2. Chapter 2 The Global Economic Environment

3. 2-2 政治 法律 社会 文化 企业外部环境（不可控因素）人事部 财务部 生产部 研发部 营销部营销战略营销组合 营销组织 营销 中介 顾客 市场 人口经济 科技自然企业内部环境（可控因素） 微观环境宏观环境 营销环境分析 营销环境分析

4. 2-3 External Marketing Environment Demographics Social Change Social Change Economic Conditions Economic Conditions Political & Legal Factors Political & Legal Factors Technology Competition Environmental Scanning Target Market Product Distribution Promotion Price Product Distribution Promotion Price External Environment is not controllable Ever-Changing Marketplace goal

5. 2-4 A PESTEL Analysis of the Macro-Global Environment

6. 2-5 Introduction This chapter looks at: An overview of the world economy A survey of economic system types The stages of market development The balance of payments

7. 2-6 Learning Objective 1 1 An overview of the world economy

8. 2-7 The World Economy—An Overview In the early 20 th century economic integration was at 10%; today it is 50% Global competitors have displaced or absorbed local ones Growth in global trade has exceeded domestic growth Insert photo of international currencies istockphoto # 3074196

9. 2-8 The World Economy—An Overview The new realities: Capital movements have replaced trade as the driving force of the world economy (Q:U.S dollars) Production has become uncoupled from employment (productivity) The world economy, not individual countries, is the dominating factor (German, Japan) E-Commerce diminishes the importance of national barriers and forces companies to re- evaluate business models

10. 2-9 Growth in global trade has exceeded domestic growth (why?) The growth in world trade in from 2007 increased from 10% to 30% until the 2008 economic crisis, while world industrial production averaged about 5 percent over the same time frame. Economic Growth and World Trade

11. 2-10 Transnational Corporations and Countries

12. 2-11 Nearly all of these corporations headquarters are concentrated in industrialized countries A firm’s activities are concentrated outside of its home country.

13. 2-12

14. 2-13 Learning Objective A survey of economic system types 2 2

15. 2-14 Economic Systems Resource Allocation Market Command Private Resource Ownership State Market Capitalism Market Socialism Centrally Planned Capitalism Centrally Planned Socialism

16. 2-15 Market Capitalism Individuals and firms allocate resources Production resources are privately owned Driven by consumers Government’s role is to promote competition among firms and ensure consumer protection

17. 2-16 Centrally Planned Socialism Opposite of market capitalism State holds broad powers to serve the public interest; decides what goods and services are produced and in what quantities Consumers can spend on what is available Government owns entire industries and controls distribution Demand typically exceeds supply Little reliance on product differentiation, advertising, pricing strategy

18. 2-17 Centrally Planned Capitalism Economic system in which command resource allocation is used extensively in an environment of private resource ownership Examples: Sweden Japan

19. 2-18 Market Socialism Economic system in which market allocation policies are permitted within an overall environment of state ownership Examples: China

20. 2-19 Alternative Descriptive Criteria p38 Type of economy Type of government Trade and capital flows The commanding heights Services provided by the state and funded through taxes Institutions markets

21. 2-20 Economic Freedom （ implication p40) 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 market

22. 2-21 Economic Freedom Free 1. Hong Kong 2. Singapore 3. Ireland 4. Luxembourg 5. Iceland/U.K 7. Estonia 8. Denmark 9. Australia/New Zealand/U.S. Repressed 150. Cuba 151. Belarus 152. Libya/Venezuela 153. Zimbabwe 154. Burma 155. Iran 156. North Korea

23. 2-22 Learning Objective The stages of market development 3 3

24. 2-23 Stages of Market Development Defined on the base of Gross National Income (GNI) Provide a useful basis for global market segmentation and target marketing. What ’ s the MKTG implication? p50

25. 2-24 BEMs, identified 10 years ago, were countries in Central Europe, Latin America, and Asia that were to have rapid economic growth Today, the focus is on BRIC, Brazil, Russia, India, and China

26. 2-25 Big Emerging Markets 新兴市场 China India Indonesia South Korea Brazil Mexico Argentina South Africa Poland Turkey

27. 2-26 Low-Income Countries GNP per capita of $ 825 or less Characteristics Limited industrialization High percentage of population involved in farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Concentrated in Sub-Saharan Africa India is the only BRIC country

28. 2-27 Lower-Middle-Income Countries GNI per capita: $826 to $3,255 Sometimes called less-developed countries (LDCs) Characteristics Rapidly expanding consumer markets Cheap labor Mature, standardized, labor-intensive industries like textiles and toys BRIC nations are China and Brazil MKTG Implication

29. 2-28 Upper-Middle-Income Countries GNP per capita: $3,256 to $10,065 Characteristics: Rapidly industrializing, less agricultural employment Increasing urbanization Rising wages High literacy rates and advanced education Lower wage costs than advanced countries Also called newly industrializing economies (NIEs) Examples: Russia, Malaysia, Chile, Venezuela, Hungary

30. 2-29 Marketing Opportunities in LDCs Characterized by a shortage of goods and services (mkter ’ s role p46) Mistaken Assumptions about LDCs Long-term opportunities must be nurtured in these countries Look beyond per capita GNP (Tanzania, utility bill, well, sun, nursing homes) The standard of living in many low-income countries is often higher than income data might suggest. Consider the LDCs collectively rather than individually wealth disparity Consider first mover advantage Set realistic deadlines

31. 2-30 Mistaken Assumptions about LDCs 1.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 cheap 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.

32. 2-31 High-Income Countries GNI per capita: $10,066 or more Also know as advanced, developed, industrialized, or postindustrial countries Characteristics: p47 Sustained economic growth through innovation Service sector is more than 50% of GNI Importance of information processing and exchange Ascendancy of knowledge over capital, intellectual over machine technology, scientists and professionals over engineers and semiskilled workers Future oriented Importance of interpersonal relationships Marketing Implication p47

33. 2-32 G-8, the Group of Eight Goal of global economic stability and prosperity U.S. Japan Germany France Britain Canada Italy Russia (1998) 2007 G-8 Leaders in Germany

34. 2-33 OECD, the Organization for Economic Cooperation and Development 30 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

35. 2-34 The 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 part

36. 2-35 Marketing Implications of the Stages of Development: Product Saturation Levels 产品饱和度 p50 The % of potential buyers or household who own a product India: 1% of people have telephones Autos: 1 per 20,000 Chinese; 21 per 100 Poles; 49 per 100 EU citizens Computers: 1 PC per 6,00 Chinese; 11 PCs per Poles; 34 PCs per EU citizen

37. 2-36 Balance of Payments 国际收支 Record of all economic transactions between the residents of a country and the rest of the world Current account 经常项目 – record of all recurring trade in merchandise and services, and humanitarian aid trade deficit—negative current account trade surplus—positive current account Capital account – record of all long-term direct investment, portfolio investment 证券投资, and capital flows

38. 2-37 Balance of Payments

39. 2-38 2-38 largest Exporters and Importers

40. 2-39

41. 2-40 Overview of International Finance refer to the book Foreign exchange makes it possible to do business across the boundary of a national currency Currency of various countries are traded for both immediate (spot) and future (forward) delivery Currency risk adds turbulence to global commerce