Chapter 2: An Overview of the International Marketing Environment

The World Economy
Globalization has led to a unified international economy: the international economy performs as a single unit
Levels of Development
High-Income Countries
Middle-Income Countries
Low-Income Countries
High-Income Countries
Well-developed industrial and service sectors
Markets in maturity stage
Consumers with established preferences
Markets are characterized by intense competition
Middle-Income Countries
Developing rapidly
Many are countries with emerging markets
Big Emerging Markets
Present the greatest potential for international trade and expansion
Set the pace for the economy in the region
Ex: China, India, Brazil, Mexico
Low-Income Countries
Primarily agrarian
Located in different regions in Asia and Sub-Saharan Africa
Often neglected or underserved by large multinationals
Represent potential niche markets
Political Environment: Political Risk
Political risk signals: poor economic performance, repression of ethnic groups, internal diversity and incongruent interests
Types of Political Risks
Risks related to government trade policies
Risks related to government economic policy
Risks related to labor and action group
Risks related to terrorism
Minimizing Political Risk
Understand both ruling and opposition parties
Remain politically neutral
Be exemplary corporate citizens
Partner with local companies and create local expertise
Use local suppliers
Obtain insurance coverage
International Legal Environment
International Laws
Host Country Laws
Home Country Laws
*must adhere to all three
Legal Systems
Common Law
Code (Civil) Law
Islamic Law
Common Law
Based on prior court ruling
Code (Civil) Law
Comprehensive written laws that specify what constitutes legal behavior; used by most countries
Islamic Law
System of law based on the interpretation of the Koran Islam’s holy book, and the practices and sayings of the Prophet Muhammad
Intellectual Property Rights
Violation is the most significant threat to competitiveness of international corporations
Intellectual Property Protection
Trade Secret
Protection of the rights of the inventor or of the firm to use and sell the invention for a specified period of time
Rights of owner of original work of art to reproduce, sell, perform or film the work
Trade Secret
Know-how, formulas, and special blends that are not registered and are thus not protected by law
TRIPS agreement
(Trade-Related Aspects of Intellectual Property Rights); member countries of the WTO, must sign this
Antitrust legislation
Prevent anticompetitive activities such as the creation of monopolies and cartels
Anti-corruption legislation
Prevent multinational corporations from using unethical means to obtain competitive advantage in a particular market
The Natural Environment
Determines access to markets, production, and productivity capability and trade
Geology and Topography
Determines access to markets
Hydroelectric power is essential to economic development
Affects economic development
Population growth rate is highest in South Asia and Sub-Saharan Africa
Environmental Quality
Concerns about the environment have led to the active regulation of business, especially in industrialized countries
Technological Environment
New product development proceeding at fast pace
Thousands of patents and trademarks are registered worldwide on a daily basis
Technology has greatly changed international marketing

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