Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following

Copyright © 2001 by Harcourt, Inc. All rights reserved.Copyright © 2001 by Harcourt, Inc. All rights reserved. 4-4-33

Market CharacteristicsMarket Characteristics

Population demographicsPopulation demographics• Age distribution, life expectancies, Age distribution, life expectancies,

household size, urbanizationhousehold size, urbanization IncomeIncome

• Distribution of low, medium, and high incomesDistribution of low, medium, and high incomes• Gross domestic product per capitaGross domestic product per capita• Purchasing power parityPurchasing power parity

Consumption patternsConsumption patterns• Income spent on necessities and luxuriesIncome spent on necessities and luxuries• Product saturation or diffusionProduct saturation or diffusion• Product form differencesProduct form differences


Market Characteristics… continued Market Characteristics… continued

Availability and quality of infrastructureAvailability and quality of infrastructure• Rail traffic networks for distribution capabilitiesRail traffic networks for distribution capabilities

• Communication systems for marketingCommunication systems for marketing

• Energy (electrical and fuel) consumptionEnergy (electrical and fuel) consumption Foreign involvement in the economyForeign involvement in the economy

• Degree of foreign direct investment in country or in Degree of foreign direct investment in country or in a specific industrya specific industry

• Rules governing foreign investmentRules governing foreign investment Impact of the economic environment on social Impact of the economic environment on social

developmentdevelopment• Urbanization, life expectancy, literacy rates, etc.Urbanization, life expectancy, literacy rates, etc.

• Physical Quality of Life Index (PQLI)Physical Quality of Life Index (PQLI)


The Economic UnionThe Economic Union

has all the characteristics of a common has all the characteristics of a common market, market,

harmonizes taxation,harmonizes taxation, harmonizes government spending, andharmonizes government spending, and harmonizes monetary policies,harmonizes monetary policies, establishes a common currencyestablishes a common currency


Economic Integration in Regional MarketsEconomic Integration in Regional Markets

Free Free Trade Trade AreaArea

Economic UnionEconomic Union

Customs UnionCustoms Union

Common MarketCommon Market

Harmonization of Harmonization of Economic PoliciesEconomic Policies

Factor MobilityFactor Mobility

Common External Common External Trade PolicyTrade Policy


The Maastricht Agreement The Maastricht Agreement

Created the European Union starting in Created the European Union starting in January, 1994.January, 1994.

Established European Community citizenship.Established European Community citizenship. Established a Central Bank and a system to Established a Central Bank and a system to

manage monetary policy.manage monetary policy. Established price stability.Established price stability. Established a commitment by member Established a commitment by member

countries to reduce governmental deficitscountries to reduce governmental deficits Recommended a single currency,Recommended a single currency,

the Euro, become the commonthe Euro, become the commoncurrency in 1999.currency in 1999.


European IntegrationEuropean Integration

Expected economic growth from:Expected economic growth from:• Eliminating transaction costsEliminating transaction costs• Economies of scale will be attained as production Economies of scale will be attained as production

becomes concentratedbecomes concentrated• More intense competition from EU companiesMore intense competition from EU companies

Operations from one country can be freely Operations from one country can be freely expanded to other countries.expanded to other countries.

Products can be freely sold across borders to Products can be freely sold across borders to millions of new consumers.millions of new consumers.


Fortress Europe May DevelopFortress Europe May Develop

EU integration may result in increased EU integration may result in increased restrictions on trade and investment by restrictions on trade and investment by outsiders. outsiders.


Economic Integration in the AmericasEconomic Integration in the Americas

The North American Free Trade Agreement The North American Free Trade Agreement (NAFTA) created the world’s largest free (NAFTA) created the world’s largest free market.market.• 390 million U.S., Canadian, and Mexican 390 million U.S., Canadian, and Mexican

consumersconsumers


Other Economic AlliancesOther Economic Alliances

Import SubstitutionImport Substitution• As a step to develop economic growth in small As a step to develop economic growth in small

developing countries, new domestic industries are developing countries, new domestic industries are encouraged to produce goods that were formerly encouraged to produce goods that were formerly imported.imported.


Other Economic Alliances in the AmericasOther Economic Alliances in the Americas

Southern Cone Common Market (Mercosur)Southern Cone Common Market (Mercosur) Andean Common Market (ANCom)Andean Common Market (ANCom)

Central American Common Market (CACM)Central American Common Market (CACM) Caribbean Common Market (CARICOM)Caribbean Common Market (CARICOM)

Caribbean Basin InitiativeCaribbean Basin Initiative


Free Trade Area of the Americas (FFTA)Free Trade Area of the Americas (FFTA)

An agreement to form a An agreement to form a regional trading zone regional trading zone

stretching from stretching from Point Barrow, Alaska Point Barrow, Alaska

to Patagonia, Argentina.to Patagonia, Argentina.


Integration in AsiaIntegration in Asia

Asia-Pacific Economic Cooperation (APEC)Asia-Pacific Economic Cooperation (APEC) Association of Southeast Asian Nations Association of Southeast Asian Nations

(ASEAN)(ASEAN) East Asia Economic GroupEast Asia Economic Group South Asian Association for Regional South Asian Association for Regional

Cooperation (SAARC)Cooperation (SAARC)


Integration in Africa and the Middle EastIntegration in Africa and the Middle East

Economic Community of West African States Economic Community of West African States (ECOWAS)(ECOWAS)

Afro-Malagasy Economic UnionAfro-Malagasy Economic Union East Africa Customs UnionEast Africa Customs Union West African Economic CommunityWest African Economic Community Maghreb Economic CommunityMaghreb Economic Community Gulf Cooperation Council (GCC)Gulf Cooperation Council (GCC)


Economic Integration and the International MarketerEconomic Integration and the International Marketer

Assessing opportunities and problemsAssessing opportunities and problems• Marketers must envision the impact of integration Marketers must envision the impact of integration

on the firm’son the firm’s– mode of market entry (local production)mode of market entry (local production)– increased scale of entry (interregional trade)increased scale of entry (interregional trade)– the targeted markets’ readiness for changethe targeted markets’ readiness for change

• and develop a strategic response and develop a strategic response to build long-term sustainable to build long-term sustainable competitive advantage competitive advantage through expansion, through expansion, acquisitions and alliances.acquisitions and alliances.

Documents

Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following