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Global Marketing: Chapter 2

Terms in this set (24)

Four Main Types of Economic Systems
-Market Capitalism
-Centrally Planned Socialism
-Centrally Planned Capitalism
-Market Socialism
...
PRIVATE/MARKET→Market Capitalism
STATE/MARKET→Market Socialism
PRIVATE/COMMAND→Centrally Planned Capitalism
STATE/COMMAND→Centrally Planned Socialism
Market Capitalism
•Individuals and firms allocate resources
•Production resources are privately owned
•Driven by consumers
•Government should promote competition among firms and ensure consumer protection
Centrally Planned Socialism
•Not really popular anymore, Africa, China: typically don't see this anymore
•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
•Demand typically exceeds supply
•Little reliance on product differentiation, advertising, pricing strategy
Centrally Planned Capitalism
-Command resource allocation is used extensively in an environment of private resource ownership
•An Example:
o Sweden
Market Socialism
-Market allocation policies are permitted within an overall environment of state ownership
•Examples:
o India
Indicators of Economic Planning
•How economically free or depressed you are
•Personal Choice: how much do you have
•Voluntary Exchange: forced or banned
•Freedom to compete in markets
•Protection of people and property
Economic Freedom
•Rankings of economic freedom among countries
o Ranges from "free" to "repressed"
Variables considered in Economic Freedom
oTrade policy
oTaxation policy
oCapital flows and foreign investment
oBanking Policy
oWage and price controls
oProperty rights
oBlack market: repressed
Free/ Repressed
1.Hong Kong
2. Singapore
3. Ireland
4. Luxembourg
5. Iceland/U.K.
7. Estonia
8. Denmark
9. Australia/New Zealand/United States

150. Cuba
151. Belarus
152. Libya/Venezuela
153. Zimbabwe
154. Burma
155. Iran
156. North Korea
Stages of Market Development
•The World Bank has defined four categories of development using Gross National Income (GNI) as a base
•BEMs, (Big Emerging Markets) identified 10 years ago, were countries in
o Central Europe
o Latin America
o Asia that were to have rapid economic growth
BRIC
Brazil
Russia
India
China
• World Bank has defined four categories of development based upon Gross National Income (GNI):
oHigh income countries
oUpper-middle income countries
oLower-middle income countries
oLow income countries
High Income Countries
Japan, Sweden
GNI per Capita: $10,066 or more

Advanced, developed, industrialized, postindustrial
Characteristics of High Income Countries
•Sustained economic growth through disciplined 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
Upper Middle Income Countries
GNI per capita: $3256 to $10065
Characteristics of Upper Middle Income Countries
•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
Examples: Malaysia, Chile, Venezuela, Hungary, Ecuador
Lower Middle Income Countries
GNI per capita: $826-$3255
Characteristics of Low Middle Income Countries
•Rapidly expanding consumer markets
•Cheap labor
•Mature, standardized, labor-intensive industries like textiles and toys
BRIC nations are:
• China and Brazil
Low Income Countries
GNI per capita $825 or less
Characteristics of Low Income Countries
•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
Marketing Opportunities in LDC's
•Characterized by a shortage of goods and services
•Long-term opportunities must be nurtured in these countries
o Look beyond per capita GNI
o Consider the LDCs collectively rather than individually
o Consider first mover advantage
o Set realistic deadlines
Mistaken Assumption about Least Developed Countries
•The poor have no money
•The poor will not "waste" money on non-essential goods.
•Entering developing markets is fruitless because goods there are too cheap to make a profit.
•People in BOP (bottom of the pyramid) countries cannot use technology.
•Global companies doing business in BOP countries will be seen as exploiting the poor.
The Triad
•US, Western Europe and Japan 75% of worlds income
•Big Emerging Markets, BRIC, Triad (top)
•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
THIS SET IS OFTEN IN FOLDERS WITH...