Chapter 2: Global Marketplaces and Business Centers

intern

ation

al bu

siness, 5

th edition

chapter 2global marketplaces and business centers

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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

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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

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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

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Vital Information in International Business

Basic geographyMarket

characteristics

Culture Politics

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World Economic Activity

• The Triad

– Japan

– European Union

– United States

• The Quad

– Triad

– Canada

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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

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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

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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

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Euro Countries

• Belgium

• France

• Luxembourg

• Germany

• Italy

• Netherlands

• Ireland

• Greece

• Portugal

• Spain

• Austria

• Finland

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Map 2.2 Western Europe

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Marketplaces of Eastern Europe

• Russia

• Estonia

• Latvia

• Lithuania

• Armenia

• Belarus

• Georgia

• Moldova

• Ukraine

• Azerbaijan

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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

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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

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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