1、McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies,Inc.All rights reserved.Europe,Africa,andthe Middle EastChapter 1010-*Learning ObjectivesLO1 The reasons for economic unionLO2 Patterns of international cooperationLO3 The evolution of the European UnionLO4 Evolving patterns of trade as e
2、astern Europe andthe former Soviet states embrace free-market systemsLO5 Strategic implications for marketing in the regionLO6 The size and nature of marketing opportunities in the European/African/Middle East regions10-*Regional Market Regions and Regional Economic Cooperation Multinational market
3、regions are groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriersare the most important global trends today The most successful one is the European Union(EU),the worlds largest multinational market region and foremost example of economic cooperat
4、ion Multinational market groups form large markets that provide potentially significant opportunities for international business.310-*La Raison dEtre Successful economic union requires favorable economic,political,cultural,and geographic factors as a basis for success The advantages of economic unio
5、n must be clear-cut and significant Benefits must greatly outweigh the disadvantages before nations forgo any part of their sovereignty10-*Economic Factors Usually markets are enlarged through preferential tariff treatment for participating members,common tariff barriers against outsiders,or both En
6、larged,protected markets stimulate internal economic development External and internal barriers are reduced because of the greater economic security afforded to domestic producers For a union to survive,it must have agreements and mechanisms in place to settle economic disputes.Political FactorsPoli
7、tical amenability among countries is another basic requisite for the development of a market agreementTypically,marketing arrangements are made in response to external political threatsParticipating countries must have comparable aspirations and general compatibility before surrendering any part of
8、their national sovereignty510-*Geographic and Temporal Proximity Although not absolutely imperative for cooperating members of a customs union,such closeness facilitates the functioning of a common market More important than physical distance are differences across time zones Trade tends to travel m
9、ore easily in northsouth directions than it did in ancient times Transportation networks are interrelated and well developed when countries are close together Issues of immigration,legal and illegal,also promote closer economic integration610-*Cultural Factors Cultural similarity eases the shock of
10、economic cooperation with other countries Members understand the outlook and viewpoints of their colleagues Language,as a part of culture,has not created as much a barrier for EU countries as was expected Nearly every educated European can do business in at least two or three languages Religion,howe
11、ver still seems to be an issue,as evidenced by the impending membership of turkey into the EU Key members share a long-established Christian heritage10-*Patterns of Multinational Cooperation10-*Regional Cooperation Groups The most basic economic integration and cooperation is the regional cooperatio
12、n for development(RCD)Governments agree to participate jointly to develop basic industries beneficial to each economy Each country makes an advance commitment to:participate in the financing of a new joint venture to purchase a specified share of the output of the venture10-*Free Trade Area A free t
13、rade area(FTA)requires more cooperation and integration than the RCD It is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries Members maintain individual tariff schedules for external countries.An FTA provides its mem
14、bers with a mass market without barriers to impede the flow of goods and services10-*Customs Union A customs union represents the next stage in economic cooperation It enjoys the free trade areas reduced or eliminated internal tariffs and adds a common external tariff on products imported from count
15、ries outside the union.The European Union was a customs union before becoming a common market Customs unions exist between France and Monaco,Italy and San Marino,and Switzerland and Liechtenstein,to name some examples.1110-*Common Market A common market agreement eliminates all tariffs and other res
16、trictions on internal trade Adopts a set of common external tariffs,and removes all restrictions on the free flow of capital and labor among member nations It is a unified economy and lacks only political unity to become a political union1210-*Political Union Political union is the most fully integr
17、ated form of regional cooperation It involves complete political and economic integration,either voluntary or enforced The most notable enforced political union was the Council for Mutual Economic Assistance(COMECON),a centrally controlled group of countries organized by the Soviet Union Two new pol
18、itical unions came into existence in the 1990s:the Commonwealth of Independent States(CIS),made up of the republics of the former Soviet Union,and the European Union(EU)1310-*Global Markets and Multinational Groups The restructuring of the eastern European bloc into independent market-driven economi
19、es The dissolution of the Soviet Union into independent states The worldwide trend toward economic cooperation Enhanced global competition All of these warrant the study of three multinational regions:Europe,Africa and Middle East1410-*Europe and European Integration Within Europe,every type of mult
20、inational market grouping exists:The European Union European Economic Area,The European Free Trade Area No other group is more secure or more important economically than the EU It has made progress toward achieving the goal of complete economic integration and,ultimately,political union There are la
21、nguage and cultural differences,individual national interests,political differences,and centuries-old restrictions designed to protect local national markets Historically,standards have been used to effectively limit market access to individual countries(Germany:Beer,Italy:Pasta)Exhibit 10.1 Europea
22、n Market Regions Fundamental Market Metrics(in parentheses)=average annual growth rate 20062011 as a percentage*Current U.S.$.*eEurozone.Source:Euromonitor International,2012;World Bank,2012.10-161610-*European Union Even though several member states are not fully implementing all the measures,they
23、are making progress The proportion of directives not yet implemented in all 27 member states has fallen dramatically Taxation has been one of the areas where implementation lags and reform continues to be necessaryEU InstitutionsIt has executive,parliamentary,and judicial branches:the European Commi
24、ssion:initiates policiesthe Council of Ministers:is the decision-making body of the European Unionthe European Parliament:can amend and adopt legislation the Court of Justice:is responsible for challenging any measures incompatible with the Treaty of Rome,for passing judgment at the request of a nat
25、ional court,on the interpretation or validity of points of EU law10-*Economic and Monetary Union(EMU)The EMU,a provision of the Maastricht Treaty,established the parameters of the creation of a common currency for the EU,the euro Established a timetable for its implementation In 2002,a central bank
26、was established,conversion rates were fixed,circulation of euro banknotes and coins was completed The 12 member states employed the euro beginning in January 1,2001,some did not join voluntarily1810-*Expansion of the European Union Ten new countries were added in 2004,some ahead of schedule Bulgaria
27、 and Romania entered as planned in 2007 Talks with Turkey,Macedonia,and Croatia are continuing Negotiations with Turkey have had their ups and downs,but the Muslim majority nation has economically benefited from its new openness In 2007 the European Union celebrated its golden anniversary The 200820
28、09 global recession has posed daunting short-term challenges to the integrity of the Union An early recovery stalled in late 2009;and Ireland,Portugal,Spain,and particularly Greece are experiencing continuing problems.10-*Long Term Challenges for the EU The long term challenges facing the Union in t
29、he next 50 years appear to fall into three categories:improving the Unions economic performance deciding how to limit the political aspect of union and deciding about further enlargement10-*Eastern Europe Most eastern European countries are privatizing state-owned enterprises Establishing free marke
30、t pricing systems Relaxing import controls But struggling with inflation The very different paths taken toward market economies have resulted in different levels of progressBaltic StatesThe Baltic statesEstonia,Latvia,and Lithuaniaare a good example of the difference that the right policies can make
31、All three countries started off with roughly the same legacy of inefficient industry and Soviet-style command economiesGovernment bureaucracy,corruption,and organized crimecommon problems found in the countries of the former Soviet Union continueThese issues represent the most significant hurdles to
32、 U.S.trade and investment2110-*Commonwealth of Independent States The first Soviet republics to declare independence were the Baltic states The remaining 12 republics of the former USSR,collectively known as the Newly Independent States(NIS),regrouped into the Commonwealth of Independent States The
33、CIS is a loose economic and political alliance with open borders but no central government2210-*Africa Recent global economic problems have not impeded the growth among African countries Ethiopia,Angola,and Malawi each experienced annual growth rates of greater than 8 percent between 2007 and 2011 S
34、everal other countries in the sub-Saharan region have grown faster than 5 percent annually However,Africas multinational market integration activities can be characterized as a great deal of activity but little progress Despite the large number and assortment of paper organizations,there has been li
35、ttle progress towards economic integration because of political instabilityMiddle East/North Africa(MENA)The ongoing political turmoil in Middle East/North Africa(MENA)region accelerated in 2011 and has resulted in economic disaster in several countries in the regionThe Arab Common Market set goals
36、for free internal trade but has not really succeededThe aim was to integrate the economies of the 22 Arab countries,but a long history of border disputes,and internal political turmoil will have to be overcome.The Arab Gulf states,Egypt,and Morocco formed an Arab Free Trade Area,sometimes called the
37、 Greater Arab Free Trade Area(GAFTA)Iran,Pakistan,and Turkey,formed the Regional Cooperation for Development(RCD),recently renamed to the Economic Cooperation Organization(ECO)The organization,led by Iran,is the Organization of the Islamic Conference(OIC),a common market composed of Islamic countrie
38、s2310-*Implications of Market Integration Multinational provide opportunity through access to greatly enlarged markets Production,financing,labor,and marketing decisions are impacted World competition will continue to intensify as businesses become stronger and more experienced in dealing with large
39、 market groups.Regulation of business activities has been intensified throughout multinational market groups2410-*Opportunities Economic integration creates large mass markets.Most multinational groups have coordinated programs to foster economic growth Major savings will result from the billions of
40、 dollars now spent in developing different versions of products to meet a variety of national standards.Market BarriersProvide an advantage to the companies within the market in their dealings with other countries of the market groupCompanies willing to invest in production facilities in multination
41、al markets may benefit from protectionist measures Exporters to these markets are in a considerably weaker positionMeeting product and other standards within each multinational marketing region like the EU is a challenge2510-2610-*Marketing Mix Implications In the past:Companies charged different pr
42、ices in different countries Non-tariff barriers between member countries supported such price differentials Companies are adjusting their marketing mix strategies to reflect anticipated market changes in the single European market.Price standardization due to parallel importation Fairer competition due to single currency(EU)Reduced number of brands due to standardization Increased competition among retailers27
