Chapter three
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Chapter three. The role of economy. Marketers need to operate within the constraints of this environment, and in the case of international marketing there will be more than one environment constraining the company at any one time.

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Chapter three

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Chapter three

The role of economy


  • Marketers need to operate within the constraints of this environment, and in the case of international marketing there will be more than one environment constraining the company at any one time.


  • Most of the firms environments have to be taken as they are and cannot be controlled, yet they have profound consequences for marketing management. Thus procedures are needed for the speedy identification of fresh market opportunities resulting from environmental change


  • A two-step procedure for scanning environments and coping with environmental change is necessary.

  • 1. the firm should predict the external changes that might occur and then detail: how the organization would be affected by them and how it should respond.


  • 2. it should list the businesss major functions, followed by an outline of all environmental factors likely to affect these functions. Unfortunately there is a huge number of external variables that might affect a firms operations, creating the danger that some important variables may be overlooked.


  • Very large companies might attempt to influence the governments and institutions that help determine environments in the first place. Lobbying of governments, the media international organizations, etc, can occur via trade associations, chambers of commerce, industry trade missions to foreign countries and similar organizations.


  • 3.1 world economy overview

  • Revolutionary changes: contrary to much of the received doctrine of economic theory

  • The first change: increased volume of capital movements. Capital movements rather than trade have become the driving force of the world economy. Today, it is capital movements and trade that determine currency value


  • The second change: employment in manufacturing--- remains steady or has declined, production---continues to grow


  • The third change: uncoupling primary products economy from the industrial economy

  • The fourth change: the emergence of the world economy as the dominant economic unit. The world economy is in control. The macroeconomics of the nation-state no longer control economic outcomes


  • 3.1.1 the international economic system

    World Bank Group WBG

    IBRDIDA


  • IBRD1945

  • IFC1956

  • IDA1960

  • MIGA1988

  • ICSID1966


  • International Monetary FundIMF19451227


  • 186


  • IMFIMF5


  • World Trade OrganizationWTO1948



  • WTO

  • WTO


3.2 exchange system

  • 3.2.1 foreign exchange and international finance

  • Definition: the process of converting the currency of one country into the currency of another country. The exchange rate is constantly changing due to supply and demand and the possible financial difficulty a country is experiencing.


  • Foreign exchangeForexFX


  • factors that affect exchange rate

  • () 1. 2. 3. 4. 5. 6.

  • ()

  • ()

  • ()


  • 3.2.2 foreign exchange activities

  • soft currency

  • hard currency

  • foreign exchange market



  • 3.2.3 foreign exchange controls (government, methods)

  • ;;;,.


  • 3.2.4 international financial agencies

  • (International Development Association,IDA)



  • Credit)(Loan)


  • International Finance CorporationIFC


  • (International Monetary FundIMF)


  • 3.3 international trade

  • definition

  • 3.3.1 balance of trade

  • 3.3.2 the us-china balance of trade


  • Key factors in the economic environment of a country in which a firm is doing business are the nature and extent of competition, growth rates and living standards, tax regimes, import controls and market opportunities as a whole.


  • International marketing managers need to take an interest in both the economic structures of the countries in which they wish to do business and the international economy as whole in order to establish the sizes and characteristics of various markets, identify high-growth sectors assess the degree of risk attached to operating in specific countries, and deploy resources effectively.


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