International Marketing Lecture 2

Front 1

Peoples or organizations with needs and wants; both have the willingness and ability to buy or sell.

Back 1

Market Definition

Front 2

The ____ _____ _____ plays a large role in the development of new markets for organizations

Back 2

Global Economic Environment

Front 3

4 main types of economic systesm

Back 3

1. Market Capitalism
2. Centrally Planned Socialism
3. Centrally Planned Capitalism
4. Market Socialism

Front 4

Market and Private

Back 4

Market Capitalization

Front 5

Command and Private

Back 5

Centrally Planned Capitalization

Front 6

Market and State

Back 6

Market Socialism

Front 7

Command and State

Back 7

Centrally Planned Socialism

Front 8

1. individuals and firms allocate resources
2. production resources are privately owned
3. Driven by consumers
4. Government should promote competition among firms and ensure consumer protection.
* Consumers decide what to buy and when to buy it ex) US and UK

Back 8

Market Capitalism

Front 9

1. Opposite of Market Capitalism
2. State holds broad powers to serve the public interest decides what goods and services are produced and in what quantities.
3. Consumers can spend on what is available
4. Government owns entire industries
5. Demand typically exceeds supply
6. Little reliance on product differentiation, advertising, pricing strategy
(ex. North Korea)

Back 9

Centrally Planned Socialism

Front 10

Economic system in which command resource allocation is used extensively in an environment of private resource ownership.
* example Sweden
a welfare state

Back 10

Centrally Planned Capitalism

Front 11

Economic system in which market allocation policies are permitted within an overall environment of state ownership.
Examples:
China & Vietnam

Back 11

Market Socialism

Front 12

Rankings of economic freedom among countries range from ____ to _____

Back 12

free to repressed

Front 13

Variables considered in Economic Freedom.

Back 13

1. Trade policy
2. Taxation Policy
3. Capital Flows and Foreign Investment
4. Banking Policy
5. Wage and Price Controls
6. Property Rights
7 Black Market

Front 14

The world bank has defined four categories of development using __________ as a base

Back 14

Gross National Income (GNI)

Front 15

____, identified 10 years ago, were countries in Central Europe, Latin America, and Asia that were to have rapid economic growth.

Back 15

BEMs

Front 16

BRIC

Back 16

Brazil Russia India China

Front 17

World Banks four categories of development.

Back 17

1. High income Countries
2. Upper Middle Countries
3. Lower Middle Countries
4. Low Income Countries

Front 18

1. GNI per capita: $12,276 or more
*Ex Japan vs Sweden
2. Also know as advanced, developed, industrialized, or postindustrial countries.

Back 18

High Income Countries

Front 19

6 Characteristics of High Income Countries

Back 19

1. Sustained economic growth through disciplined innovation
2. Service sector is more than 50% of GNI
3. Importance of information processing and exchange
4. Ascendancy of knowledge over capital, intellectual over machine technology, scientists and professionals over engineers and semiskilled workers
5. Future oriented
6. Importance of interpersonal relationships

Front 20

1. GNI per capita $3,976 to $12,275
Ex) Malaysia, Chile, Venezuela, Mexico,
2. Also called newly industrializing economies (NIEs)
3. BRIC nations are:
Brazil China and Russia
Brazil, China, Russia

Back 20

Upper-Middle-Income Countries

Front 21

5 characteristics of Upper- Middle Income Countries

Back 21

1. Rapidly industrializing, less agricultural employment
2. Increasing Urbanization
3. Rising wages
4. High literacy rates and advanced education
5. Lower wage costs than advanced countries.

Front 22

1. GNI per capita $1006-$3975
Ex) India is the only Bric country
other ex( Honduras, Pakistan)

Back 22

Lower-Middle-Income Countries

Front 23

3 characteristics of Lower Middle Income Countries

Back 23

1. Rapidly expanding consumer markets
2. Cheap Labor
3. Mature, standardized, labor-intensive industries like textiles and toys.

Front 24

1. GNI per capita $1005 or less
Ex) Haiti, Somalia, Zimbawee
*40% of worlds population

Back 24

Low-Income Countries

Front 25

Characteristics of Low Income Countries.

Back 25

1. Limited industrialization
2. High percentage of population involved in farming
3. High birth rates
4. Low literacy rates
5. Heavy reliance on foreign aid
6. Political instability and unrest
7 Concentrated in Sub-Saharan Africa

Front 26

1. Characterized by a shortage of goods and services
2. Long term opportunities must be nurtured in these countries
a. look beyond per capita GNP
b. Consider the LDCs collectively rather than individually
c. Consider first mover advantage
d. Set realistic deadlines

Back 26

Marketing Opportunities in LDCs

Front 27

3 Influences on the World Economy

Back 27

1. G8/G-20 (group of twenty
2. Organization for Economic Cooperation and development
3. The Triad

Front 28

Goal of Global economic stability and prosperity.

Back 28

G-8

Front 29

Members of the G-8

Back 29

1. United States
2. Japan
3. Germany
4. France
5. Britain
6. Canada
7. Italy
8. Russia (1975)

Front 30

1. 34 Nations
2. Post-World War 2 European Origin
3. Canada, United States (1961), Japan (1964)
4. Promote economic growth and social well-being
5. Focuses on world trade, global issues, labor market deregulation.

Back 30

Organization for Economic Cooperation and Development (OECD)

Front 31

1. Responsible for 80% of world trade
2. Discusses at Meetings
Food supply
Energy Concentration
Pollution
Terrorism

Back 31

G-20

Front 32

1. United States, Western Europe and Japan
2. 75% of World Income (coke does this well)
3. Expanded ____ includes all of North America and the Pacific Rim and most of Eastern Europe.
4. Global companies should be equally strong in each part.

Back 32

The Triad

Front 33

What does GATT stand for

Back 33

General Agreement on Tariffs and Trade

Front 34

1. Treaty among nations to promote trade among members established in 1947
a. handled trade disputes
b. Lacked enforcement power
c. Replaced by World Trade Oranization in 1995

Back 34

GATT

Front 35

1. Provides forum for trade related negotiations among 153 members.
Based in Geneva
Serves as dispute mediators through DSB
Has enforcement power and can impose sanctions
2. Countries found in violation of ___ are expected to change policies or else face sanctions.
* always an odd# - if appeals it will be a 3 member panel

Back 35

The World Trade Organization

Front 36

1. Many Countries seek to lower barriers to trade within their regions
2. PTAs give partners special treatment and may discriminate against others
3. More than 300 PTAs have notified the WTO

Back 36

Preferential Trade Agreements

Front 37

(4) Economic Integration

Back 37

1. Free trade areas
2. Custom Unions
3. Common Market
4. Economic Trade

Front 38

1. 2 or more countries agree to abolish tariffs and other barriers to trade among themselves
2. Countries continue independent trade policies with countries outside agreement
3. ________ Requirements restric transshipment of goods from the country with the lowest tariff to another
*only dealing with 2 more involved

Back 38

Free Trade Area
3. Rules of Origin

Front 39

____ Establishes free trade are
1. all three nations pledge to promote economic growth through tariff reductions and expanded trade and investment
2. No common external tariffs
3. Restrictions on labor and other movements remain.

Back 39

NAFTA

Front 40

3 Members of NAFTA

Back 40

1. Canada
2. United States
3. Mexico

Front 41

1. Evolution of free trade area
2. Includes the elimination of internal barriers to trade ( as in FTA)
3. And establish common external barriers to trade.
4. Ex. the EU and Turkey, the Andean Community, Mercos
*usually a cet (common external tariffs)
* cet avoids re-exportation

Back 41

Custom Union

Front 42

1. Includes the elimination of internal barriers to trade ( as in free trade area)
2. AND establishes common external barriers to trade (as in customs union)
3. And allows for the free movement of factors of production such as labor, capital, and information
4. And coordinates and harmonizes economic and social policy within the union.
5. Ex. EEA

Back 42

Common Market

Front 43

1. Includes the elimination of internal barriers to trade (as in free trade area)
2. AND establishes common external barriers to trade (as in customs union)
3. AND allows for the free movement of factors of production, such as labor, capital, and information (as in common market)
4. And coordinates and harmonizes economic and social policy with the union
*Similar licenses, easier to move around

Back 43

Economic Union

Front 44

• Full evolution of economic union
• Creation of unified central bank
• Use of single currency
• Common policies on issues such as agriculture, social policy, transport, competition, mergers, taxation
• Requires extensive political unity
• Would lead to a central government in time

Back 44

Economic Union

Front 45

• Initially began with the 1958 Treaty of Rome
• Objective to harmonize national laws and regulations so that goods, services, people, and money could flow freely across national boundaries
• 1992 Maastricht Treaty set stage for transition to an economic union with a central bank and single currency (the euro)

Back 45

The European Union

Front 46

________set stage for transition to an economic union with a central bank and single currency (the euro)

Back 46

1992 Maastricht Treaty

Front 47

• 27 countries
• Over 500 million people • Combined GDP over
$17 trillion
• The euro is not used by all countries yet; the euro zone includes 17 mostly Western European nations

Back 47

European Union

Front 48

6 Original EU members

Back 48

1. Belgium
2. Netherlands
3. France
4. Italy
5. (West) Germany
6. Luxemburg

Front 49

Points to Remember
• Four main types of economic systems
• Four stages of market development – defined by
the World Bank
• Four stages of economic integration

Back 49

Points to Remember
• Four main types of economic systems
• Four stages of market development – defined by
the World Bank
• Four stages of economic integration