1. International Marketing © Thomson/South-Western ChapterChapter Slide 1 The International Political Economy 4.1 National Demographics 4.2 Economic Environment 4.3 Political and Legal Environments 4 Chapter 19

2. International Marketing © Thomson/South-Western Slide 7 IMPORTANCE OF DEMOGRAPHICS  demographic factors  income  age  social status  education These draw a picture of the population in a market Chapter 4

3. International Marketing © Thomson/South-Western 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 Chapter 4

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

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

6. International Marketing © Thomson/South-Western 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. Chapter 4

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

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

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

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

11. Ethics Around the World Pg. 81

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

13. International Marketing © Thomson/South-Western 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. Chapter 4

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

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

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

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

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

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

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

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

22. International Marketing © Thomson/South-Western 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 Chapter 4

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

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

25. International Marketing © Thomson/South-Western Slide 31 POLITICAL SYSTEMS  A political system sets the laws under which businesses operate.  sovereign states - free from external control.  protectorates - under partial control of a larger country. Chapter 4

26. International Marketing © Thomson/South-Western Slide 32 Types of Political Systems  democracy  direct elections by country’s citizens  republic  citizens elect representatives  representatives vote on laws Chapter 4

27. International Marketing © Thomson/South-Western Slide 33 Types of Political Systems (continued)  one-party states  only one political party  communism - all property belongs to the state.  theocracy  religion or faith plays a dominant role Chapter 4

28. International Marketing © Thomson/South-Western 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 Chapter 4

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

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

31. International Marketing © Thomson/South-Western 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 Chapter 4

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

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

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

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