Pl Please read the case, “El Salvador’s bitcoin gamble”. The International Monetary Fund (IMF) has been trying to convince El Salvador to reverse its 2021 law, which has made bitcoin a legal tender. Should El Salvador comply with the IMF’s demand and stop the use of bitcoin as a legal tender? Please see “Assignment 1 and 2: Case analysis guidelines” in Canvas and try to include as many things as possible from the guidelines. Please cite all the sources of your information. Your analysis is expected to be about 2,000-2,500 words in length excluding tables, figures and references.
Key points
El Salvador lacks its own currency and heavily relies on remittances: Bitcoin strategy is seemingly straightforwaThe overriding problem: Based on many possiblyunrealistic and false premises:
“the price of one bitcoin would hit US$1 million within five years”
remittances can be sent using bitcoin “with almost zero cost”.Benefits of easier and cheaper remittances do notnecessarily result from the use of bitcoin.
Salvadorans are saving informally: extremely volatile nature of bitcoin, this indeed could be a better economic
decision.
Countries such as El Salvador can benefit from a broader blockchain strategy to promote better uses
of the technology in diverse areas:
public administration
•property registration
•supply chain
•
healthcare.
Also important to develop the regulatory framework to protect consumer data and prevent identity thefts.
1
.
Analysis Of Industry, Market And Other
Environmental Factors (The El Salvadoran Economy):
You are expected to discuss the following:
Structure of firms competing in the industry (financial
industry in this case), performance of the industry (e.g., growth rate), strengths and weaknesses of competitors
(banks are major competitors for bitcoin, buyer/consumer behaviors (e.g., where they would buy,
what features they look for in a product (e.g., financial product such as Chivo wallet), when they buy, etc.),drivers of success in the industry (e.g., innovation,
product quality, low price, etc.)
2. Analysis Of The Focal Organization/Country (El
Salvadoran):
You are expected to discuss the following:
Distinctive competency of the country,
Nature of the country’s economy, past and present
performance and factors that led to the current position
of the company/country. A SWOT analysis may help
3. Action Plan
You are expected to discuss the following:
Choices that are available to the country
A) Comply with the IMF demand
B) Continue the use of bitcoin as legal tender
4. Potential outcomes:
You are expected to discuss the following for each of the
choices identified in #3:
possible reactions various stakeholders,
potential impact on future performance of the country.
5. Make a recommendation
1. You need to make a recommendation to the country
among the choices identified earlier.
2. Note that recommendations are required to provide
actionable, operational and strategic guidance to the
company/industry/country. It would be a good idea to
discuss in detail why you choose the recommendation
as well as why you dismissed other alternatives
Do additional research
It is a good idea to do additional research about the
country and/or the environment.
Expected length: About 2,000-2,500 words excluding
references.
