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Multinational Market Regions and Market Groups

Multinational Market Regions and Market Groups. Chapter 10. Multinational market regions. Defined: “Those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers”

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Multinational Market Regions and Market Groups

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  1. Multinational Market Regions and Market Groups Chapter 10

  2. Multinational market regions • Defined: • “Those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers” • Having the following common factors help to create a more successful economic union amongst countries: • 1. Economic unity • 2. (Comparable) Political unity • 3. Geographic Proximity • 4. Cultural similarities

  3. Patterns of Multinational Cooperation • 5 Groupings for regional economic integration: • 1. Regional Cooperation Groups • (RCD- regional cooperation development, Joint ventures) • 2. Free Trade Area (NAFTA) • Reduces or eliminates tariffs amongst trading members • 3. Customs Union • Adds a common external tariff to countries outside union • 4. Common Market (EEC) • Unified economy that lacks political unity (EEC) • 5. Political Union (EU) • Unified economically and politically

  4. Global Markets and Multinational Market Groups • Europe (1st “triad region”) • European Community • See exhibit 10.1 & 10.2 pg. 284 and pg. 285 • Stages and development of the European Union (ex. 10.3 pg. 286) • Single European Act (1987) • The “White Paper” • “Harmonization” • EC institutions • The European Commission, The Council of Ministers, The European Parliament, The European Court of Justice

  5. Europe • European Free Trade Association (EFTA) and European Economic Area (EEA) • EFTA • Countries that wish to participate in a free trade area, but not willing to join the ECC (Iceland, Liechtenstein, Norway, and Switzerland) • EFTA will most likely dissolve and its members will join either EU or EEA. • EEA • Countries that wish to also participate in free trade area, except when it comes to their domestic farm policies.

  6. Europe • European Union • Economic and Monetary Union (EMU) • Maastrict Treaty in 1992 • Goal of treaty was to create economic and political unity (including foreign policy) in European member countries. • Euro • Common currency for EU • Central bank was created to fix rates of conversion, print and circulate euro banknotes and coins, and cancel member states previous banknotes and coins. • Treaty of Amsterdam (1997) • Laid the foundation for developing a single currency and enlarging the EU into Central and Eastern Europe.

  7. Europe • European Union Expansion • 6 Countries waiting for acceptance in 2006 • Czech Republic, Hungary, Poland, Estonia, Slovenia and Cyprus • EU needs to address significant issues before countries will be admitted • Illegal immigrants; cheap labor; integration of agricultural industries; human rights; impact on legislative process • Marketing in Europe • Opportunities • Market Barriers • Reciprocity

  8. Europe • Marketing Mix Implications • Companies will have to adjust their marketing strategies in the European market by: • Standardizing their prices across countries to avoid the problem of parallel imports • Using the internet to market products and services • Reducing the number of brands offered • The Commonwealth of Independent States (CIS) • 12 former republics of Russia formed after the dissolution of Russia • Exhibit 10.6 pg. 295 • Central European Free Trade Area (CEFTA) • Same 6 countries requesting admittance into EU • Economically has been successful

  9. Global Markets and Multinational Market Groups • The Americas (2nd Triad) • U.S., Canada, Central America, South America • NAFTA • Originally Canada and U.S. joined together under (CFTA) to eliminate tariffs and other barriers to trade • Mexico sought the same agreement with U.S. and Canada and formed NAFTA in 1994. • Requires all 3 countries remove all tariffs and barriers to trade over 15 years; but allows each country to determine tariff arrangements with non-member countries • Benefits to each of the countries include • Canada has an advanced industrial economy, rich resources but needs more markets to sell (consumers) • U.S. also has an advanced economy, but needs resources (oil) , more market opportunity and cheaper labor • Mexico needs investment, technology, exports and other economic reinforcements to infuse their economy

  10. The Americas • NAFTA: • Key Provisions of NAFTA (ex. 10-7, pg. 298) • What is happening with NAFTA and other Latin America groups? • Chile was to be the first country to enter, then membership would extend south to the Free Trade areas of the Americas by 2005 • Issues that need to be addressed first include: common tariffs, U.S. seeking to integrate foreign policies • Success or Failure with NAFTA (somewhat mixed) • Measurable positive effects include: • Trade amongst countries has grown by nearly 75%, foreign direct investment has increased; job creation has increased in all 3 countries

  11. The Americas • SCFTA or “Mercosur” • Brazil, Argentina, Chile, Bolivia… • Treaty signed in 1991 to create a common market to allow free movement of goods, capital, labor and services amongst members • Second largest common market in Latin-America • Most influential and successful free trade area in South America • Other Latin America Market Groups • CACM, CARICOM, LAIA, • (see exhibit 10.8 pg. 302)

  12. Global Markets and Multinational Market Groups • Asian Pacific Rim (3rd “triad region) • Trade Groups • 1. Association of Southeast Asian Nations (ASEAN) • 2. Asia-Pacific Economic Cooperation (APEC)

  13. Global Markets and Multinational Market Groups • Africa • 1. Economic Community of West African States (ECOWAS) • 2. Southern African Development Community (SADC) • See exhibits 10.10 pgs. 308-309 • Middle East • Arab Common Market • Economic Cooperation Organization (ECO) • Organization of the Islamic Conference (OIC)

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