test 4 Flashcards
define economic development
It is known as an increase in average per capita gross domestic product (GDP) production which increases national production.
Rapid economic growth increases consumer demand.
Define the relationship between time zone and marketing operations
Virtual meetings are hard to execute.
Time zones have the greatest influences successful commercial efforts abroad.
The common time zones give the Europeans advantages in both Africa and the Middle East.
There is the most economic growth in countries that have the same time zone.
Trading areas defined by time zones
Americas
Europe and Africa
Asia pacific
The economic growth within a country affects what?
Attitudes towards foreign business
The demands for good
The distribution systems found within a country
The entire marketing process
Define UN classification of countries based on economic development
Most developed – industrialised countries with high per capita incomes (Canada, England, France)
Less developed – industrially developing countries just entering world trade with relatively low per capita incomes (Asia and Latin America)
Least developed – industrially underdeveloped, agrarian, subsistence (Africa)
More-developed countries (MDCs):
UN classification
Industrialized countries with high per capita incomes, such as Canada, England, France
Less-developed countries (LDCs):
UN classification
Industrially developing countries just entering world trade with relatively low per capita incomes, such as many countries in Asia and Latin America
Least-developed countries (LLDCs):
UN classification
Industrially underdeveloped, agrarian, subsistence, such as Africa
Understand the new classification (IMF and WB)
Developed economies (Canada, US, France, Sweden, etc.)
Emerging markets (China, Brazil, Mexico, South Africa, Taiwan, etc.)
Developing economies (Africa)
Developed economies
IMF and WB
Canada, US, France, Sweden,
Emerging markets
IMF and WB
China, Brazil, Mexico
Developing economies
IMF and WB
Africa
Economic growth factors
Political stability
Economic and legal factors
Planning
Production
Industries targeted for growth
Incentives to force high domestic rate of savings, update infrastructure, transportation, education
The influence of infrastructure on a country’s economic development
Infrastructure represents capital goods that serve the activities of many industries.
Infrastructure increases economic development
Business efficiency is affected by their presence or absence.
What are marketing contributions to economic development?
Marketing is the middle man between productive capacity and consumer demand.
The marketing process can create a balance between higher production and higher consumption.
Explain marketing in developing countries
Marketing must be tailored to each circumstance
Pricing in poorer countries may have different problems to pricing in more developed countries.
A marketer must assess the existing level of marketing development and its receptiveness to understand the marketing potential of a country.
The relationship between market development and economic development
The level of market development roughly parallels the stages of economic development.
When an economy is more developed, more marketing functions are demanded, and the institutions become more specialised and sophisticated.
As countries develop, the distribution channel systems develop.
Understand the Americas regional economic integration
US and Canada: CFTA
US, Canada and Mexico: NAFTA (new CUSMA) to reduce tariffs among country members
Dominican Republic free trade agreement (DR-CAFTA) : Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and US.
CFTA
US and Canada
NAFTA (new CUSMA)
US, Canada and Mexico
Used to reduce tariffs among country members
The strategic implications of economic development for marketing
As a country develops, incomes change, population concentrations shift, expectations for a better life, new infrastructures evolve
When incomes rise, new demand is generated at all income levels.
As incomes rise to middle-class range, demand for more costly goods increases.
least to most powerful economic integration stages
Regional cooperation groups
Free Trade area
Custom Union
Common market
Economic Union
political union
Understand European institutions
European Commission – Initiates policy and supervises its observance by member states
Council of Ministers – The decision-making body; determines which proposals of the Single European Act to accept as binding to members
The European Parliament – Passes and amends legislation
Court of Justice – The Supreme Court of the European Union
European Commission
Initiates policy and supervises its observance by member states
Council of Ministers
The decision-making body; determines which proposals of the Single European Act to accept as binding to members
The European Parliament
Passes and amends legislation
Court of Justice
The Supreme Court of the European Union
Benefits of the Euro
Created a single currency for most countries
Easier to compare prices across
Europe Firms are more competitive
Increase range of investment options
Established a central bank
Costs of Euro
Loss of control over National monetary policy
EU is not an optimal currency area
It took a bit of time for countries to come on board with the euro
Economic development in Africa
Ethiopia, Angola, and Malawi each experienced annual growth rates of greater than 8% between 2007 and 2011.
Countries in the sub-Saharan region have grown faster than 5% annually.
There has been little progress toward economic integration because of political instability.
Examples of regional economic integration in Africa
AMU
CEN-SAD Community of Sahel-Saharan States
COMESA – Common Market for East and Southern Africa
Examples of regional economic integration in Americas
NAFTA
Examples of regional economic integration in Europe
EU – 27 members
EFTA 4 members
Understand the dynamic growth in the Asia Pacific Region
Asia has been the fastest growing area in the world for the past three decades.
In 1996, the leading Asian economies experienced a financial crisis that resulted in the crash of the Asian stock market.
What is referred to as greater China?
Greater China refers to both the People’s Republic of China (PRC) and the Republic of China (ROC) or Taiwan.
Understand greater China economic development drivers
Two major events that occurred in 2000 are having a profound effect on China’s economy:
Admission to the World Trade Organization.
United States’ granting normal trade relations (NTR) to China on a permanent basis (PNTR).
China can be thought of as a group of regions rather than a single country due to its size.
Human rights and the legal system are major issues.
Other problems China face in the longer run
Environmental decline is associated with its fast growth.
The demographic disaster associated with its one-child policy.
Managing the current great transition from rural to urban living.
What does BOPMs stand for?
Bottom-of-the-Pyramid Markets
Understand BOPMs
The bottom of the pyramid consists of 4 billion people across the world with annual incomes of less than $1,200
These markets are not necessarily defined by national borders but rather by the pockets of poverty across countries.
They are part of the least developed countries and the developing countries
Understand marketing opportunities in the Greater China
There are extreme differences in economic well-being, cultures, and political structures.
The rich municipalities like Beijing and Shanghai are quite comparable to Paris, New York, or Tokyo in terms of the availability of luxury products.
In China, you cannot sell the same lines of cosmetics or shampoos nationwide (unlike in the US).
China is large and rich and therefore
seen as a “more-developed country.”
