Global Marketing 2

Bab 2
GLOBAL MARKETING ENVIRONMENT

THE WORLD ECONOMIC – AN OVERVIEW :
• The world economy has changed since world war II. The most fundamental change is the emergence of global markets, responding to new opportunities, global competitors have steadily displaced or absorbed local ones.
• There have been several remarkable changes in the world economy. Organization stand a better chance of achieving success when plans and strategies are based on the new realities of the changed world economy:[william graider]
1. Capital movement have replaced trade as the
driving force of the world economy
the volume of capital movement is increased. The dollar value of world trade in merchandise is running at roughly $5.5 trillion per-year. Global capital movement far exceed the dollar volume of global trade
• According to orthodox economic theory, when country runs a deficit on its trade accounts, its currency should depreciate in value. Today, it is capital movements and trade that determine currency value.
• What Is International Trade?
International trade is the exchange of goods and services between countries. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes.

• Production has become “uncoupled” from employment. The second chance concern the relationship between productivity and employment. Although employment in manufacturing remains steady or has declined, productivity continues to grow.
In USA, manufacturing’s share of GDP has declined from 19.2% in 1989 to 16.1% in 1999. Similar trend can be found in many other major industrial economics as well.

>>>Manufacturing is not in decline-its employment in manufacturing that is in decline. – some companies have cut employment by outsourcing or subcontracting nonmanufacturing activities; data processing, housekeeping, food services

Gross Domestic Product :
• GDP is Gross domestic product. For a region, the GDP is "the market value of all the goods and services producted by labor and property located in" the region, usually a country. It equals GNP minus the net inflow of labor and property incomes from abroad.
3. The world economy dominates the scene; individual country economies play a subordinate role. [. Subject to the authority or control of another.]
• The third major changes is the emergence of the world economy as the dominant economic unit.
• Japan & Germany has been their respective competitive position in the world. In contrast, many other countries include the usa, have focused upon domestic objectives and priorities to the exclusion of their global competitive position
4. The 75 years struggle between capitalism and socialism is largely over.
• The fourth change is the end of the cold war. The demise of communism as an economic & political system can be explained straightforward manner: communism is not an effective economic system.
5. The grow of e- commerces diminished the importance of national barriers and forces companies to re- evaluate their business models
Finally, the personal computers revolution and the advent of the internet era have in some ways diminished the importance of national boundaries.
an estimated 500 million personal computers are installed in homes and business


• Market Capitalism
is an economic system in which individuals and firm allocate resources and production resources are privately owned.
Economic system characterized by the following: private property ownership exists; individuals and companie are allowed to compete for their own economic gain; and free market forces determine the prices of goods andservices. Such a system is based on the premise of separating the state and business activities. Capitalistsbelieve that markets are efficient and should thusfunction without interference, and the role of the state is to regulate and protect

• Centrally Planned Socialism
In this type of economic system , the state has broad power to serve the public interest as it sees fit. State planner make “top down” decision about what good and services are produced and in what quantities, consumers can spend their money on what is available.
Government ownership of entire industries as well as individual enterprises is characteristic of centrally – planned socialism
Because demand typically exceeds supply, the element of the marketing mix are not used as strategic variables. Little on product differentiation, advertising or promotion. Government also control distribution to eliminate “exploitation” by intermediaries.

• Centrally – Planned Capitalism & Market Socialism
In reality, market capitalism and centrally planned socialism do not exist “pure” form. In most countries, command and market resources allocation are practiced simultaneously, as are private and state resources ownership.
An economic system in which command resource allocation is utilized in an environment of private resource ownership can be called centrally-planned capitalism.
sweden, two third of all expenditure are controlled by the government, resource allocation is more command oriented rather than market orientation.

• Market socialism
Market socialism is also possible. Market allocation policies are
permitted within an overall environment of state ownership.
China has given considerable freedom to businesses and individuals in
the Guandon Province to operate within a market system.
Economic system which is based on cooperation rather than competition and which utilizes centralized planning and distribution.