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International Marketing Chapter 10

International Marketing Chapter 10. Multinational Market Regions and Market Groups. Introduction.

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International Marketing Chapter 10

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  1. International MarketingChapter 10 Multinational Market Regions and Market Groups

  2. Introduction • The evolution and growth of multinational market regions—those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers—are the most important global trends today • Organizational form varies widely among market regions, but the universal goal of multinational cooperation is economic benefit for the participants • Political and social benefits sometimes accrue, but the dominant motive for affiliation is economic. • The world is awash in economic cooperative agreements as countries look for economic alliances to expand access to free markets.

  3. Traits of Successful Economic Unions • Economic Compatibility (similar economic systems) • Political Compatibility (similar political systems) • Cultural Compatibility • Geographic factors • Weakness in some must be balanced by strengths in others

  4. Patterns of Multinational Cooperation • There are five fundamental groupings for regional economic integration as follows: • Regional Cooperation Groups • Free Trade Areas • Customs Unions • Common Markets and Economic Unions • Political Unions • Viewed on a spectrum, each requires greater levels of cooperation among member nations and include:

  5. Regional Cooperation Groups • A group of countries that have agreed to participate in basic industries beneficial to each or jointly develop joint ventures that benefit both countries, e.g., Colombia and Venezuela built a hydroelectric dam on the Orinico river which both share

  6. Free Trade Areas • A group of countries that have agreed to reduce drastically (but not eliminate) all trade barriers such as customs duties and non-tariff barriers (standards) • Examples of Free Trade Areas: NAFTA, and European Free Trade Area (EFTA) between Iceland, Liechtenstein, Norway, and Switzerland • Member countries can have different trade policies for other external countries

  7. Customs Unions • In addition to drastically reducing trade barriers from FTA identified previously, a group of countries that have agreed to eliminate customs duties levied among member countries • Examples of Customs Unions: East African Customs Union between Ethiopia, Kenya, Sudan, Tanzania, Uganda, and Zambia • Also establishes common external barriers like imposing a common tariff on goods imported from countries out of the association.

  8. Common Markets • In addition to drastically reducing trade barriers, and eliminating customs duties levied from FTA and Customs Unions identified previously, a common market is a group of countries that allow: • the free flow of capital and labor (engineers, doctors, and lawyers can work without recertification) among members • a common currency • a common central bank; and • common policies on transportation, agriculture, social services, welfare, and taxes • Latin America boasts three common markets: the Central American Common Market (CACM), the Andean Common Market, and the Southern Cone Common Market (MERCOSUR). • The three have roughly similar goals and seek eventual full economic integration.

  9. Political Unions • The highest level of cooperation among member countries • Examples of Political Unions: COMECON (Council for Mutual Economic Assistance), and U.S.S.R., but it no longer exists • A group of countries that have agreed to complete political and economic integration and cooperation among members

  10. Global Markets and Multinational Market Groups • Many Multinational Market Groups have emerged due to recent trends that include: • The globalization of markets • The restructuring of Eastern Europe into independent market-driven economies • The dissolution of the Soviet Union into independent states and • The worldwide trend toward economic cooperation • Various examples of Multinational Market Groups are provided next

  11. European Market Regions

  12. European Union History

  13. Symbol of the Euro

  14. Newly Independent States

  15. CIS or Commonwealth of Independent States

  16. North American Free-Trade Area (NAFTA) Canada United States Mexico

  17. NAFTA Rules of Origin Tariff shift rule • Non-NAFTA imports undergo sufficient manufacture or processing to become products that can qualify under a different tariff classification. • A set percentage of the value of the good must be North American (usually coupled with a tariff classification shift requirement). Some goods are subject to the value-content rule only when they fail to pass the tariff classification test because of non-NAFTA inputs. Value-content rule

  18. Economic Cooperation Organization (ECO) Pakistan Iran Turkey Azerbaijan Turkmenistan Uzbekistan

  19. Central European Free-Trade Area (CEFTA) Poland Hungary Slovakia Czech Republic Slovenia Romania

  20. Southern Cone Free Trade Area (MERCOSUR) Argentina Bolivia Brazil Chile Paraguay Uruguay

  21. Latin American Integration Association (LAIA) Argentina Mexico Bolivia Paraguay Brazil Peru Chile Uruguay Columbia Venezuela Ecuador

  22. Andean Common Market (ANCOM) Bolivia Columbia Ecuador Peru Venezuela Panama

  23. Central America Common Market (CACM) Guatemala Costa Rica Nicaragua Honduras

  24. Caribbean Community and Common Market (CARICOM) Antigua Jamaica Barbuda Montserrat Belize St. Kitts-Nevis Dominica Anguilla Grenada St. Lucia Guyana St. Vincent Trinidad-Tobago

  25. Association of Southeast Asian Nations (ASEAN) Brunei Singapore Indonesia Thailand Laos Vietnam Malaysia Myanmar Philippines

  26. Association of Southeast Asian Nations (ASEAN) + 3 Brunei Singapore Indonesia Thailand Laos Vietnam Malaysia Japan Myanmar S. Korea Philippines China

  27. Economic Cooperation Organization (ECO) Pakistan Iran Turkey Azerbaijan Turkmenistan Uzbekistan

  28. Asia-Pacific Economic Cooperation (APEC) Japan Philippines Australia South Korea Russia Brunei Malaysia Singapore Canada Mexico Taiwan Chile New Zealand Thailand China Papua New Guinea U.S.A. Hong Kong Peru Vietnam Indonesia

  29. Economic Community of West African States (ECOWAS) Benin Guinea-Bissau Burkina Faso Liberia Cote d’ Ivoire Mali Gambia Mauritania Ghana Niger Guinea Nigeria

  30. Southern African Development Community (SADC) Angola Gabon Botswana Mali Lesotho Mauritania Namibia Niger Malawi Senegal Mauritius Togo

  31. East African Customs Union Ethiopia Kenya Sudan Tanzania Uganda Zambia

  32. West Africa Economic Community Senegal Togo Burkina Faso Cote d’Ivoire Mali Mauritania Niger

  33. Customs and Economic Union of Central Africa (CEUCA) Cameroon Central African Republic Gabon People’s Republic of Congo

  34. Maghreb Economic Community Algeria Libya Morocco Tunisia

  35. Arab Common Market Iraq Kuwait Jordan Syria Egypt

  36. Future Multinational Trade Groups • United States/Japan • Hong Kong/Taiwan • Asia-Pacific Rim Countries • Hong Kong/Taiwan/Coastal Provinces of Southern China • Western Hemisphere (North and South America) F.T.A. • Transatlantic Free Trade Area (U.S.A. & EU) • NAFTA including Central America • SAFTA

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