Country Snap Shot USA

8/14/2019 Country Snap Shot USA

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Country Snapshot: USA

Country Snapshot

United States of America

Prashant Tandon Page 1


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ContentsUnited States of America .......................................................................................3

1. Introduction .........................................................................................................32. Brief Overview of the USA ...................................................................................43. Economy overview ..............................................................................................54. Key Economic Indicators .....................................................................................6a) GDP ....................................................................................................................65. Labor force ..........................................................................................................7a) Major Agriculture & related products ..................................................................7b) Major Industries ..................................................................................................7c) Exports commodities & Partners USA ..............................................................8d) Imports - commodities & Partners USA ...............................................................96. Main factors affecting a Business .....................................................................10

a) Obsolescence ....................................................................................................10b) Prices & Inflation ...............................................................................................10c) Substitutions ....................................................................................................10d) Income Inequality .............................................................................................10e) Transportation System ......................................................................................11f) Miscellaneous ...................................................................................................12g) Culture .............................................................................................................12h) Geert Hofstede Model: USA ..............................................................................13i) Geographical factors .........................................................................................15j) Corruption ..........................................................................................................157. Political Environment Overview .......................................................................16

8. Legal System Overview ....................................................................................179. Opportunities in the US market .........................................................................1810. Challenges in the US Market ...........................................................................1811. References ......................................................................................................19



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United States of America

1.Introduction

USA is the world's foremost economic and military power, with globalinterests and an unmatched global reach.

United States of America is a federal constitutional republic comprising fiftystates and a federal district. The country is situated mostly in central NorthAmerica, where its 48 contiguous states and Washington, D.C., the capital district,lie between the Pacific and Atlantic Oceans, bordered by Canada to the north andMexico to the south. The state of Alaska is in the northwest of the continent, withCanada to its east and Russia to the west across the Bering Strait. The state ofHawaii is an archipelago in the mid-Pacific. The country also possesses severalterritories, or insular areas, in the Caribbean and Pacific.



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2.Brief Overview of the USA

Full name: United States of America

Population: 308.8 million (UN, 2007)

Population growth Rate :0.9%

Age structure:

o 0-14 years: 20.2% (male 31,639,127/female 30,305,704)o 15-64 years: 67% (male 102,665,043/female 103,129,321)o 65 years and over: 12.8% (male 16,901,232/female 22,571,696)

Capital: Washington DC Largest city: New York City

Area: 9.8 million sq km (3.8 million sq miles)

Major language: English

Major religion: Christianity

Life expectancy: 76 years (men), 81 years (women) (UN)

Monetary unit: 1 US dollar = 100 cents

Main exports: Computers and electrical machinery, vehicles, chemicalproducts, food and live animals, military equipment and aircraft

Main Imports : Agricultural Products, Industrial Supplies, Capital Goods

(Computers, Telecommunications Equipment, Motor Vehicle Parts, OfficeMachines, Electric PowerMachinery), Consumer Goods (Automobiles, Clothing)

GNI per capita: US $46,040 (World Bank, 2007)



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3.Economy overview

The US has the largest and most technologically powerful economy in theworld, with a per capita GDP of $48,000.

In this market-oriented economy, private individuals and business firmsmake most of the decisions, and the federal and state governments buyneeded goods and services predominantly in the private marketplace.

US business firms enjoy greater flexibility than their counterparts in WesternEurope and Japan in decisions to expand capital plant, to lay off surplusworkers, and to develop new products.

At the same time, they face higher barriers to enter their rivals' homemarkets than foreign firms face entering US markets.

US firms are at or near the forefront in technological advances, especially incomputers and in medical, aerospace, and military equipment; their

advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a

"two-tier labor market" in which those at the bottom lack the education andthe professional/technical skills of those at the top and, more and more, failto get comparable pay raises, health insurance coverage, and otherbenefits.

The war in March-April 2003 between a US-led coalition and Iraq, and thesubsequent occupation of Iraq, required major shifts in national resources tothe military.

Hurricane Katrina caused extensive damage in the Gulf Coast region inAugust 2005, but had a small impact on overall GDP growth for the year.

Soaring oil prices between 2005 and the first half of 2008 threatenedinflation and unemployment, as higher gasoline prices ate into consumers'budgets.

Imported oil accounts for about two-thirds of US consumption.

Problem Zones: Long-term problems include inadequate investment in economic

infrastructure, rapidly rising medical and pension costs of an agingpopulation, sizable trade and budget deficits, and stagnation of familyincome in the lower economic groups.

The merchandise trade deficit reached a record $847 billion in 2007, butdeclined to $810 billion in 2008, as a depreciating exchange rate for thedollar against most major currencies discouraged US imports and made USexports more competitive abroad.

The global economic downturn, the sub-prime mortgage crisis, investmentbank failures, falling home prices, and tight credit pushed the United Statesinto a recession by mid-2008.

To help stabilize financial markets, the US Congress established a $700



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billion Troubled Asset Relief Program (TARP) in October 2008.

The government used some of these funds to purchase equity in US banksand other industrial corporations. In January 2009 the US Congress passedand President Barack OBAMA signed a bill providing an additional $787billion fiscal stimulus - two-thirds on additional spending and one-third on

tax cuts - to create jobs and to help the economy recover.

4.Key Economic Indicators

a) GDP

The GPD figures show that USA has a huge GDP of $14.33 trillion. The overallgrowth rate of the GDP is only 1.3% as compared other developing countries thathave a growth rate of 8-10%. USA ranks 181 in the GDP growth rate. The GPD percapita stands at $44,000 which shows the average income level of the people.

The GPD percapita shows that people would be able to afford luxury goods. Butthere also lies a 12% segment of the population below the poverty line whichcould also create a segment. The service sector accounts for the maximum GDPof the country at 79.2%, followed by 12.6% by the industry & 1.2% by theagriculture. But on the other part USA is a large marketplace depending on thetype of products, is indicated by its GDP.



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5.Labor force

USA has 155.2 million (includes unemployed) of labor force. This includes skilledas well as unskilled labor force. The average labor compensation is very high inUSA. Therefore it is quite difficult for cost competitive industries to survive here.The industries best suited for such an environment is research & development &niche industries. USA ranks 4 in the world among labor force.

The above data shows that USA has a huge labor force, which falls in variouscategories mentioned above. There also stands a huge unemployed labor forceavailable which might be useful for people investing in new venture.

The unemployment rate is quite high due to the recent subprime crisis in USA &stands at 7%. Therefore the wage rates have come down considerably.

a) Major Agriculture & related products

The major agriculture products of USA are wheat, corn, other grains, fruits,vegetables, cotton; beef, pork, poultry, dairy products; fish; forest products

b) Major IndustriesUSA has leading industrial power in the world. It also has highly diversifiedand technologically advanced petroleum, steel, motor vehicles, aerospace,telecommunications, chemicals, electronics, food processing, consumergoods, lumber, mining industries flourishing. The industrial growth rate ofUSA is 0.2% & the country ranks 148 in the world. The industrial growth ratedoes not seem to be an attractive figure. Many industries in US have beenloosing out to low cost & competitive industries from the other part of theworld like Chine, India. Thus need is to bring down the costs & become



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competitive again during the long run.

c) Exports commodities & Partners USA

From the above charts that US is a major exporter in the world in a wide domain &its major export partners could be seen in the chart above.



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d) Imports - commodities & Partners USA

From the above charts we can see that USA imports various commodities for thecountry. The major Import Partners are shown in the chart.

We can infer that US is one of the largest importer & exporter of goods in theworld. There is lot of free trade practices followed in the US. Although US havestringent regulations for the quality & standards of the products it imports &exports.



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6.Main factors affecting a Business

a) Obsolescence

The obsolescence rate is very high in USA due to fast advancements in thetechnological world.

b) Prices & Inflation

The US economy has had a stable inflation between 2-3 % for a period of 2000-2008. For the year 2009 the inflation has gone negative and is at -2.5% for themonth of July. We could conclude that people have changed their buying habitsdue to the ongoing recession. The prices of essential commodities have beengoing down.

c) Substitutions

The threat of substitution is very high for products in USA as its one of the mostdeveloped countries in the World & any latest developments in the world arereadily available. Therefore except in case of monopoly situations the threatremains very high. As soon as the products are launched in the market theimitates are available in a very short span of time. E.g. The Apple iphones werelaunched in US, & within a few days the Chinese imitations were available in the

market. Also the competitive companies are able to exploit the technology to getthe same kind of products in the markets. Like Nokia & Samsung offer nearlysame features in same price range.

d) Income Inequality

There is great income inequality seen in USA with the difference in remunerationsranging up to 400% in the recent times in the country. Therefore there are widesegments of people existing in the country thereby inducing a need for varioussegments of products. As we saw that there are 12% people living below thepoverty line. This shows that there is a market for the said segment. There shouldbe different varieties of goods available for The Rich, The Middle Men, and Thepoor & below.



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e) Transportation System

Transportation in the United States is facilitated by road, air, rail, and waternetworks. The vast majority of passenger travel occurs by automobile for shorterdistances, and airplane for longer distances. In descending order, most cargoestravel by railroad, truck, pipeline, or boat; air shipping is typically used only forperishables and premium express shipments.

We can see below that multimodal transport system is in place to facilitate thebusiness activities.



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f) Miscellaneous

The other factors affecting a business could be presence of industry wide unionswhich is very common in US. The people are divided on the base of jobs theyperform & hence are the members of their respective unions like fitter union,plumber union etc.

There is no widespread presence of trading blocks in US. There are varioustreaties in place which allow free trade between US & the other nations. Onlycertain number of industries is restricted for free trade & investment due tonational security reason.

g) Culture

The United States of America has a mixed culture. The United States is amulticultural nation, home to a wide variety of ethnic groups, traditions, andvalues. Aside from the now small Native American and Native Hawaiianpopulations, nearly all Americans or their ancestors immigrated within the pastfive centuries. The culture held in common by most AmericansmainstreamAmerican cultureis a Western culture largely derived from the traditions ofEuropean immigrants with influences from many other sources, such as traditionsbrought by slaves from Africa. More recent immigration from Asia and especiallyLatin America has added to a cultural mix that has been described as both ahomogenizing melting pot and a heterogeneous salad bowl in which immigrantsand their descendants retain distinctive cultural characteristics.

The mixed culture of US has been a major advantage to people for starting theirbusiness in the US. The people find it easy to adjust to the US culture & receive aless intense cultural shock.

As already stated USA has a much diversified culture in place, Therefore culturebecomes an important factor of consideration for the businesses. The widelyknown term is Western Culture, which is one of the most controversial topics ofdebate throughout the world. Therefore businesses need to decide its actions,

such as branding, advertising & other public relations activities very carefully.There is a strong presence of free media in USA, through which even the smallestmistake made could reach millions of people throughout the world. This couldresult in affecting companys businesses globally. The conflicts of cultural naturecould have lasting effects like French Fries being renamed as US fries recently.

People of different culture have different tastes. The tastes are not only limited tofood but also includes colors, design, lifestyles. Thus making products to suit to



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needs of people of diverse cultures is a challenge. The fact that needs to be takencare of is that diverse culture induces diverse consumption patterns. Therefore itmight be very different between countries. Like people in US like lots of Fast Food,this may not be liked by people in other world countries.

h) Geert Hofstede Model: USA

The high Individualism ranking 91 for the United States indicates a society with a more individualisticattitude and relatively loose bonds with others. The populace is more self-reliant and looks out forthemselves and their close family members.

The next highest Hofstede Dimension is Masculinity with a ranking of 62, compared with a world aver-age of 50. This indicates the country experiences a higher degree of gender differentiation of roles. Themale dominates a significant portion of the society and power structure. This situation generates a fe-male population that becomes more assertive and competitive, with women shifting toward the malerole model and away from their female role.

The LTO is the lowest Dimension for the US at 29, compared to the world average of 45. This lowLTO ranking is indicative of the societies' belief in meeting its obligations and tends to reflect an ap-preciation for cultural traditions.

The next lowest ranking Dimension for the United States is Power Distance at 40, compared to theworld Average of 55. This is indicative of a greater equality between societal levels, including govern-ment, organizations, and even within families. This orientation reinforces a cooperative interactionacross power levels and creates a more stable cultural environment.



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The last Geert Hofstede Dimension for the US is Uncertainty Avoidance, with a ranking of 46, com-pared to the world average of 64. A low ranking in the Uncertainty Avoidance Dimension is indicativeof a society that has fewer rules and does not attempt to control all outcomes and results. It also has agreater level of tolerance for a variety of ideas, thoughts, and beliefs.



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i) Geographical factors

The total land area of the contiguous United States is approximately 1.9 billionacres. Alaska, separated from the contiguous United States by Canada, is thelargest state at 365 million acres. Hawaii, occupying an archipelago in the centralPacific, southwest of North America, has just over 4 million acres. After Russia andCanada, the United States is the world's third or fourth largest nation by totalarea, ranking just above or below China.

The United States, with its large size and geographic variety, includes mostclimate types. To the east of the 100th meridian, the climate ranges from humidcontinental in the north to humid subtropical in the south. The southern tip ofFlorida is tropical, as is Hawaii. The Great Plains west of the 100th meridian aresemi-arid. Much of the Western mountains are alpine. The climate is arid in theGreat Basin, desert in the Southwest, Mediterranean in coastal California, andoceanic in coastal Oregon and Washington and southern Alaska. Most of Alaska issubarctic or polar. Extreme weather is not uncommonthe states bordering theGulf of Mexico are prone to hurricanes, and most of the world's tornadoes occurwithin the country, mainly in the Midwest's Tornado Alley.

Altogether, the government owns 28.8% of the country's land area. Most of this isprotected, though some is leased for oil and gas drilling, mining, logging, or cattleranching; 2.4% is used for military purposes.

We can conclude from the above that USA is a big country having multiple

climates at its advantage, thus giving it an edge over other major developedcountries which are small in area & thus dont have such a wide variety ofclimatologically advantages.

j) Corruption

USA has a world ranking of 18 for corruption index in 2008. That is it one of themost corruption free country in the world. Red Tapeisim is hardly seen in US.



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7.Political Environment Overview

The US has a two-party system.

Since the 1850s the political system has featured rivalry between the Democraticand Republican parties.

Although each party embodies a broad coalition of interests, the Democrats tendto be pro-labor and have, especially since the 1960s, been more inclined toespouse socially liberal attitudes towards civil rights and welfare expenditure. TheRepublicans tend to promote low tax rates and a limited welfare system,combined with a strong military and a tough criminal justice system.

Powers are constitutionally divided between the executive, legislative and judicialbranches, and between the federal and state governments. The president headsthe executive branch. The federal legislature, Congress, consists of a House ofRepresentatives, whose members are elected from constituencies based onpopulation, and a Senate, whose members are elected state-wide (two per state).The president is elected every four years and House members every two years.Senators serve a six-year term, with one-third elected at each congressionalelection.

The US political system has been seen as relativity stable as compared to manyother countries in the world.



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8.Legal System Overview

The law of the United States consists of many levels of codified and un-codifiedforms of law, of which the most important is the United States Constitution, thefoundation of the federal government of the United States.

The Constitution sets out the boundaries of federal law, which consists ofconstitutional acts of Congress, constitutional treaties ratified by Congress,constitutional regulations promulgated by the executive branch, and case laworiginating from the federal judiciary.

The Constitution and federal law are the supreme law of the land, thuscircumscribing state and territorial laws in the fifty U.S. states and in theterritories. In the unique dual-sovereign system of American federalism (actuallytripartite when one includes Indian reservations), states are the plenarysovereigns, while the federal sovereign possesses only the limited supremeauthority enumerated in the Constitution.

Indeed, states may grant their citizens broader rights than the federalConstitution as long as they do not infringe on any federal constitutional rights.Thus, most U.S. law (especially the actual "living law" of tort, criminal, and familylaw experienced by the majority of citizens on a day-to-day basis) consistsprimarily of state law, which can and does vary greatly from one state to the next.

The legal system consist of the supreme court as the supreme decision making

body in the country. The system also has the many lower levels of courts, thus itmakes the system robust. The people are protected from evils & wrong doingscould be questioned. The system is quite transparent.Therefore people enjoy the freedom to do things which are legal in nature.Business benefit from the legal & political system as they find that theirinvestments are protected & rights are safe.

There is a fair taxation system present in USA. The companies are not veryheavily taxed. People get huge benefits in taxes & there are treaties existing withother nations which help in prevention of double taxations.



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9.Opportunities in the US market

Food retail sector.

Food processing sector.

Fruits Juice Segments.

Green & Renewable segments of Energy Generation.

Carbon efficiency sector.

Green Datacenters Revolution.

Pharmacy Sector: Vaccines for Swine Flu &more.

Intellectual Property Rights.

Health Care Sector: Yoga, stress reductions, mental rehabilitations. Real estate sector.

IT Sector.

Research &Development.

10. Challenges in the US Market

U.S. Economy going through turbulent times affecting how, where, what,

when US consumer is spending their dollar on. Bio-Terrorism Act increased registration, monitoring and record-keeping of

imported products

Food Safety Legislation recent national food scares have focused attentionon food safety, particularly of imported products. Currently 30 billsproposing changes to food legislation on Capitol Hill

Exchange Rate fluctuating. Recent strengthening forecast to continue,improving returns for Irish exporters.

Food Labeling different requirements to EU; different bar codes.

Route to Market Complex (Importers; Brokers; Wholesalers; Key Accounts)

Increased security issues.

Liquidity crunch.

On spread of pandemic like Swine Flu.

Stringent standards, regulations, specifications to be met.

Market is sophisticated, quality-conscious, high tech and competitive.



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11. References

www.google.com

www.wikipedia.com

www.buyusa.gov

http://www.transparency.org/policy_research/surveys_indices/cpi

http://www.geert-hofstede.com/hofstede_united_states.shtml

https://www.cia.gov/library/publications/the-world-factbook/

www.economist.com

www.bbc.co.uk

http://www.google.com/http://www.wikipedia.com/http://www.buyusa.gov/http://www.buyusa.gov/http://www.buyusa.gov/http://www.buyusa.gov/http://www.transparency.org/policy_research/surveys_indices/cpihttp://www.transparency.org/policy_research/surveys_indices/cpihttp://www.geert-hofstede.com/hofstede_united_states.shtmlhttp://www.geert-hofstede.com/hofstede_united_states.shtmlhttps://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/http://www.economist.com/http://www.bbc.co.uk/http://www.bbc.co.uk/http://www.bbc.co.uk/http://www.bbc.co.uk/http://www.google.com/http://www.wikipedia.com/http://www.buyusa.gov/http://www.transparency.org/policy_research/surveys_indices/cpihttp://www.geert-hofstede.com/hofstede_united_states.shtmlhttps://www.cia.gov/library/publications/the-world-factbook/http://www.economist.com/http://www.bbc.co.uk/

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Country Snap Shot USA