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Chapter Objectives 1. Evaluate the impact of the political and economic characteristics of the world's various marketplaces on businesses 2. Appreciate the uses of national income data in making business decisions 3. Discuss North America as a major marketplace and business center in the world economy 4. Describe Western Europe as a major marketplace and business center in the world economy 5. Discuss the problems facing the economies of the former communist countries of Eastern and Central Europe 6. Discuss Asia as a major marketplace and business center in the world economy 7. Assess the development challenges facing African, Middle Eastern, and South American countries
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intern
ation
al bu
siness, 5
th edition
chapter 2global marketplaces and business centers
2-2
Chapter Objectives 1
• Evaluate the impact of the political and economic characteristics of the world’s various marketplaces on business
• Appreciate the uses of national income data in making business decisions
• Discuss North America as a major marketplace and business center in the world economy
2-3
Chapter Objectives 2
• Describe Western Europe as a major marketplace and business center in the world economy
• Discuss the problems facing the economies of the former communist countries of Eastern and Central Europe
2-4
Chapter Objectives 3
• Discuss Asia as a major marketplace and business center in the world economy
• Assess the development challenges facing African, Middle Eastern, and South American countries
2-5
Vital Information in International Business
Basic geographyMarket
characteristics
Culture Politics
2-6
World Economic Activity
• The Triad
– Japan
– European Union
– United States
• The Quad
– Triad
– Canada
2-7
Figure 2.1a Shares of World’s GDP, 1970
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Figure 2.1b Shares of World’s GDP, 2004
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Marketplaces of North America
• United States
• Canada
• Mexico
• Greenland
• Central America
• Caribbean islands
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Map 2.1 North America
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United States
• Third largest population in world
• Fourth largest land mass
• Largest economy
• 30 percent of world’s GDP in 2004
• Prime market for exports
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The U.S. Dollar
Invoicingcurrency
Flightcapital
2-13
Classifying Countries by Income Levels
High Income
Lower Income
Middle Income
Least Developed
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Figure 2.2 Headquarters of World’s Largest Corporations in 2005 by Country
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Canada
• Second largest land mass
• 80 percent of population concentrated along U.S./Canadian border
• Rich natural resources
• Trade with U.S. - single largest bilateral trade relationship in world
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Advantages of Canada
• Proximity to U.S. market
• Stability of legal and political systems
• Excellent infrastructure and educational systems
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Mexico
• Largest Spanish-speaking nation
• Federal government system
• Participant in NAFTA along with U.S. and Canada
2-18
Central America and the Caribbean
• Economic development hindered by
– Political instability
– Chronic U.S. military intervention
– Inadequate educational systems
– Weak middle class
– Poverty
– Import limitations
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Marketplaces of Western Europe
European Union Member Countries
Other Countries in Western Europe
2-20
Euro Countries
• Belgium
• France
• Luxembourg
• Germany
• Italy
• Netherlands
• Ireland
• Greece
• Portugal
• Spain
• Austria
• Finland
2-21
Map 2.2 Western Europe
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Marketplaces of Eastern Europe
• Russia
• Estonia
• Latvia
• Lithuania
• Armenia
• Belarus
• Georgia
• Moldova
• Ukraine
• Azerbaijan
2-23
Map 2.3 Eastern Europe
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Marketplaces of Central Europe
• Romania
• Bosnia-Herzegovina
• Croatia
• Macedonia
• Slovenia
• Serbia
• Montenegro
• Albania
• Austria
• Bulgaria
• Czech Republic
• Slovak Republic
• Hungary
• Poland
2-25
Map 2.4 Central Europe
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Marketplaces of Asia
• Japan
• Australia and New Zealand
• The Four Tigers
• China
• India
• Afghanistan and Central Asian Republics
• Southeast Asian Countries
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Map 2.5 Asia
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Japan
• Second largest economy
• GDP of $4.6 trillion in 2004
• Industries controlled by keiretsu
• GDP growth rate of 1.3 percent
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Map 2.6 Australia and New Zealand
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The Four Tigers
South Korea Taiwan
Singapore Hong Kong
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China
• World’s most populous country
• Communist ideology mixed with market-oriented economic policies
• Heavy FDI
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India
• World’s second most populous country
• Per capita GDP of $620
• British colony until 1947
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Afghanistan and the Central Asian Republics
• Afghanistan
• Kazakhstan
• Uzbekistan
• Tajikistan
• Turkmenistan
• Kyrgyzstan
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Southeast Asian Countries
• Thailand, Malaysia, and Indonesia
• Low labor costs
• Significant FDI in recent years
• Continued recovery from currency crisis in 1997 and 1998
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Marketplaces of Africa and the Middle East
• Africa
– 867 million people
– 54 countries
– Major economies:
• South Africa
• Ivory Coast
• Algeria
• Nigeria
• Middle East
– Cradle of civilization
– Major economies:
• Saudi Arabia
• Kuwait
• UAE
2-36
Map 2.7 Africa and the Middle East
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Map 2.8 The Middle East
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Marketplaces of South America
• Brazil
• Bolivia
• Uruguay
• Argentina
• Chile
• Colombia
• French Guiana
• Paraguay
• Peru
• Ecuador
• Venezuala
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Map 2.9 South America