1、Global MarketingThe Global Economic EnvironmentChapter 22-1IntroductionThis chapter includes:An overview of the world economy A survey of economic system types The stages of market development The balance of payments2-2The World EconomyAn Overview In the early 20th century economic integration was a
2、t 10%;today it is 50%EU and NAFTA are very integrated Global competitors have displaced or absorbed local ones2-3The World EconomyAn Overview The new realities:Capital movements have replaced trade as the driving force of the world economy Production has become uncoupled from employment The world ec
3、onomy,not individual countries,is the dominating factor2-4Zeroing in on Economic Systems Globalization has made it harder to pigeonhole economies within the four-cell matrix Also consider:Type of economy:advanced industrial state,emerging or transition economy,or developing nation?2-5Zeroing in on E
4、conomic Systems Type of Government:Monarchy,dictatorship,tyrant?One-party system?Dominated by another state?Democracy?Terrorist?Trade and capital flows:Free trade,part of trading bloc?Currency board or exchange controls?The commanding heights:Transportation,communications&energy sectors.State,privat
5、e,or mixed ownership?2-6Zeroing in on Economic Systems Services provided by the state or state funded:Pensions,health care,education.Institutions:Country characterized by transparency,standards,absence of corruption?Standards ignored and court system compromised?Markets:Entrepreneurial high risk/hig
6、h reward?Socialized market?Government dominated price and wage controls?2-7Market Capitalism Individuals and firms allocate resources Production resources are privately owned Driven by consumers Governments role is to promote competition among firms and ensure consumer protection2-8Western Market Sy
7、stems2-9Economic Freedom Rankings of economic freedom among countries“free”“mostly free”“mostly unfree”“repressed”Variables considered include such things as:Trade policy Taxation policy Capital flows and foreign investment Banking policy Wage and price controls Property rights Black market2-10Econo
8、mic Freedom2013 RankingsFree1.Hong Kong2.Singapore3.Australia4.New Zealand5.Switzerland6.Canada7.Chile8.Mauritius9.Denmark10.United StatesRepressed169.Turkmenistan170.Equatorial Guinea171.Dem.Rep.Congo172.Burma173.Eritrea174.Venezuela175.Zimbabwe176.Cuba177.North KoreaNot ranked:Afghanistan,Iraq,Kos
9、ovo,Libya,Liechtenstein,Somalia,Sudan,Syria2-11Stages of Market Development The World Bank has defined four categories of development using Gross National Income(GNI)as a base BEMs,identified 10 years ago,were countries in Central Europe,Latin America,and Asia that were to have rapid economic growth
10、2-12Low-Income Countries GNP per capita of$1,025 or less Characteristics Limited industrialization High percentage of population in farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Concentrated in Sub-Saharan Africa2-13Lower-Middle-Income Cou
11、ntries GNI per capita:$1,026 to$4,035 Characteristics Rapidly expanding consumer markets Cheap labor Mature,standardized,labor-intensive industries like footwear,textiles and toys 50 bottom-ranked countries are LDCsleast developed countries India is the only BRIC nation 2-14Upper-Middle-Income Count
12、ries Also called industrializing or developing economies Other countries:Malaysia,Chile,Venezuela,MexicoGNP per capita:$4,036 to$12,475Characteristics:Rapidly industrializing,less agricultural employmentIncreasing urbanizationRising wagesHigh literacy rates and advanced educationLower wage costs tha
13、n advanced countriesChilean copper mine2-15Newly Industrializing Economies(NIEs)Lower-middle and upper income economies with the highest sustained rates of economic growth Greater industrial output that developing economies Exports of manufactured and refined products N-11 a new country grouping ide
14、ntified by Goldman Sachs NIEs include Egypt,Indonesia,the Philippines,(lower-middle income)Mexico,and Turkey (upper-middle income)2-16Marketing Opportunities in LDCs Characterized by a shortage of goods and services Long-term opportunities must be nurtured in these countries Look beyond per capita G
15、NP Consider the LDCs collectively rather than individually Consider first mover advantage Set realistic deadlines2-17Mistaken Assumptions about LDCs1.The poor have no money.2.The poor will not“waste”money on non-essential goods.3.Entering developing markets is fruitless because goods there are too c
16、heap to make a profit.4.People in BOP(bottom of the pyramid)countries cannot use technology.5.Global companies doing business in BOP countries will be seen as exploiting the poor.2-18High-Income Countries GNI per capita:$12,476 or more Also known as advanced,developed,industrialized,or postindustria
17、l countries Characteristics:Sustained economic growth through disciplined innovation Service sector is more than 50%of GNI Households have high ownership levels of basic productsTokyoTokyo2-19High-Income Countries Characteristics,continued:Importance of information processing and exchange Ascendancy
18、 of knowledge over capital,intellectual over machine technology,scientists and professionals over engineers and semiskilled workers Future oriented Importance of interpersonal relationships2-20 G-20,Group of Twenty Established in 1999 Finance Ministers and central bank governors of 19 countries and
19、the EURussia hosted the 2013 summit.21OECD,the Organization for Economic Cooperation and Development 34 nations Post-WW II European origin Canada,U.S.(1961),Japan(1964)Promotes economic growth and social well-being Focuses on world trade,global issues,labor market deregulation Anti-bribery conventio
20、ns2-22The Triad U.S.,Western Europe,and Japan Represents 75%of world income Expanded Triad includes all of North America and the Pacific Rim and most of Eastern Europe Global companies should be equally strong in each part2-23Product Saturation Levels The%of potential buyers or households who own a
21、product India:20%of people have telephones2-24Balance of Payments Record of all economic transactions between the residents of a country and the rest of the world Current accountrecord of all recurring trade in merchandise and services,and humanitarian aid trade deficitnegative current account trade
22、 surpluspositive current account Capital accountrecord of all long-term direct investment,portfolio investment,and capital flows2-25Balance of Payments2-26U.S.Goods and Services Trade with BIC2-27Overview of International Finance Foreign exchange makes it possible to do business across the boundary
23、of a national currency Currency of various countries are traded for both immediate(spot)and future(forward)delivery Currency risk adds turbulence to global commerce2-28Foreign Exchange Market DynamicsSupply and Demand interactionCountry sells more goods/services than it buysThere is a greater demand
24、 for the currencyThe currency will appreciate in value2-29Managing Economic Exposure Economic exposure refers to the impact of currency fluctuations on the present value of the companys financial performance.Occurs when sales are in a foreign currency Nestl generates 98%of sales outside home country
25、 Euro zone companies GlaxoSmithKline,Daimler AG,BP,for example,generate 1/3 of sales in the U.S.2-30Managing Economic Exposure Numerous techniques and strategies have been developed to reduce exchange rate risk Hedging involves balancing the risk of loss in one currency with a corresponding gain in another currency Forward Contracts set the price of the exchange rate at some point in the future to eliminate some risk2-31Looking Ahead to Chapter 3 The Global Trade Environment2-32
