1 / 41

Chapter 2

Chapter 2. The economic environment. The world economic pyramid. 1500–1750. SOURCE: U.N. World Development Reports. Ian Goldin : Navigating our global future. The world economic pyramid. Click to play video. Major industrialised countries .

cleta
Download Presentation

Chapter 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 2 The economic environment

  2. The world economic pyramid 1500–1750 SOURCE: U.N. World Development Reports

  3. Ian Goldin: Navigating our global future The world economic pyramid Click to play video

  4. Major industrialised countries

  5. The world’s population exceeded 6.5 billion in 2009 The EU has 27 member counties Asia holds over half the world’s population Market characteristics: Population

  6. Population can be broken down by: age distribution life expectancies household size urbanisation Market characteristics: Population

  7. Income is useful for the initial screening of markets Per capita GDP is the primary indicator of purchasing power. The top 20 countries account for 81 per cent of the world’s GDP Market characteristics: Income

  8. Monetary figures are a less reliable measure of income in developing economies Purchasing power parities (PPP) shows how many units of one currency are needed to buy a good or service in the currency of another country Market characteristics: Income

  9. Income spent on necessities gives an indication of market development Diffusion Engel’s Laws Market characteristics: Consumption patterns

  10. Chinese consumers have a new wish list Market characteristics: Consumption patterns Click to play video

  11. Not necessarily uniform across regions National debt burden (repayments) impacts buying habits Inflation impacts buying habits Market characteristics: Consumption patterns

  12. International marketers investigate: rail traffic networks for distribution capabilities communication systems for marketing energy (electrical and fuel) consumption Market characteristics: Infrastructure

  13. Connectivity in ASEAN Market characteristics: Infrastructure Click to play video

  14. The diffusion of Internet technology the number of Internet users surpassed 1.6 billion in 2008 Internet access varies considerably around the world Two-thirds of the world has a mobile phone Growth is most apparent in Africa Market characteristics: Infrastructure

  15. Market characteristics: Infrastructure

  16. Social development indicators urbanisation life expectancy literacy rates number of physicians, etc. These tend to improve with economic development Impact of the economic environment on social development

  17. Cultural indicators book titles published registered borrowings number of daily newspapers number of public libraries, etc Again, these tend to improve with economic development Impact of the economic environment on social development

  18. Physical Quality of Life Index (PQLI) measures the level of welfare in a country: life expectancy infant mortality adult literacy rates Impact of the economic environment on social development

  19. Least restrictive form of economic integration Eliminates tariff and quota barriers Tariff and quota barriers are set against non-member countries Regional economic integration: Free trade area

  20. Sometimes formed specifically for certain classes of goods or services i.e. cars Groupings are in a constant state of flux For example, EFTA and NAFTA Regional economic integration: Free trade area

  21. No trade barriers among member nations Member countries establish a common trade policy with respect to non-members Tariff revenues are shared For example, the Southern African Customs Union Regional economic integration: Customs unions

  22. No trade barriers among member nations Member countries establish a common trade policy with respect to non-members Restrictions on immigration and border investment are abolished Regional economic integration: Common market

  23. The factors of production are mobile labor capital technology Helps to facilitate economic growth but provides no guarantees to individual members For example, the European Community (EC) Regional economic integration: Common market

  24. Has all the characteristics of a common market Harmonises taxation, government spending and monetary policies Political unification For example, the European Union (EU) Regional economic integration: Economic union

  25. Eliminating transaction costs Economies of scale More intense competition from EU companies More member countries European integration: Sources of growth

  26. Products can be freely sold across borders to millions of new consumers The term ‘Fortress Europe’ is used to describe a unified Europe Australia and New Zealand fear the EU will erect barriers making market access difficult to non-EU firms Success is based on customer relationships European integration

  27. NAFTA is the world’s largest free market with 390 million consumers and a total output of US$10 trillion NAFTA includes industrialised nations (US and Canada) and a developing country (Mexico) North American integration

  28. US-Mexico gains/losses remain controversial low-cost labour issues environmental issues The North American Agreement on Labor Cooperation (NAALC) was set up to hear NAFTA related complaints North American integration

  29. Many developing countries have adopted an import substitution policy: They produce goods that were formally imported New markets must be found Other economic alliances

  30. Many attempts to form trading blocs have failed political and economic differences are to blame The blocs that have been formed (e.g. Mercosur) have limited power Many Latin American nations are realising that if they do not unite, they will become increasingly marginal in the world market Integration in Latin America

  31.  Integration in Latin America • There is an argument to form the Free Trade Area of the Americas (FTAA): • a trading zone from Kodiak, Alaska to Tierra del Fuego, Argentina • reduce dependence on US trade

  32. The most established arrangement is the Association of Southeast Asian Nations (ASEAN) members agreed to create a customs union by 2010 East Asia Economic Group (EAEG) Japan, South Korea and Taiwan are not members so its effect is nominal Integration in Asia

  33. South Asian Association for Regional Cooperation (SAARC) Indian subcontinent agreement Asia Pacific Economic Cooperation (APEC) free and open trade no later than 2010 free and open trade with developing nations no later that 2020 Integration in Asia

  34. East Asia Summit (EAS) includes Australia, New Zealand, China, Japan and South Korea Closer Economic Relations (CER) trade partnership between Australia and New Zealand ASEAN-Australian-New Zealand Free Trade Area (AANZFTA) signed in 2008 access to 600 million Integration in Asia

  35. Economic Community of West African States (ECOWAS) aims to form a common market Common Market for Eastern and Southern Africa (COMESA) Integration in Africa and the Middle East

  36. Arab Maghreb Union Gulf Cooperation Council (GCC) Many blocs have small memberships and have experienced limited success Integration in Africa and the Middle East

  37. Anticipate the outcome of the change Consider the change readiness of the market Develop a strategic response Exert influence by lobbying Economic integration and the international marketer

  38. Australia and China move closer to FTA Economic integration and the international marketer Click to play video

  39. Asia (1997), Mexico (1994), Russia (1998), Global (2008) etc. Causes of financial crisis corporate socialism corporate governance banking stability and management Dealing with financial crises

  40. The benefits of a free market are questionable Consumer confidence is eroded Consumers and marketers seek less expensive alternatives Marketers manipulate the 4P mix Dealing with financial crises

More Related