Problem-Based Learning Scenario

Problem-Based Learning Scenario

Introduction

It is imperative that the economic outlook of the two countries is comprehensively reviewed before any concrete decisions are made in this regard. For this purpose, a range of major macroeconomic factors of the countries will be assessed and compared in order to help the AutoEdge in making a good decision. This range of macroeconomic factors includes Gross Domestic Product (GDP), unemployment rate, interest rates, and inflation.

Discussion

South Korea

The following are the major macroeconomic indicators for South Korea:

GDP

The Gross Domestic Product of South Korea has seen impressive growth over a period of the last five years. This can be seen from the fact that it has grown by nearly 2.6% in the last six months (Organization for Economic Cooperation and Development, 2013). This upward drive has reinforced the positive sentiment of investors as it suggests a very positive outlook for the economy. Also, as South Korea's GDP showed growth of 2.0% in the previous year of 2012, the numbers for the current year are even more impressive and should, therefore, boost the confidence (Organization & FECAD. 2012).

Unemployment Rate

The unemployment rate is going to have a very strong effect on AutoEdge. This is regardless of which country the operations are based in. South Korea's unemployment rate for the current year is poised at 3.3% which is relatively lower as compared to other major economies in the region (Organization for Economic Cooperation and Development, 2013). This means that there is a higher level of stability in the South Korean job market with a healthy supply of skilled labor. This is a positive outlook for the automotive industry.

Interest Rates

South Korea has seen a low interest rate of 2.5% which is a positive outlook for businesses. This is mainly the result of a drastic measure adopted by the South Korean government through which it brought about major cuts in the interest rate (Organization & FECAD. 2013). Along with an initiative by the government to increase the budget, this has significantly helped to fuel South Korea's economy and boost the gross domestic product. However, there are also some risks associated with a low interest rate (International Monetary Fund, 2013). For instance, a low interest rate would lead to sluggishness in the property market and a possible slowdown of the economy based on the performances of the U.S. and China.

Investment

The economy of South Korea has also seen an impressive growth of 3.3% in the ...