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MASTER FILE PRESENTATION AUGUST 17, 2011 SHARP E-1

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Dr. William N. Moore, DBA, MBA
Dr. William N. Moore, DBA, MBA

The document summarizes William N. Moore's dissertation which examines the influences of inflation rates on global business operations and performance. The dissertation investigates possible correlations between inflation, country categories, credit ratings, currency crises, and currency values. It presents research hypotheses testing for differences in inflation rates between various country samples and the overall mean. Descriptive statistics and charts are provided analyzing inflation data from different country groupings between 2004-2011.

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2/3/2015 Dissertation Final Defense William N. Moore 1 INFLUENCES OF THE INFLATION RATES ON GLOBAL BUSINESS OPERATIONS AND PERFORMANCE? Dissertation Citation http://gradworks.umi.com/35/06/3506845.html Argosy University/Chicago College of Business and Information Technology William Newton Moore September 24, 2011 Dissertation Committee Members Doctor Roberto Castaneda, CPA & DBA,Chair MM/MBA) in Marketing and Finance, Northwestern University Doctor Jodi Martinez,EdD. Member Doctor Harold Sargent, Ph.D. Member
2/3/2015 Dissertation Final Defense, William N. Moore 2 Purpose of the Study The overall purpose of this study is to isolate the possible linear relationship between CPI inflation as the dependent variable related to sample categories, currency regime choice, currency crises, currency values and numerical speculative sovereign credit ratings as the independent variables. In other words, should Multinationals accept possible financial crises as the normal course of business in the foreign countries hosting their operations. The researcher has investigated whether there are correlations between the random variables of inflation, sample categories, numerical speculative sovereign credit ratings, currency crises and currency values.
Hyperinflation occurred in the countries of Central and Eastern Europe during the 1990s. So, multinational and local firm¡¯s inventory turnover decreased significantly during those periods of hyperinflation. The problem involves identifying those countries which may be inflation prone with weak currencies if those countries are current hosts or chosen as future hosts of multinationals. 2/3/2015 Dissertation Final Defense William N. Moore 3
Stickney, Brown & Wahlen, 2007, introduced the Global Economic and Environmental Conditions as PepsiCo, Inc. and subsidiaries discussed Business Risks: ¡°Unforeseen global economic and environmental changes and political unrest may result in business interruption, supply constraints, foreign currency devaluation, inflation, deflation or decreased demand. Economic conditions in North America could also adversely affect growth. For example, rising fuel costs may impact the sales of our products in convenience stores where our products are generally sold in higher margin single serve packages.¡± (p. 1053) 2/3/2015 Dissertation Final Defense William N. Moore 4
N = 182 COUNTRIES Sampling without replacement Two large random samples Four small random samples Regression Analysis Chi Square Tests of Differences Exploratory Qualitative Research Study One: Secondary Data Analysis Study Secondary Research Data Source: Standard and Poor¡¯s Sovereign Credit Ratings Institutional Investors Numerical Credit Ratings Quantitative Correlation Research Study Two: Secondary Data Analysis Study ¨C Statistical Inference Secondary Data Sources: National Bureau of Economic Research Working Paper 8963 International Monetary Fund Database of Financial Crises Episodes Global Rates.com Inflation Rates Economy Watch Inflation Rates 2009 Consumer Prices Organization Economic Development and Cooperation 2/3/2015 Dissertation Final Defense William N. Moore 5
2/3/2015 Dissertation Final Defense William N. Moore 6 Research Hypothesis 1 H0 There is no difference in the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries in Russia, Ukraine, Moldova, and Turkey compared to the hyperinflation rates of the 1990s. H1 There is a difference in the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries in Russia, Ukraine, Moldova, and Turkey compared to the hyperinflation rates of the 1990s. Research Hypothesis 2 H0 There is no difference in the CPI inflation rate mean in a small random sample of 19 International Monetary Fund countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. H1 There is a difference in the CPI inflation rate mean in a small random sample of 19 International Monetary Fund countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries.
Ho There is no difference in the 2009 Economy Watch CPI mean of 3.820% for 182 countries in Russia, Ukraine, Moldova and Turkey compared to the hyperinflation rates of the 1990s. H1 There is a difference in the 2009 Economy Watch CPI mean of 3.820% for 182 countries in Russia, Ukraine, Moldova and Turkey compared to the hyperinflation rates of the 1990s. The 2009 CPI Inflation mean of the sample countries of Russia, Ukraine, Moldova and Turkey is shown on the following Excel 2003 Chart. Is The Null Hypothesis rejected? The Null Hypothesis will be rejected if the 2009 mean 7.025% of the small sample of emerging Europe countries is above the 2009 Economy Watch CPI Inflation rate mean 3.820% for 182 countries. 2/3/2015 Dissertation Final Defense William N. Moore 7
2/3/2015 Dissertation Final Defense William N. Moore 8 0.0000% 1.0000% 2.0000% 3.0000% 4.0000% 5.0000% 6.0000% 7.0000% 8.0000% Y Axis Inflation Percents Economy Watch CPI Inflation mean 182 countries Small Sample Emerging Europe countries CPI Inflation mean X Axis Comparison Categories Comparison Categories Economy Watch mean of 3.820% for 182 countries vs. a small sample mean of 7.025% for four emerging Europe countries. THE NULL HYPOTHESIS IS REJECTED Comparison Categories
2/3/2015 Dissertation Final Defense William N. Moore 9 Angola 13.99% Descriptive statistics Australia 2.11% Belize -0.39% RANDOM SAMPLE 2 # 1 Burundi 4.63% count 29 Denmark 1.43% mean 3.843% Dominica 3.16% sample variance0.00243 Dominican Republic 5.76% sample standard deviation0.04932 Egypt 9.96% minimum -0.01371 El Salvador -0.03% maximum 0.222 Eritrea 22.20% range 0.23571 Figi 6.80% France 0.10% standard error of the mean0.00916 Gabon 0.87% Germany 0.84% confidence interval 99.% lower0.01313 Israel 3.98% confidence interval 99.% upper0.06374 Kuwait 1.18% Latvia -1.37% Macau 3.41% empirical rule Mali 1.67% mean - 1s-0.01088 Mongolia 1.89% mean + 1s0.08775
2/3/2015 Dissertation Final Defense William N. Moore 10 Mozambique 4.22% percent in interval (68.26%) 86.2% Myanmar 7.12% mean - 2s -0.06020 Namibia 6.99% mean + 2s 0.13707 Netherlands 0.71% percent in interval (95.44%) 93.1% Niger -0.62% mean - 3s -0.10952 Oman 3.39% mean + 3s 0.18639 Panama 1.91% percent in interval (99.73%) 96.6% Papua New Guinea 5.68% Portugal -0.14% skewness 2.21813 Bolivia 0.27% kurtosis 6.25475 coefficient of variation (CV) 128.32% 1st quartile 0.840% median 2.108% 3rd quartile 5.677% interquartile range 4.837% mode #N/A
2/3/2015 Dissertation Final Defense William N. Moore 11 Descriptive statistics 182 COUNTRIES (POPULATION) 2009 CPI INFLATION # 1 count 182 mean 3.820% sample variance 0.00387 sample standard deviation 0.06225 minimum -0.0767 maximum 0.53438 range 0.61108 standard error of the mean 0.00461 confidence interval 99.% lower 0.02619 confidence interval 99.% upper 0.05021 empirical rule mean - 1s -0.02405 mean + 1s 0.10044 0 5 10 15 20 25 30 YAXISINFLATIONSAMPLESIZE=182 X AXIS HISTOFRAM MEASURES CPI INFLATION MEAN 2009
2/3/2015 Dissertation Final Defense William N. Moore 12 percent in interval (68.26%) 82.4% mean - 2s -0.08629 mean + 2s 0.16269 percent in interval (95.44%) 97.8% mean - 3s -0.14854 mean + 3s 0.22493 percent in interval (99.73%) 98.9% skewness 3.39796 kurtosis 22.45233 coefficient of variation (CV) 162.95% 1st quartile 0.686% median 2.450% 3rd quartile 5.761% interquartile range 5.076% mode 0.000%
2/3/2015 Dissertation Final Defense William N. Moore 13 Research Hypothesis 2 H0 There is no difference in the CPI inflation rate in a small random sample of 19 countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. H1 There is a difference in the CPI inflation rate in a small random sample of 19 countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. The Null Hypothesis is rejected. The following Excel 2003 Chart shows the 2009 CPI Inflation mean of a test sample of 19 countries which have adopted a Pegged Currency Regime is 12.887%
2/3/2015 Dissertation Final Defense William N. Moore 14 Angola 13.99% FIXED PEG Descriptive statistics Argentina 7.70% FIXED PEG 2009 RANDOM SAMPLE Banglades h 8.51% FIXED PEG FIXED PEG THEORY # 1 Belarus 10.11% FIXED PEG count 19 Botswana 5.85% FIXED PEG mean 12.887% Congo 53.44% FIXED PEG sample variance 0.01212 Equatorial Guinea 8.09% FIXED PEG sample standard deviation 0.11008 Eritrea 22.20% FIXED PEG minimum 0.05846 Figi OPEC 6.80% FIXED PEG maximum 0.53438 Guinea 7.90% FIXED PEG range 0.47592 Iran OPEC 10.40% FIXED PEG Malawi 8.70% FIXED PEG standard error of the mean 0.02525 Nepal 10.60% FIXED PEG Russia 8.80% FIXED PEG confidence interval 99.% lower 0.05618 Sierra Leone 10.78% FIXED PEG confidence interval 99.% upper 0.20157 Uzbekista n 10.60% FIXED PEG Venezuel a OPEC 25.06% FIXED PEG Vietnam 6.52% FIXED PEG empirical rule Yemen 8.83% FIXED PEG mean - 1s 0.01879 mean + 1s 0.23895
2/3/2015 Dissertation Final Defense William N. Moore 15 percent in interval (68.26%) 89.5% mean - 2s -0.09128 mean + 2s 0.34903 percent in interval (95.44%) 94.7% mean - 3s -0.20136 mean + 3s 0.45911 percent in interval (99.73%) 94.7% skewness 3.15232 kurtosis 10.92080 coefficient of variation (CV) 85.42% 1st quartile 7.992% median 8.833% 3rd quartile 10.692% interquartile range 2.700% mode #N/A
2/3/2015 Dissertation Final Defense William N. Moore 16 CPI INFLATION MEAN TRENDS 2004-2011 0.000% 2.000% 4.000% 6.000% 8.000% 10.000% 12.000% 14.000% Sm allSam ple Peg Theory Em erging Europe Sm allSam ple N on Aligned G roup EBR D Sm allSam ple Econo W atch C alculation W orld C PIInflation M ean 182 C ountries O EC D 34 C ountries X AXIS EIGHT CATEGORIES YAXISPERCENTCPIINFLATION 0.000% 10.000% 20.000% 30.000% 40.000% 50.000% 60.000% CUMMULATIVEPERCENTAGE CPI INFLATION DESCENDING CUMMULATIVE PERCENTAGE Linear (CPI INFLATION DESCENDING)
2/3/2015 Dissertation Final Defense William N. Moore 17 Research Questions What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings and the 2009 CPI inflation rate mean of at least four small random samples and two large random sample of International Monetary Fund countries (including 118 Non Aligned Movement countries) compared to: 1. AAA Investment Grade Sovereign Credit Ratings. 2. 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries. What are the 2009 CPI inflation rates compared to both the 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries and the hyperinflation rates of the 1990s in Russia, Ukraine, Moldova and Turkey which respectively were: 1. Russia 38.4% eleven years ago in 1998. 2. Ukraine 39.7% thirteen years ago in 1996. 3. Moldova 50% ten years ago in 1999. 4. Turkey 106.3% fifteen years ago in 1994. What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings for Russia, Ukraine, Moldova and Turkey compared to: 1. AAA Investment Grade Sovereign Credit Ratings.
What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings and the 2009 CPI inflation rates of at least four small random samples and two large random samples of International Monetary Fund countries (including 118 Non Aligned Movement countries) compared to: 1. AAA Investment Grade Sovereign Credit Ratings. 2. 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries. 2/3/2015 Dissertation Final Defense William N. Moore 18
Dissertation Final Defense William N. Moore2/3/2015 19 Answer Research Question 1 Samples from the International Monetary Fund Countries Samples from the 118 Non Aligned Movement Countries The CPI Inflation rates of 19 or 31% of the 61 countries in this sample are above the eight year CPI Inflation trend of 5.623% for the (population) 182 average number of countries investigated. Sovereign Ratings Column1 Column2 Column3 Column4 Country Sovereign local currency ratings Sovereign foreign currency ratings Currency Regime Inflation Rate Percentage 2009 Afghanistan B B Managed Floating -5.14% Algeria BBB BBB Managed Floating 5.75% Angola BB BB Fixed Peg 13.99% Antigua and Barbuda CCC CCC Currency Board 2.40% Armenia BB- BB- Managed Floating 6.60% Australia AA+ AA+ Independently Floating 2.11% Bahamas BBB+ BBB+ Fixed Peg 1.33% Barbados BBB+ BBB- Fixed Peg 3.47% Bolivia B B Crawling Peg .27% Botswana A- A- Crawling Peg 5.85% Burkina Faso B B Fixed Peg -.30% Central African Republic B B Fixed Peg 0.90% Chad B B Fixed Peg 4.71% Comoros B B Fixed Peg 2.17% C?te d'Ivoire B B Fixed Peg 1.00% Cyprus AA- AA- Independently Floating 1.57% Djibouti B B Currency Board 2.17% Egypt BB+ BB+ Managed Floating 9.96% Eritrea B B Fixed Peg 22.20% Equatorial Guinea 5 BB BB Fixed Peg 8.05% Fiji B B- Fixed Peg 6.80% Ghana B B Managed Floating 15.97% Grenada B B Currency Board -2.35% Guyana B B Fixed Peg 3.65% Haiti B B Managed floating -4.70%
2/3/2015 Dissertation Final Defense William N. Moore 20 Hungary BBB- BBB- Independently Floating 5.60% India BBB- BBB- Managed floating 14.97% Iran BB BB Crawling Peg 10.40% Iraq BB BB Crawling Peg -4.42% Jamaica B- B- Managed floating 10.18% Jordan BBB- BB Fixed Peg 2.68% Kuwait AA- AA- Fixed Peg 1.18% Luxembourg AAA AAA Independently Floating 1.80% Madagascar B- B- Managed floating 8.00% Malawi B B Fixed Peg 8.70% Mali B B Fixed Peg 1.67% Mauritania B B Managed floating 5.00% Mongolia BB- BB- Fixed Peg 1.89% Morocco BBB+ BBB- Fixed Peg -1.57% Nepal B B Fixed Peg 10.60% Nicaragua B B Crawling Peg .93% Nigeria BB- B+ Managed floating 13.94% Oman A A Fixed Peg 3.39% Philippines BB BB Independently Floating 4.30% Qatar AA AA Fixed Peg -4.87% Russia BBB BBB Managed floating 8.80% Saudi Arabia AA- AA- Fixed Peg 4.25% Senegal B+ B+ Fixed Peg -3.36% Seychelles B B Fixed Peg -2.47% Sierra Leone B B Fixed Peg 10.78% Singapore AAA AAA Managed Floating -.76% Suriname B+ B+ Fixed Peg 1.33% Swaziland B B Fixed Peg 4.49% Sweden AAA AAA Independently Floating 2.80% Switzerland AAA AAA Independently Floating .28% Timor-Leste B B No Separate Legal Tender 1.10% Tunisia BBB BBB Fixed Peg 5.00% Turkmenistan B B Fixed Peg .10% Vanuatu B B Managed Floating 2.36% Venezuela BB- BB- Fixed Peg 25.06% Zambia B B Independently Floating 9.90%
What are the 2009 CPI inflation rates compared to both the 2009 Economy Watch CPI Inflation mean of 3.820 % for 182 countries and the hyperinflation rates of the 1990s in Russia, Ukraine, Moldova and Turkey which respectively were: 1. Russia 38.4% eleven years ago in 1998. 2. Ukraine 39.7% thirteen years ago in 1996. 3. Moldova 50% ten years ago in 1999. 4. Turkey 103.4% fifteen years ago in 1994. 2/3/2015 Dissertation Final Defense William N. Moore 21
2/3/2015 Dissertation Final Defense William N. Moore 22 2/3/2015 22 Answer Research Question 2 Emerging European Countries Currency Regime Country II Rating Inflation 2009 Managed Floating Moldova 22.00 B- 0.44% Fixed Exchange Rate Peg Belarus 24.70 B+ 10.10% Independent Floating Albania 33.50 B+ 3.40% Managed Floating Ukraine 35.60 B- 12.33% Managed Floating Serbia 40.70 BB- 6.578% Fixed Exchange Rate Peg FYR Macedonia 43.30 BB -1.63% Independent Floating Turkey 49.00 BB 6.53% Managed Floating Romania 52.50 BB 4.764% ERM 2 Latvia 55.20 BB -1.371% Fixed Exchange Rate Peg Croatia BBB 1.862% Currency Board Peg Euro Bulgaria 54.10 BBB 1.638% Floating Hungary 59.20 BBB 5.60% ERM 2 Lithuania 59.80 BBB 1.271% Currency Board Peg Euro Estonia 61.00 A -1.709% Managed Floating Czech Republic 74.70 A 1.00% Fixed Exchange Rate Peg Poland 71.50 A 3.50% Fixed Exchange Rate Peg Slovak Republic 73.60 A 0.08% EURO Slovenia 81.50 AA 1.791% Managed Floating Russia BBB 8.80%
What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings for Russia, Ukraine, Moldova and Turkey compared to: 1. AAA Investment Grade Sovereign Credit Ratings. Answer Research Question 3 Independent Floating Turkey 49.00 BB 6.53% Managed Floating Russia BBB 8.80% Managed Floating Ukraine 35.60 B- 12.33% Managed Floating Moldova 22.00 B- 0.44% 2/3/2015 Dissertation Final Defense William N. Moore 23
2/3/2015 Dissertation Final Defense William N. Moore 24 Descriptive statistics 182 COUNTRIES (POPULATION) 2009 CPI INFLATION # 1 count 182 mean 3.820% sample variance 0.00387 sample standard deviation 0.06225 minimum -0.0767 maximum 0.53438 range 0.61108 standard error of the mean 0.00461 confidence interval 99.% lower 0.02619 confidence interval 99.% upper 0.05021 empirical rule mean - 1s -0.02405 mean + 1s 0.10044 0 5 10 15 20 25 30 YAXISINFLATIONSAMPLESIZE=182 X AXIS HISTOFRAM MEASURES CPI INFLATION MEAN 2009
2/3/2015 Dissertation Final Defense William N. Moore 25 percent in interval (68.26%) 82.4% mean - 2s -0.08629 mean + 2s 0.16269 percent in interval (95.44%) 97.8% mean - 3s -0.14854 mean + 3s 0.22493 percent in interval (99.73%) 98.9% skewness 3.39796 kurtosis 22.45233 coefficient of variation (CV) 162.95% 1st quartile 0.686% median 2.450% 3rd quartile 5.761% interquartile range 5.076% mode 0.000%
2/3/2015 Dissertation Final Defense William N. Moore 26 DECREASING QUARTILES 2009 Congo 53.44% FOURTH Venezuela 25.06% QUARTILE Finland 22.20% Eritrea 22.20% Sao Tome and Principe 16.09% Ghana 15.97% India 14.97% Angola 13.99% Nigeria 13.94% Pakistan 13.14% SMALL Ukraine 12.33% SAMPLE Uganda 12.30% Sudan 11.46% Sierra Leone 10.78% Tanzania 10.68% Uzbekistan 10.60% Nepal 10.60% Iran 10.40% Jamaica 10.18%
2/3/2015 Dissertation Final Defense William N. Moore 27 Honduras 2.95% Libya 2.83% Korea 2.80% Sweden 2.80% Indonesia 2.78% Bahrain 2.78% Gambia 2.72% Ethiopia 2.70% Jordan 2.68% Congo, Republic of 2.54% Guam 2.50% Antigua and Barbuda 2.40% Vanuatu 2.36% Comoros 2.17% Djibouti 2.17% Australia 2.11% United Kingdom 2.10% Norway 2.01% Colombia 2.00% Greece 2.00%
2/3/2015 Dissertation Final Defense William N. Moore 28 Sample 2 Inital Samples (Sample size = 37) International Monetary Fund Daabase Financial Crises Episodes 2007 154 Currency Crises (Population = 208) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Inflation > 40% Pegs Managed Floating Mean No Separate Legal Tender Median Mode X Axis Percent in Sample Category YAxisPercentage 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% YAxisCummualtivePercentage Percent of sample Cummulative Percentage
2/3/2015 Dissertation Final Defense William N. Moore 29 Census Sample Initial Samples (Sample Size = 154) International Monetary Fund Database Financial Crises Episodes 2007 154 Currency Crises ((Population = 208) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Inflation > 40% Pegs Managed Floating Mean Black Market Median Freely Floating No Separate Legal TenderX Axis Percent in Sample Category YAxisPercentage 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% YAxisCummulativePercentage Percent of Sample Cummulative Percentage
? Limitations 1 ? Limitations 2 2/3/2015 Dissertation Final Defense William N. Moore 30
The international business researcher has only used secondary data sources to complete the study. The international business researcher is aware that actual Multinational operating experience may have prepared Multinational operations managers to withstand hyperinflationary environments. But in any case the Central Bank where the Multinational is operating will not buy the Multinational inventory. 2/3/2015 31Dissertation Final Defense, William N. Moore
In looking at so many secondary sources of international economic data, there may be inaccurate data but all sources of information have been cross checked. In this regard, this study is based on information found only in the PEER Reviewed Journals, International Monetary Fund statistics and other referenced sources. 2/3/2015 32Dissertation Final Defense, William N. Moore
Operations managers of multinational companies can easily narrow their search for capital investment candidates by using the eight year World CPI Inflation mean trend of 5.623%. for 182 countries. The CPI Inflation indicator for 2010 is 4.966%. The CPI Inflation forecast for 2011 is 6.175% which is above the eight year World CPI Inflation mean trend of 5.623%. 2/3/2015 Dissertation Final Defense William N. Moore 33
Operations managers of multinational companies may have to accept the fact that inflation may be entrenched unless future research determines otherwise. 2/3/2015 Dissertation Final Defense William N. Moore 34
The international business researcher reviewed between 40 and 50 PEER Reviewed Journals for this study. But just by chance some of PEER Reviewed Journal researchers had information to complement this study. To write a robust study a researcher has to cross check all information gathered to prepare for possible challenges to the researcher¡¯s conclusions. 2/3/2015 35Dissertation Final Defense, William N. Moore
The most recent research about the Emerging Europe Countries which was uncovered in December 2010 is published by European Bank for Reconstruction and Development. The report is called ¡°Transition Report 2009¡± 2/3/2015 36Dissertation Final Defense, William N. Moore
2/3/2015 372/3/2015 CPI Inflation in 29 countries which are assisted by European Bank for Reconstruction and Development during crises still remains above the eight year World CPI Inflation trend of 5.623%. Considerable risk remains to a Multinational company if a capital investment is made in a country which does not appreciate the implications of inflation, currency regime choice or borrows in foreign currency other than their own. 37Dissertation Final Defense, William N. Moore
Dissertation Final Defense, William N. Moore 2/3/2015 38 During the initial economic and financial screening, a recent criteria for a potential capital investment country includes market indicators which are: ?Market size = Size of urban population + Electricity Consumption. ?Market growth rate = Average growth rate in commercial energy use + Real growth rate in GDP. ?E-commerce readiness = Mobile phones per 1,000 + Number of PCs per 1,000 + Internet hosts per million people. ?Eight year World CPI Inflation mean trend of 5.623% for 182 countries. Local currency obligations and foreign currency obligations default risk opinion from Standard & Poor's. ?Independent Central Bank. ?Legal and Political Environment. ?Physical Property Rights. ?Intellectual Property Rights. ?Ease of doing business Ranking. (World Bank) ?Protection of investors Ranking. (World Bank) ?Enforcing contracts Ranking. (World Bank) (Ball, Geringer, Minor and McNett (2010) pp. 430-431)
2/3/2015 392/3/2015 Future research should determine if central bank Independence conflicts with political ideologies in Emerging Europe countries. Future Research should determine if some emerging Europe countries are ignoring their balance sheets because they know that the International Monetary Fund will make them a loan regardless of how they perform. 39Dissertation Final Defense, William N. Moore
2/3/2015 Dissertation Final Defense William N. Moore 40 Ball, D.A., Geringer, J.M., Minor, M.S., and McNett, J.M., (2010) INTERNATIONAL BUSINESS THE CHALLENGE OF GLOBAL COMPETITION. New York, New York. McGraw-Hill Irwin Cooper, D.R., Schindler, P.S. (2003) business RESEARCH METHODS. New York, New York. McGraw-Hill Irwin Creswell, J.W. (2005) Educational Research Planning, Conducting, and Evaluating Quantitative and Qualitative Research. Upper Saddle River, New Jersey. PEARSON Merrill Prentice-Hall. Economy Watch Database Inflation statistics International Monetary Fund of Financial Crises Episodes, 2007 Lind, D.A., Marchal, W.G., Wathen, S.A. (2010) Statistical Techniques in Business & Economics. New York, New York. McGraw-Hill Irwin Stickney, C.P.,Brown, P.R., Wahlen, J.M. (2007) Financial Reporting, Financial Statement Analysis and Valuation. A Strategic Perspective. Mason, Ohio. Thompson South-Western.
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MASTER FILE PRESENTATION AUGUST 17, 2011 SHARP E-1

  • 1. 2/3/2015 Dissertation Final Defense William N. Moore 1 INFLUENCES OF THE INFLATION RATES ON GLOBAL BUSINESS OPERATIONS AND PERFORMANCE? Dissertation Citation http://gradworks.umi.com/35/06/3506845.html Argosy University/Chicago College of Business and Information Technology William Newton Moore September 24, 2011 Dissertation Committee Members Doctor Roberto Castaneda, CPA & DBA,Chair MM/MBA) in Marketing and Finance, Northwestern University Doctor Jodi Martinez,EdD. Member Doctor Harold Sargent, Ph.D. Member
  • 2. 2/3/2015 Dissertation Final Defense, William N. Moore 2 Purpose of the Study The overall purpose of this study is to isolate the possible linear relationship between CPI inflation as the dependent variable related to sample categories, currency regime choice, currency crises, currency values and numerical speculative sovereign credit ratings as the independent variables. In other words, should Multinationals accept possible financial crises as the normal course of business in the foreign countries hosting their operations. The researcher has investigated whether there are correlations between the random variables of inflation, sample categories, numerical speculative sovereign credit ratings, currency crises and currency values.
  • 3. Hyperinflation occurred in the countries of Central and Eastern Europe during the 1990s. So, multinational and local firm¡¯s inventory turnover decreased significantly during those periods of hyperinflation. The problem involves identifying those countries which may be inflation prone with weak currencies if those countries are current hosts or chosen as future hosts of multinationals. 2/3/2015 Dissertation Final Defense William N. Moore 3
  • 4. Stickney, Brown & Wahlen, 2007, introduced the Global Economic and Environmental Conditions as PepsiCo, Inc. and subsidiaries discussed Business Risks: ¡°Unforeseen global economic and environmental changes and political unrest may result in business interruption, supply constraints, foreign currency devaluation, inflation, deflation or decreased demand. Economic conditions in North America could also adversely affect growth. For example, rising fuel costs may impact the sales of our products in convenience stores where our products are generally sold in higher margin single serve packages.¡± (p. 1053) 2/3/2015 Dissertation Final Defense William N. Moore 4
  • 5. N = 182 COUNTRIES Sampling without replacement Two large random samples Four small random samples Regression Analysis Chi Square Tests of Differences Exploratory Qualitative Research Study One: Secondary Data Analysis Study Secondary Research Data Source: Standard and Poor¡¯s Sovereign Credit Ratings Institutional Investors Numerical Credit Ratings Quantitative Correlation Research Study Two: Secondary Data Analysis Study ¨C Statistical Inference Secondary Data Sources: National Bureau of Economic Research Working Paper 8963 International Monetary Fund Database of Financial Crises Episodes Global Rates.com Inflation Rates Economy Watch Inflation Rates 2009 Consumer Prices Organization Economic Development and Cooperation 2/3/2015 Dissertation Final Defense William N. Moore 5
  • 6. 2/3/2015 Dissertation Final Defense William N. Moore 6 Research Hypothesis 1 H0 There is no difference in the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries in Russia, Ukraine, Moldova, and Turkey compared to the hyperinflation rates of the 1990s. H1 There is a difference in the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries in Russia, Ukraine, Moldova, and Turkey compared to the hyperinflation rates of the 1990s. Research Hypothesis 2 H0 There is no difference in the CPI inflation rate mean in a small random sample of 19 International Monetary Fund countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. H1 There is a difference in the CPI inflation rate mean in a small random sample of 19 International Monetary Fund countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries.
  • 7. Ho There is no difference in the 2009 Economy Watch CPI mean of 3.820% for 182 countries in Russia, Ukraine, Moldova and Turkey compared to the hyperinflation rates of the 1990s. H1 There is a difference in the 2009 Economy Watch CPI mean of 3.820% for 182 countries in Russia, Ukraine, Moldova and Turkey compared to the hyperinflation rates of the 1990s. The 2009 CPI Inflation mean of the sample countries of Russia, Ukraine, Moldova and Turkey is shown on the following Excel 2003 Chart. Is The Null Hypothesis rejected? The Null Hypothesis will be rejected if the 2009 mean 7.025% of the small sample of emerging Europe countries is above the 2009 Economy Watch CPI Inflation rate mean 3.820% for 182 countries. 2/3/2015 Dissertation Final Defense William N. Moore 7
  • 8. 2/3/2015 Dissertation Final Defense William N. Moore 8 0.0000% 1.0000% 2.0000% 3.0000% 4.0000% 5.0000% 6.0000% 7.0000% 8.0000% Y Axis Inflation Percents Economy Watch CPI Inflation mean 182 countries Small Sample Emerging Europe countries CPI Inflation mean X Axis Comparison Categories Comparison Categories Economy Watch mean of 3.820% for 182 countries vs. a small sample mean of 7.025% for four emerging Europe countries. THE NULL HYPOTHESIS IS REJECTED Comparison Categories
  • 9. 2/3/2015 Dissertation Final Defense William N. Moore 9 Angola 13.99% Descriptive statistics Australia 2.11% Belize -0.39% RANDOM SAMPLE 2 # 1 Burundi 4.63% count 29 Denmark 1.43% mean 3.843% Dominica 3.16% sample variance0.00243 Dominican Republic 5.76% sample standard deviation0.04932 Egypt 9.96% minimum -0.01371 El Salvador -0.03% maximum 0.222 Eritrea 22.20% range 0.23571 Figi 6.80% France 0.10% standard error of the mean0.00916 Gabon 0.87% Germany 0.84% confidence interval 99.% lower0.01313 Israel 3.98% confidence interval 99.% upper0.06374 Kuwait 1.18% Latvia -1.37% Macau 3.41% empirical rule Mali 1.67% mean - 1s-0.01088 Mongolia 1.89% mean + 1s0.08775
  • 10. 2/3/2015 Dissertation Final Defense William N. Moore 10 Mozambique 4.22% percent in interval (68.26%) 86.2% Myanmar 7.12% mean - 2s -0.06020 Namibia 6.99% mean + 2s 0.13707 Netherlands 0.71% percent in interval (95.44%) 93.1% Niger -0.62% mean - 3s -0.10952 Oman 3.39% mean + 3s 0.18639 Panama 1.91% percent in interval (99.73%) 96.6% Papua New Guinea 5.68% Portugal -0.14% skewness 2.21813 Bolivia 0.27% kurtosis 6.25475 coefficient of variation (CV) 128.32% 1st quartile 0.840% median 2.108% 3rd quartile 5.677% interquartile range 4.837% mode #N/A
  • 11. 2/3/2015 Dissertation Final Defense William N. Moore 11 Descriptive statistics 182 COUNTRIES (POPULATION) 2009 CPI INFLATION # 1 count 182 mean 3.820% sample variance 0.00387 sample standard deviation 0.06225 minimum -0.0767 maximum 0.53438 range 0.61108 standard error of the mean 0.00461 confidence interval 99.% lower 0.02619 confidence interval 99.% upper 0.05021 empirical rule mean - 1s -0.02405 mean + 1s 0.10044 0 5 10 15 20 25 30 YAXISINFLATIONSAMPLESIZE=182 X AXIS HISTOFRAM MEASURES CPI INFLATION MEAN 2009
  • 12. 2/3/2015 Dissertation Final Defense William N. Moore 12 percent in interval (68.26%) 82.4% mean - 2s -0.08629 mean + 2s 0.16269 percent in interval (95.44%) 97.8% mean - 3s -0.14854 mean + 3s 0.22493 percent in interval (99.73%) 98.9% skewness 3.39796 kurtosis 22.45233 coefficient of variation (CV) 162.95% 1st quartile 0.686% median 2.450% 3rd quartile 5.761% interquartile range 5.076% mode 0.000%
  • 13. 2/3/2015 Dissertation Final Defense William N. Moore 13 Research Hypothesis 2 H0 There is no difference in the CPI inflation rate in a small random sample of 19 countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. H1 There is a difference in the CPI inflation rate in a small random sample of 19 countries which have adopted the Peg Theory compared to the 2009 Economy Watch CPI inflation rate mean of 3.820% for 182 countries. The Null Hypothesis is rejected. The following Excel 2003 Chart shows the 2009 CPI Inflation mean of a test sample of 19 countries which have adopted a Pegged Currency Regime is 12.887%
  • 14. 2/3/2015 Dissertation Final Defense William N. Moore 14 Angola 13.99% FIXED PEG Descriptive statistics Argentina 7.70% FIXED PEG 2009 RANDOM SAMPLE Banglades h 8.51% FIXED PEG FIXED PEG THEORY # 1 Belarus 10.11% FIXED PEG count 19 Botswana 5.85% FIXED PEG mean 12.887% Congo 53.44% FIXED PEG sample variance 0.01212 Equatorial Guinea 8.09% FIXED PEG sample standard deviation 0.11008 Eritrea 22.20% FIXED PEG minimum 0.05846 Figi OPEC 6.80% FIXED PEG maximum 0.53438 Guinea 7.90% FIXED PEG range 0.47592 Iran OPEC 10.40% FIXED PEG Malawi 8.70% FIXED PEG standard error of the mean 0.02525 Nepal 10.60% FIXED PEG Russia 8.80% FIXED PEG confidence interval 99.% lower 0.05618 Sierra Leone 10.78% FIXED PEG confidence interval 99.% upper 0.20157 Uzbekista n 10.60% FIXED PEG Venezuel a OPEC 25.06% FIXED PEG Vietnam 6.52% FIXED PEG empirical rule Yemen 8.83% FIXED PEG mean - 1s 0.01879 mean + 1s 0.23895
  • 15. 2/3/2015 Dissertation Final Defense William N. Moore 15 percent in interval (68.26%) 89.5% mean - 2s -0.09128 mean + 2s 0.34903 percent in interval (95.44%) 94.7% mean - 3s -0.20136 mean + 3s 0.45911 percent in interval (99.73%) 94.7% skewness 3.15232 kurtosis 10.92080 coefficient of variation (CV) 85.42% 1st quartile 7.992% median 8.833% 3rd quartile 10.692% interquartile range 2.700% mode #N/A
  • 16. 2/3/2015 Dissertation Final Defense William N. Moore 16 CPI INFLATION MEAN TRENDS 2004-2011 0.000% 2.000% 4.000% 6.000% 8.000% 10.000% 12.000% 14.000% Sm allSam ple Peg Theory Em erging Europe Sm allSam ple N on Aligned G roup EBR D Sm allSam ple Econo W atch C alculation W orld C PIInflation M ean 182 C ountries O EC D 34 C ountries X AXIS EIGHT CATEGORIES YAXISPERCENTCPIINFLATION 0.000% 10.000% 20.000% 30.000% 40.000% 50.000% 60.000% CUMMULATIVEPERCENTAGE CPI INFLATION DESCENDING CUMMULATIVE PERCENTAGE Linear (CPI INFLATION DESCENDING)
  • 17. 2/3/2015 Dissertation Final Defense William N. Moore 17 Research Questions What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings and the 2009 CPI inflation rate mean of at least four small random samples and two large random sample of International Monetary Fund countries (including 118 Non Aligned Movement countries) compared to: 1. AAA Investment Grade Sovereign Credit Ratings. 2. 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries. What are the 2009 CPI inflation rates compared to both the 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries and the hyperinflation rates of the 1990s in Russia, Ukraine, Moldova and Turkey which respectively were: 1. Russia 38.4% eleven years ago in 1998. 2. Ukraine 39.7% thirteen years ago in 1996. 3. Moldova 50% ten years ago in 1999. 4. Turkey 106.3% fifteen years ago in 1994. What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings for Russia, Ukraine, Moldova and Turkey compared to: 1. AAA Investment Grade Sovereign Credit Ratings.
  • 18. What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings and the 2009 CPI inflation rates of at least four small random samples and two large random samples of International Monetary Fund countries (including 118 Non Aligned Movement countries) compared to: 1. AAA Investment Grade Sovereign Credit Ratings. 2. 2009 Economy Watch CPI Inflation mean of 3.820% for 182 countries. 2/3/2015 Dissertation Final Defense William N. Moore 18
  • 19. Dissertation Final Defense William N. Moore2/3/2015 19 Answer Research Question 1 Samples from the International Monetary Fund Countries Samples from the 118 Non Aligned Movement Countries The CPI Inflation rates of 19 or 31% of the 61 countries in this sample are above the eight year CPI Inflation trend of 5.623% for the (population) 182 average number of countries investigated. Sovereign Ratings Column1 Column2 Column3 Column4 Country Sovereign local currency ratings Sovereign foreign currency ratings Currency Regime Inflation Rate Percentage 2009 Afghanistan B B Managed Floating -5.14% Algeria BBB BBB Managed Floating 5.75% Angola BB BB Fixed Peg 13.99% Antigua and Barbuda CCC CCC Currency Board 2.40% Armenia BB- BB- Managed Floating 6.60% Australia AA+ AA+ Independently Floating 2.11% Bahamas BBB+ BBB+ Fixed Peg 1.33% Barbados BBB+ BBB- Fixed Peg 3.47% Bolivia B B Crawling Peg .27% Botswana A- A- Crawling Peg 5.85% Burkina Faso B B Fixed Peg -.30% Central African Republic B B Fixed Peg 0.90% Chad B B Fixed Peg 4.71% Comoros B B Fixed Peg 2.17% C?te d'Ivoire B B Fixed Peg 1.00% Cyprus AA- AA- Independently Floating 1.57% Djibouti B B Currency Board 2.17% Egypt BB+ BB+ Managed Floating 9.96% Eritrea B B Fixed Peg 22.20% Equatorial Guinea 5 BB BB Fixed Peg 8.05% Fiji B B- Fixed Peg 6.80% Ghana B B Managed Floating 15.97% Grenada B B Currency Board -2.35% Guyana B B Fixed Peg 3.65% Haiti B B Managed floating -4.70%
  • 20. 2/3/2015 Dissertation Final Defense William N. Moore 20 Hungary BBB- BBB- Independently Floating 5.60% India BBB- BBB- Managed floating 14.97% Iran BB BB Crawling Peg 10.40% Iraq BB BB Crawling Peg -4.42% Jamaica B- B- Managed floating 10.18% Jordan BBB- BB Fixed Peg 2.68% Kuwait AA- AA- Fixed Peg 1.18% Luxembourg AAA AAA Independently Floating 1.80% Madagascar B- B- Managed floating 8.00% Malawi B B Fixed Peg 8.70% Mali B B Fixed Peg 1.67% Mauritania B B Managed floating 5.00% Mongolia BB- BB- Fixed Peg 1.89% Morocco BBB+ BBB- Fixed Peg -1.57% Nepal B B Fixed Peg 10.60% Nicaragua B B Crawling Peg .93% Nigeria BB- B+ Managed floating 13.94% Oman A A Fixed Peg 3.39% Philippines BB BB Independently Floating 4.30% Qatar AA AA Fixed Peg -4.87% Russia BBB BBB Managed floating 8.80% Saudi Arabia AA- AA- Fixed Peg 4.25% Senegal B+ B+ Fixed Peg -3.36% Seychelles B B Fixed Peg -2.47% Sierra Leone B B Fixed Peg 10.78% Singapore AAA AAA Managed Floating -.76% Suriname B+ B+ Fixed Peg 1.33% Swaziland B B Fixed Peg 4.49% Sweden AAA AAA Independently Floating 2.80% Switzerland AAA AAA Independently Floating .28% Timor-Leste B B No Separate Legal Tender 1.10% Tunisia BBB BBB Fixed Peg 5.00% Turkmenistan B B Fixed Peg .10% Vanuatu B B Managed Floating 2.36% Venezuela BB- BB- Fixed Peg 25.06% Zambia B B Independently Floating 9.90%
  • 21. What are the 2009 CPI inflation rates compared to both the 2009 Economy Watch CPI Inflation mean of 3.820 % for 182 countries and the hyperinflation rates of the 1990s in Russia, Ukraine, Moldova and Turkey which respectively were: 1. Russia 38.4% eleven years ago in 1998. 2. Ukraine 39.7% thirteen years ago in 1996. 3. Moldova 50% ten years ago in 1999. 4. Turkey 103.4% fifteen years ago in 1994. 2/3/2015 Dissertation Final Defense William N. Moore 21
  • 22. 2/3/2015 Dissertation Final Defense William N. Moore 22 2/3/2015 22 Answer Research Question 2 Emerging European Countries Currency Regime Country II Rating Inflation 2009 Managed Floating Moldova 22.00 B- 0.44% Fixed Exchange Rate Peg Belarus 24.70 B+ 10.10% Independent Floating Albania 33.50 B+ 3.40% Managed Floating Ukraine 35.60 B- 12.33% Managed Floating Serbia 40.70 BB- 6.578% Fixed Exchange Rate Peg FYR Macedonia 43.30 BB -1.63% Independent Floating Turkey 49.00 BB 6.53% Managed Floating Romania 52.50 BB 4.764% ERM 2 Latvia 55.20 BB -1.371% Fixed Exchange Rate Peg Croatia BBB 1.862% Currency Board Peg Euro Bulgaria 54.10 BBB 1.638% Floating Hungary 59.20 BBB 5.60% ERM 2 Lithuania 59.80 BBB 1.271% Currency Board Peg Euro Estonia 61.00 A -1.709% Managed Floating Czech Republic 74.70 A 1.00% Fixed Exchange Rate Peg Poland 71.50 A 3.50% Fixed Exchange Rate Peg Slovak Republic 73.60 A 0.08% EURO Slovenia 81.50 AA 1.791% Managed Floating Russia BBB 8.80%
  • 23. What are the 2009 Standard & Poor¡¯s Sovereign Credit Ratings for Russia, Ukraine, Moldova and Turkey compared to: 1. AAA Investment Grade Sovereign Credit Ratings. Answer Research Question 3 Independent Floating Turkey 49.00 BB 6.53% Managed Floating Russia BBB 8.80% Managed Floating Ukraine 35.60 B- 12.33% Managed Floating Moldova 22.00 B- 0.44% 2/3/2015 Dissertation Final Defense William N. Moore 23
  • 24. 2/3/2015 Dissertation Final Defense William N. Moore 24 Descriptive statistics 182 COUNTRIES (POPULATION) 2009 CPI INFLATION # 1 count 182 mean 3.820% sample variance 0.00387 sample standard deviation 0.06225 minimum -0.0767 maximum 0.53438 range 0.61108 standard error of the mean 0.00461 confidence interval 99.% lower 0.02619 confidence interval 99.% upper 0.05021 empirical rule mean - 1s -0.02405 mean + 1s 0.10044 0 5 10 15 20 25 30 YAXISINFLATIONSAMPLESIZE=182 X AXIS HISTOFRAM MEASURES CPI INFLATION MEAN 2009
  • 25. 2/3/2015 Dissertation Final Defense William N. Moore 25 percent in interval (68.26%) 82.4% mean - 2s -0.08629 mean + 2s 0.16269 percent in interval (95.44%) 97.8% mean - 3s -0.14854 mean + 3s 0.22493 percent in interval (99.73%) 98.9% skewness 3.39796 kurtosis 22.45233 coefficient of variation (CV) 162.95% 1st quartile 0.686% median 2.450% 3rd quartile 5.761% interquartile range 5.076% mode 0.000%
  • 26. 2/3/2015 Dissertation Final Defense William N. Moore 26 DECREASING QUARTILES 2009 Congo 53.44% FOURTH Venezuela 25.06% QUARTILE Finland 22.20% Eritrea 22.20% Sao Tome and Principe 16.09% Ghana 15.97% India 14.97% Angola 13.99% Nigeria 13.94% Pakistan 13.14% SMALL Ukraine 12.33% SAMPLE Uganda 12.30% Sudan 11.46% Sierra Leone 10.78% Tanzania 10.68% Uzbekistan 10.60% Nepal 10.60% Iran 10.40% Jamaica 10.18%
  • 27. 2/3/2015 Dissertation Final Defense William N. Moore 27 Honduras 2.95% Libya 2.83% Korea 2.80% Sweden 2.80% Indonesia 2.78% Bahrain 2.78% Gambia 2.72% Ethiopia 2.70% Jordan 2.68% Congo, Republic of 2.54% Guam 2.50% Antigua and Barbuda 2.40% Vanuatu 2.36% Comoros 2.17% Djibouti 2.17% Australia 2.11% United Kingdom 2.10% Norway 2.01% Colombia 2.00% Greece 2.00%
  • 28. 2/3/2015 Dissertation Final Defense William N. Moore 28 Sample 2 Inital Samples (Sample size = 37) International Monetary Fund Daabase Financial Crises Episodes 2007 154 Currency Crises (Population = 208) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Inflation > 40% Pegs Managed Floating Mean No Separate Legal Tender Median Mode X Axis Percent in Sample Category YAxisPercentage 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% YAxisCummualtivePercentage Percent of sample Cummulative Percentage
  • 29. 2/3/2015 Dissertation Final Defense William N. Moore 29 Census Sample Initial Samples (Sample Size = 154) International Monetary Fund Database Financial Crises Episodes 2007 154 Currency Crises ((Population = 208) 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Inflation > 40% Pegs Managed Floating Mean Black Market Median Freely Floating No Separate Legal TenderX Axis Percent in Sample Category YAxisPercentage 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 140.00% YAxisCummulativePercentage Percent of Sample Cummulative Percentage
  • 30. ? Limitations 1 ? Limitations 2 2/3/2015 Dissertation Final Defense William N. Moore 30
  • 31. The international business researcher has only used secondary data sources to complete the study. The international business researcher is aware that actual Multinational operating experience may have prepared Multinational operations managers to withstand hyperinflationary environments. But in any case the Central Bank where the Multinational is operating will not buy the Multinational inventory. 2/3/2015 31Dissertation Final Defense, William N. Moore
  • 32. In looking at so many secondary sources of international economic data, there may be inaccurate data but all sources of information have been cross checked. In this regard, this study is based on information found only in the PEER Reviewed Journals, International Monetary Fund statistics and other referenced sources. 2/3/2015 32Dissertation Final Defense, William N. Moore
  • 33. Operations managers of multinational companies can easily narrow their search for capital investment candidates by using the eight year World CPI Inflation mean trend of 5.623%. for 182 countries. The CPI Inflation indicator for 2010 is 4.966%. The CPI Inflation forecast for 2011 is 6.175% which is above the eight year World CPI Inflation mean trend of 5.623%. 2/3/2015 Dissertation Final Defense William N. Moore 33
  • 34. Operations managers of multinational companies may have to accept the fact that inflation may be entrenched unless future research determines otherwise. 2/3/2015 Dissertation Final Defense William N. Moore 34
  • 35. The international business researcher reviewed between 40 and 50 PEER Reviewed Journals for this study. But just by chance some of PEER Reviewed Journal researchers had information to complement this study. To write a robust study a researcher has to cross check all information gathered to prepare for possible challenges to the researcher¡¯s conclusions. 2/3/2015 35Dissertation Final Defense, William N. Moore
  • 36. The most recent research about the Emerging Europe Countries which was uncovered in December 2010 is published by European Bank for Reconstruction and Development. The report is called ¡°Transition Report 2009¡± 2/3/2015 36Dissertation Final Defense, William N. Moore
  • 37. 2/3/2015 372/3/2015 CPI Inflation in 29 countries which are assisted by European Bank for Reconstruction and Development during crises still remains above the eight year World CPI Inflation trend of 5.623%. Considerable risk remains to a Multinational company if a capital investment is made in a country which does not appreciate the implications of inflation, currency regime choice or borrows in foreign currency other than their own. 37Dissertation Final Defense, William N. Moore
  • 38. Dissertation Final Defense, William N. Moore 2/3/2015 38 During the initial economic and financial screening, a recent criteria for a potential capital investment country includes market indicators which are: ?Market size = Size of urban population + Electricity Consumption. ?Market growth rate = Average growth rate in commercial energy use + Real growth rate in GDP. ?E-commerce readiness = Mobile phones per 1,000 + Number of PCs per 1,000 + Internet hosts per million people. ?Eight year World CPI Inflation mean trend of 5.623% for 182 countries. Local currency obligations and foreign currency obligations default risk opinion from Standard & Poor's. ?Independent Central Bank. ?Legal and Political Environment. ?Physical Property Rights. ?Intellectual Property Rights. ?Ease of doing business Ranking. (World Bank) ?Protection of investors Ranking. (World Bank) ?Enforcing contracts Ranking. (World Bank) (Ball, Geringer, Minor and McNett (2010) pp. 430-431)
  • 39. 2/3/2015 392/3/2015 Future research should determine if central bank Independence conflicts with political ideologies in Emerging Europe countries. Future Research should determine if some emerging Europe countries are ignoring their balance sheets because they know that the International Monetary Fund will make them a loan regardless of how they perform. 39Dissertation Final Defense, William N. Moore
  • 40. 2/3/2015 Dissertation Final Defense William N. Moore 40 Ball, D.A., Geringer, J.M., Minor, M.S., and McNett, J.M., (2010) INTERNATIONAL BUSINESS THE CHALLENGE OF GLOBAL COMPETITION. New York, New York. McGraw-Hill Irwin Cooper, D.R., Schindler, P.S. (2003) business RESEARCH METHODS. New York, New York. McGraw-Hill Irwin Creswell, J.W. (2005) Educational Research Planning, Conducting, and Evaluating Quantitative and Qualitative Research. Upper Saddle River, New Jersey. PEARSON Merrill Prentice-Hall. Economy Watch Database Inflation statistics International Monetary Fund of Financial Crises Episodes, 2007 Lind, D.A., Marchal, W.G., Wathen, S.A. (2010) Statistical Techniques in Business & Economics. New York, New York. McGraw-Hill Irwin Stickney, C.P.,Brown, P.R., Wahlen, J.M. (2007) Financial Reporting, Financial Statement Analysis and Valuation. A Strategic Perspective. Mason, Ohio. Thompson South-Western.