Chap 2-Global Marketing EnvironmentDPM 6043 2.0 GLOBAL MARKETING ENVIRONMENT 2.1 Understand global marketing environment 2.1.1 Define global marketing environment •Themarketing environmentconsists of all factors external to an organization that can affect the organization's marketing activities. •These factors are largely uncontrollable, although marketers can influence some of them. •For example, Chrysler cannot control population trends, economic conditions, or laws once passed, but it can have some influence on political processes, technological developments, and competitive situations •The marketing environment creates opportunities or threats 2.2 Discuss on general the key influence factors within the global environment 2.2.1 The Global Trade System •Global trade, also known as international trade, is simply the import and export of goodsand services across international boundaries. •Goods and services that enter into a country for sale are calledimports. Goods and services that leave a country for sale in another country are calledexports. For example, a country may import wheat because it doesn't have much arable land, but export oil because it has oil in abundance.
Chap 2-Global Marketing EnvironmentDPM 6043 •A fundamental concept underlying global trade is the concept ofcomparative advantage, developed by David Ricardo in the 19th century. In a nutshell, the doctrine of comparative advantage states that a country can produce some goods or services more cheaply than other countries. In technical terms, the country is able to produce a specific good or service at a lower opportunity cost than others. •Anopportunity costis the benefit one gives up in making an economic choice. The classicexample is guns and butter - domestic investment over defense spending. The more guns you produce, the less funds are available to invest in public schools and infrastructure, forexample. The more you invest in the domestic economy, the less you can spend on defense. 2.2.2 Explain Economic environment a. Economic System i. Market capitalism •Market capitalismis an economic system in which individuals and firms allocate resources, and production resources are privately owned. Consumers decide what goods they desire, and firms decide how much to produce; the state's role is to promote competition •Market capitalism is practiced worldwide, especially in North America and Western Europe, butall market-oriented economies do not function in the same manner.
Chap 2-Global Marketing EnvironmentDPM 6043 •The U.S. is distinguished by its competitive "wild free- for-all" and decentralized initiative whereas Japan is a tightly run, highly regulated economic system that is market oriented. ii. Centrally planned capitalism •Centrally-planned capitalism is an economic system in which command resource allocation is used extensively in an environment of private resource ownership (e.g., Sweden). iii. Market socialism •Market socialism permits market allocation policies within an overall environment of state ownership (e.g., China gives freedom to businesses/individuals to operate in a market system). iv. Centrally planned socialism •Opposite of market capitalism •Centrally-planned socialismgives the state broad powers to serve the public as it sees fit. •State planners make "top-down" decisions about the goods and services produced and in what quantities; consumers spend money on what is available.