as the regulations. It is observed that government policies are affecting agriculture industry such as taxes, tariffs, duties and subsides. Therefore, the government of Eritrea needs to reform its policies of international trading such as that imposes restriction on export and imports business. Conclusion On the completion of the report, it can be mentioned that Eritrea has been suffering from the deficiency of business opportunities that is affecting countrys growth. Countrys economy is in the state of uncertainty. Thus, the develop the trade sector, government of the country rather focus on reinforcing resource sector such as mining and agriculture rather making the relation with Ethiopia which seems to be unrecoverable. On the contrary, it could focus on the export of its major resource such as livestock, flour, and salt to UAE. In addition, the country needs to enhance the agriculture production as well as the productivity through the development of the irrigated agriculture. Eritrea should improve capital as well as knowledge-intensive export oriented industries and services. 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