International Marketing © Thomson/South-Western ChapterChapter The International Political Economy 4.1 National Demographics 4.2 Economic Environment 4.3 Political and Legal Environments 4

International Marketing © Thomson/South-Western Chapter 4 Slide 2 Winning Strategies Europe had a history of warfare and conflict between countries and cultures. The second half of the 20 th century is one of the longest periods of piece Europe has ever seen. From Conflict to Unity

International Marketing © Thomson/South-Western Chapter 4 Slide 3 Winning Strategies (continued) In 1950, six countries formed an alliance to combine the coal and steel industries of Western Europe. Treaties of Rome European Economic Community (EEC) European Community (EC) From Conflict to Unity

International Marketing © Thomson/South-Western Chapter 4 Slide 4 Winning Strategies (continued) European Union (EU) a group of democratic European countries that use treaties to work together economically and politically trade agreements some political control over economic policies helped ensure peace and economic development raised living standards euro stronger political voice From Conflict to Unity

International Marketing © Thomson/South-Western Chapter 4 Slide 5 Lesson 4.1 National Demographics Goals Explain the importance of demographics to international marketing. Describe the effect of population and class on international marketing.

International Marketing © Thomson/South-Western Chapter 4 Slide 6 Terms developed countries newly industrialized countries developing countries Lorenz curve population pyramid social class

International Marketing © Thomson/South-Western Chapter 4 Slide 7 IMPORTANCE OF DEMOGRAPHICS demographic factors income age social status education

International Marketing © Thomson/South-Western Chapter 4 Slide 8 IMPORTANCE OF DEMOGRAPHICS (continued) developed countries first world countries newly industrialized countries second world countries developing countries third world countries hard to classify countries

International Marketing © Thomson/South-Western Chapter 4 Slide 9 Income Distribution per capita income Lorenz curve quintiles line of absolute equality line of absolute inequality

International Marketing © Thomson/South-Western Chapter 4 Slide 10

International Marketing © Thomson/South-Western Chapter 4 Slide 11 Education The educational level of a country suggests two things. An educated workforce makes it easier for an international company to expand into a market. Individuals with higher educational levels are more likely to purchase the same types of products.

International Marketing © Thomson/South-Western Chapter 4 Slide 12 >> C H E C K P O I N T List the three levels of country development.

International Marketing © Thomson/South-Western Chapter 4 Slide 13 POPULATION current world population is over 6.5 billion people projections of over 9 billion people by 2050 population pyramid

International Marketing © Thomson/South-Western Chapter 4 Slide 14 Population Pyramid High birth rate and high death rate Youngest Oldest

International Marketing © Thomson/South-Western Chapter 4 Slide 15 Population Pyramid (continued) A lower birth rate and a lower death rate Youngest Oldest

International Marketing © Thomson/South-Western Chapter 4 Slide 16 Social Class Criteria to distinguish social class include: income net worth education family history political power lifestyle

International Marketing © Thomson/South-Western Chapter 4 Slide 17 Class Mobility Class mobility is the ability of individuals to change social classes. Marketers sell products that allow individuals to appear to belong to higher social classes.

International Marketing © Thomson/South-Western Chapter 4 Slide 18 >> C H E C K P O I N T Define social class and social mobility.

International Marketing © Thomson/South-Western Chapter 4 Slide 19 Lesson 4.2 Economic Environment Goals Describe the four types of economic systems. Explain the effects of economic integration on international marketing.

International Marketing © Thomson/South-Western Chapter 4 Slide 20 Terms economic system market economy mixed economy planned economy traditional economy free trade area

International Marketing © Thomson/South-Western Chapter 4 Slide 21 THE POLITICAL ECONOMY political economy mixed economy republic

International Marketing © Thomson/South-Western Chapter 4 Slide 22 Economic Systems market economy mixed economy socialism planned economy command economy traditional economy A countrys economic system governs how it controls the production, distribution, and consumption of goods and services.

International Marketing © Thomson/South-Western Chapter 4 Slide 23 >> C H E C K P O I N T List the four types of economic systems.

International Marketing © Thomson/South-Western Chapter 4 Slide 24 ECONOMIC INTEGRATION Global economic integration refers to the development of trading partnerships through the elimination of restrictions on trade.

International Marketing © Thomson/South-Western Chapter 4 Slide 25 ECONOMIC INTEGRATION (continued) free trade area customs union common market economic union

International Marketing © Thomson/South-Western Chapter 4 Slide 26 The Americas North American Free Trade Agreement (NAFTA) a free trade zone linking Canada, the U.S., and Mexico

International Marketing © Thomson/South-Western Chapter 4 Slide 27 The Americas (continued) Central America Free Trade Agreement (CAFTA) links the U.S. with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic Free Trade Area of the Americas (FTAA) proposed partner all countries in the Americas except Cuba

International Marketing © Thomson/South-Western Chapter 4 Slide 28 >> C H E C K P O I N T Name two types of free trade areas.

International Marketing © Thomson/South-Western Chapter 4 Slide 29 Lesson 4.3 Political and Legal Environments Goals Describe the different types of political systems. Describe the different types of legal systems.

International Marketing © Thomson/South-Western Chapter 4 Slide 30 Terms political system democracy republic one-party state theocracy political risk legal system contract sustainability

International Marketing © Thomson/South-Western Chapter 4 Slide 31 POLITICAL SYSTEMS A political system sets the laws under which businesses operate. sovereign states protectorates

International Marketing © Thomson/South-Western Chapter 4 Slide 32 Types of Political Systems democracy direct elections by countrys citizens republic citizens elect representatives representatives vote on laws

International Marketing © Thomson/South-Western Chapter 4 Slide 33 Types of Political Systems (continued) one-party states only one political party communism theocracy religion or faith plays a dominant role

International Marketing © Thomson/South-Western Chapter 4 Slide 34 Political Risk When there is uncertainty about the stability of a political or legal system, businesses face increased political risk. impact on long term planning

International Marketing © Thomson/South-Western Chapter 4 Slide 35 Political Economy Movement

International Marketing © Thomson/South-Western Chapter 4 Slide 36 >> C H E C K P O I N T Name the four types of political systems.

International Marketing © Thomson/South-Western Chapter 4 Slide 37 LEGAL SYSTEMS A legal system creates, interprets, and enforces the laws of a country. statutory law tries to put every specific legal issue into a specific law

International Marketing © Thomson/South-Western Chapter 4 Slide 38 LEGAL SYSTEMS (continued) case law allows for the interpretation of statutes to specific laws corruption misuse of an official position for ones own benefit

International Marketing © Thomson/South-Western Chapter 4 Slide 39 Contract Law A contract is any legally enforceable promise or set of promises made by one party to another.

International Marketing © Thomson/South-Western Chapter 4 Slide 40 Sustainability Sustainability is a worldwide movement to allow for economic development while minimizing negative impacts on the environment. green laws Kyoto Protocol

International Marketing © Thomson/South-Western Chapter 4 Slide 41 >> C H E C K P O I N T Describe the two types of legal systems.