International Marketing© Thomson/South-Western

ChapterChapterChapterChapter

The International Political Economy4.1 National Demographics4.1 National Demographics

4.2 Economic Environment4.2 Economic Environment

4.3 Political and Legal Environments4.3 Political and Legal Environments

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Winning Strategies

Europe had a history of warfare and conflict between countries and cultures.

The second half of the 20th century is one of the longest periods of piece Europe has ever seen.

From Conflict to Unity

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Winning Strategies (continued)

In 1950, six countries formed an alliance to combine the coal and steel industries of Western Europe.

Treaties of Rome European Economic Community (EEC) European Community (EC)

From Conflict to Unity

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Winning Strategies (continued)

European Union (EU) a group of democratic European countries that

use treaties to work together economically and politically trade agreements some political control over economic policies helped ensure peace and economic development raised living standards euro stronger political voice

From Conflict to Unity

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Lesson 4.1

National Demographics

Goals Explain the importance of demographics

to international marketing. Describe the effect of population and

class on international marketing.

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Terms

developed countries newly industrialized countries developing countries Lorenz curve population pyramid social class

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IMPORTANCE OF DEMOGRAPHICS demographic factors

income age social status education

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IMPORTANCE OF DEMOGRAPHICS (continued)

developed countries first world countries

newly industrialized countries second world countries

developing countries third world countries

hard to classify countries

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Income Distribution per capita income Lorenz curve

quintiles line of absolute equality line of absolute inequality

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Education

The educational level of a country suggests two things. An educated workforce makes it easier for

an international company to expand into a market.

Individuals with higher educational levels are more likely to purchase the same types of products.

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>> C H E C K P O I N T

List the three levels of country development.

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POPULATION current world population is over 6.5

billion people projections of over 9 billion people by

2050 population pyramid

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Population Pyramid

High birth rate and high death rate

Youngest

Oldest

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Population Pyramid (continued)

A lower birth rate and a lower death rate

Youngest

Oldest

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Social Class Criteria to distinguish social class

include: income net worth education family history political power lifestyle

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Class Mobility Class mobility is the ability of

individuals to change social classes. Marketers sell products that allow

individuals to appear to belong to higher social classes.

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>> C H E C K P O I N T

Define social class and social mobility.

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International Marketing© Thomson/South-Western

Lesson 4.2

Economic Environment

Goals Describe the four types of economic

systems. Explain the effects of economic

integration on international marketing.

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Terms

economic system market economy mixed economy planned economy traditional economy free trade area

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THE POLITICAL ECONOMY

political economy mixed economy republic

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Economic Systems

market economy mixed economy

socialism

planned economy command economy

traditional economy

A country’s economic system governs how it controls the production, distribution, and consumption of goods and services.

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>> C H E C K P O I N T

List the four types of economic systems.

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ECONOMIC INTEGRATION

Global economic integration refers to the development of trading partnerships through the elimination of restrictions on trade.

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ECONOMIC INTEGRATION (continued)

free trade area customs union common market

economic union

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The Americas

North American Free Trade Agreement (NAFTA) a free trade zone linking Canada, the U.S.,

and Mexico

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The Americas (continued)

Central America Free Trade Agreement (CAFTA) links the U.S. with Costa Rica, El Salvador,

Guatemala, Honduras, Nicaragua, and the Dominican Republic

Free Trade Area of the Americas (FTAA) proposed

partner all countries in the Americas except Cuba

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>> C H E C K P O I N T

Name two types of free trade areas.

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Lesson 4.3

Political and Legal Environments

Goals Describe the different types of political

systems. Describe the different types of legal

systems.

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Terms political system democracy republic one-party state theocracy political risk legal system contract sustainability

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POLITICAL SYSTEMS

A political system sets the laws under which businesses operate. sovereign states protectorates

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Types of Political Systems democracy

direct elections by country’s citizens

republic citizens elect representatives

representatives vote on laws

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Types of Political Systems (continued)

one-party states only one political party communism

theocracy religion or faith plays a dominant role

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Political Risk When there is uncertainty about the

stability of a political or legal system, businesses face increased political risk. impact on long term planning

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Political Economy Movement

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>> C H E C K P O I N T

Name the four types of political systems.

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LEGAL SYSTEMS A legal system creates, interprets, and

enforces the laws of a country. statutory law

tries to put every specific legal issue into a specific law

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LEGAL SYSTEMS (continued)

case law allows for the interpretation of statutes to

specific laws

corruption misuse of an official position for one’s own

benefit

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Contract Law

A contract is any legally enforceable promise or set of promises made by one party to another.

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Sustainability Sustainability is a worldwide movement

to allow for economic development while minimizing negative impacts on the environment. “green” laws Kyoto Protocol

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>> C H E C K P O I N T

Describe the two types of legal systems.