| front |
back |
revisions |
lasted changed by |
history |
| Market Groupings Summary |
Market groupings make it economically feasible to enter new markets and to employ new marketing strategies that could not be applied to the smaller markets represented by individual countries.
At the same time, market groupings intensify competition by protectionism within a market group but may foster greater protectionism between regional markets.
Mercosur and ASEAN+3, for example, suggest the growing importance of economic cooperation and integration. Such developments will continue to confront the international marketer by providing continually growing market opportunities and challenges. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:41:56 GMT |
 |
| Production Efficiency |
Production efficiency derives from specialization, mass production for mass markets, and the free movement of the factors of production. Economic integration also tends to foster political harmony among the countries involved; such harmony leads to stability and peace, which are beneficial to the marketer.
The marketing implications of multinational market groups may be studied from the viewpoint of firms located inside the market or of firms located outside, which wish to sell to the markets.
Regardless of the location of the marketer, however, multinational market groups provide great opportunity for the creative marketer who wishes to expand volume |
0 |
blairstonecipher Mon, 06 Feb 2012 04:41:56 GMT |
|
| Marketing Efficiency Affected By: |
Marketing efficiency is effected through the development of mass markets, encouragement of competition, improvement of personal income, and various psychological market factors |
0 |
blairstonecipher Mon, 06 Feb 2012 04:41:56 GMT |
|
| Reciprocity |
Reciprocity is an important part of the trade policy of a unified Europe. If a country does not open its markets to an EU firm, it cannot expect to have access to the EU market. Europeans see reciprocity as a fair and equitable way of allowing foreign companies to participate in the European market without erecting trade barriers, while at the same time giving Europeans equal access to foreign markets. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:41:56 GMT |
|
| Market Barriers |
The initial aim of a multinational market is to protect businesses that operate within its borders. An expressed goal is to give an advantage to the companies within the market in their dealings with other countries of the market group. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:37:57 GMT |
|
| World Competition |
World competition will intensify as businesses become stronger and more experienced in dealing with large market groups. European and non-European multinationals are preparing to deal with the changes in competition in a fully integrated Europe. In an integrated Europe, U.S. multinationals had an initial advantage over expanded European firms because U.S. businesses were more experienced in marketing to large, diverse markets and are accustomed to looking at Europe as one market. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:37:57 GMT |
|
| Strategic Implications for Marketing |
The complexion of the entire world marketplace has been changed significantly by the coalition of nations into multinational market groups.
To international business firms, multinational groups spell opportunity in bold letters through access to greatly enlarged markets with reduced or abolished country-by-country tariff barriers and restrictions. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:37:57 GMT |
|
| OIC |
The other activity in the region, led by Iran, is the creation of the Organization of the Islamic Conference (OIC), a common market composed of Islamic countries. A preferential tariff system among the member states of the OIC and the expansion of commercial services in insurance, transport, and transit shipping are among the issues to be debated at the next conference of Islamic countries.
The OIC represents 60 countries and over 650 million Muslims worldwide. The member countries’ vast natural resources, substantial capital, and cheap labor force are seen as the strengths of the OIC. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:37:57 GMT |
|
| ECO |
Iran, Pakistan, and Turkey, formerly the Regional Cooperation for Development (RCD), have renamed their regional group the Economic Cooperation Organization (ECO). |
0 |
blairstonecipher Mon, 06 Feb 2012 04:35:07 GMT |
|
| Middle East and GAFTA |
The Middle East has been less aggressive in the formation of successfully functioning multinational market groups. The Arab Common Market has set goals for free internal trade but has not succeeded
The Arab Gulf states, Egypt, and Morocco have worked out an agreement on an Arab Free Trade Area, sometimes called the Greater Arab Free Trade Area (GAFTA). This 2005 agreement is still in its early stages of implementation and its success is thus uncertain.
The aim is to integrate the economies of the 22 Arab countries, but before that will be feasible, a long history of border disputes and persisting ideological differences will have to be overcome. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:35:07 GMT |
|
| SADC |
The Southern African Development Community is the most advanced and viable of Africa’s regional organizations. Its 14 members encompass a landmass of 6.6 million square kilometers containing abundant natural resources and a population of over 200 million. South Africa, the region’s dominant economy, has a GDP of over $160 billion and accounts for 76.8 percent of SADC market share. After years of negotiations, 11 members of SADC approved a free trade agreement aimed at phasing out a minimum of 85 percent of tariffs within eight years, and all tariffs by the end of 2012. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:35:07 GMT |
|
| ECOWAS |
Economic Community of West African States
Unfortunately, ECOWAS continues to be plagued with financial problems, conflict within the group, and inactivity on the part of some members. After 30 years, the ECOWAS treaty and its much-defined objectives and the way they are to be achieved over a 15-year period in three stages languishes; nothing has been achieved and free trade remains a deferred dream. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:35:07 GMT |
|
| Africa |
Africa’s multinational market development activities can be characterized as a great deal of activity but little progress. Despite the large number and assortment of paper organizations, there has been little actual economic integration because of the political instability that has characterized Africa in recent decades and the unstable economic base on which Africa has had to build.
The Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC) are the two most active regional cooperative groups |
1 |
blairstonecipher Mon, 06 Feb 2012 04:31:16 GMT |
|
| APEC |
The other important grouping that encompasses the Asian-Pacific Rim is the Asia-Pacific Economic Cooperation. Formed in 1989, APEC provides a formal structure for the major governments of the region, including the United States and Canada, to discuss their mutual interests in open trade and economic collaboration. APEC is a unique forum that has evolved into the primary regional vehicle for promoting trade liberalization and economic cooperation. APEC includes all the major economies of the region and the most dynamic, fastest-growing economies in the world.
APEC has as its common goal a commitment to open trade, to increase economic collaboration, to sustain regional growth and development, to strengthen the multilateral trading system, and to reduce barriers to investment and trade without detriment to other economies. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:30:28 GMT |
|
| Events that Account for Growth of ASEAN Countries |
Four major events account for the vigorous economic growth of the ASEAN countries and their transformation from cheap-labor havens to industrialized nations:
1. the ASEAN governments’ commitment to deregulation, liberalization, and privatization of their economies;
2. the decision to shift their economies from commodity based to manufacturing based;
3. the decision to specialize in manufacturing components in which they have a comparative advantage (this created more diversity in their industrial output and increased opportunities for trade); and
4. Japan’s emergence as a major provider of technology and capital necessary to upgrade manufacturing capability and develop new industries. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:30:28 GMT |
|
| ASEAN |
The primary multinational trade group in Asia is ASEAN. The goals of the group are economic integration and cooperation through complementary industry programs; preferential trading, including reduced tariff and nontariff barriers; guaranteed member access to markets throughout the region; and harmonized investment incentives. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:30:28 GMT |
|
| NAFTA to FTAA or SAFTA? |
Initially NAFTA was envisioned as the blueprint for a free trade area extending from Alaska to Argentina. The first new country to enter the NAFTA fold was to be Chile, then membership was to extend south until there was a Free Trade Area of the Americas (FTAA) by 2005. The question now is whether there will be an FTAA or whether there will be a tri-country NAFTA in the north and a South American Free Trade Area (SAFTA) led by Brazil and the other member states of Mercosur in the south. The answer to this question rests in part with the issue of fast-track legislation and the policies of the new American president. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:27:01 GMT |
|
| CARICOM |
The success of the Caribbean Free Trade Association led to the creation of the Caribbean Community and Common Market. CARICOM member countries continue in their efforts to achieve true regional integration. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:27:01 GMT |
|
| Latin American Integration Association |
Another ambitious agreement, the Latin American Free Trade Association (LAFTA), gave way to the Latin American Integration Association (LAIA or ALADI), with new rules of organization that revitalized that group. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:27:01 GMT |
|
| DR-CAFTA |
DR-CAFTA represents another important step toward the ultimate goal of a free trade agreement encompassing all the Americas. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:27:01 GMT |
|
| Southern Cone Free Trade Area- Mercosur |
Mercosur (including Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay) is the second-largest common-market agreement in the Americas after NAFTA.
Since its inception, Mercosur has become the most influential and successful free trade area in South America. With the addition of Bolivia and Chile in 1996, Mercosur became a market of 220 million people with a combined GDP of nearly $1 trillion and is the third largest free trade area in the world. In addition, negotiations have been under way since 1999 for a free trade agreement between the EU and Mercosur, the first region-to-region free trade accord. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:24:24 GMT |
|
| Key Provisions of NAFTA |
-Market access Within 10 years of implementation, all tariffs will be eliminated on North American industrial products traded between Canada, Mexico, and the United States.
-Nontariff barriers In addition to elimination of tariffs, Mexico will eliminate nontariff barriers and other trade-distorting restrictions.
-Rules of origin NAFTA reduces tariffs only for goods made in North America. Rules of origin are designed to prevent free riders from benefiting through minor processing or transshipment of non-NAFTA goods.
-Customs administration Under NAFTA, Canada, Mexico, and the United States have agreed to implement uniform customs procedures and regulations.
-Investment NAFTA will eliminate investment conditions that restrict the trade of goods and services to Mexico.
-Services – NAFTA establishes the first comprehensive set of principles governing services trade.
-Intellectual property – NAFTA will provide the highest standards of protection of intellectual property available in any bilateral or international agreement.
-Government procurement – NAFTA guarantees businesses fair and open competition for procurement in North America through transparent and predictable procurement procedures.
-Standards – NAFTA prohibits the use of standards and technical regulations used as obstacles to trade. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:24:24 GMT |
|
| CFTA |
. To further support trade activity, the two countries established the United States–Canada Free Trade Area (CFTA), designed to eliminate all trade barriers between the two countries. The CFTA created a single, continental commercial market for all goods and most services. However, no economic or political union of any kind was involved. It provided only for the elimination of tariffs and other trade barriers. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:24:24 GMT |
|
| North American Free Trade Agreement |
NAFTA – Canada, Mexico, and the United States
CFTA came first
When NAFTA was ratified and became effective in 1994, a single market of 360 million people with a $6 trillion GNP emerged. NAFTA required the three countries to remove all tariffs and barriers to trade over 15 years, and beginning in 2008 all tariff barriers were officially dropped But, for the most part, NAFTA is a comprehensive trade agreement that addresses, and in most cases improves, all aspects of doing business within North America.
The elimination of trade and investment barriers among Canada, Mexico, and the United States creates one of the largest and richest markets in the world. Cross-border cooperation seems to ameliorate other long-standing areas of conflict such as legal and illegal immigration. NAFTA has paved the way for Wal-Mart to move into Mexico and Mexican supermarket giant Gigante to move into the United States. Other cross-border services are also thriving, including entertainment and health care. Job losses have not been as drastic as once feared, in part because companies such as Lucent Technologies have established maquiladora plants in anticipation of the benefits from NAFTA. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:24:24 GMT |
|
| European Union |
The final step in the European Community’s march to union was ratification of the Maastricht Treaty (1992)
The treaty provided for the Economic and Monetary Union (EMU) and European Union. The treaty touched on all the missing links needed for a truly European political union, including foreign policy.
Because procedures on how foreign policy and social legislation decisions are to be made are so complex, another round of negotiations, which was concluded in the Amsterdam Treaty (1997), was necessary.
Initially, the viability of a European Union was in considerable doubt. However, within months of the ratification of the treaty, the EU was expanded to include Austria, Finland, and Sweden — all members of the EEA. Norway voted not to join the EU but remains a member of the European Economic Area. Much of the concern persists even as the Economic and Monetary Union is put into place. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:18:54 GMT |
|
| Global and Multinational Market Groups |
The globalization of markets, the restructuring of the Eastern European bloc into independent market-driven economies, the dissolution of the Soviet Union into independent states, the worldwide trend toward economic cooperation, and enhanced global competition make it important that market potential be viewed in the context of regions of the world rather than country by country.
Within Europe, every type of multinational market grouping exists. The European Union, European Economic Area, and the European Free Trade Association are the most established cooperative groups. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:18:54 GMT |
|
| Commonwealth |
A commonwealth of nations is a voluntary organization providing for the loosest possible relationship that can be classified as economic integration. The British Commonwealth includes Britain and countries formerly part of the British Empire.
Two new political unions came into existence in the 1990s: the Commonwealth of Independent States (CIS), made up of the republics of the former Soviet Union, and the European Union (EU). The European Union was created when the 12 nations of the European Community ratified the Maastricht Treaty. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:18:54 GMT |
|
| Political Union |
A political union is the most fully integrated form of regional cooperation. It involves complete political and economic integration, either voluntary or enforced. The most notable enforced political union was the Council for Mutual Economic Assistance (COMECON), a centrally controlled group of countries organized by the Soviet Union. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:18:54 GMT |
|
| Common Market |
A common market agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations. Thus a common market is a common marketplace for goods as well as for services (including labor) and for capital. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:16:06 GMT |
|
| Customs Union |
A customs union represents the next stage in economic cooperation. It enjoys the free trade area’s reduced or eliminated internal tariffs and adds a common external tariff on products imported from countries outside the union. The customs union is a logical stage of cooperation in the transition from an FTA to a common market. The European Union was a customs union before becoming a common market. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:16:06 GMT |
|
| FTA |
A free trade area (FTA) requires more cooperation and integration than the RCD. It is an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries while members maintain individual tariff schedules for external countries. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:16:06 GMT |
|
| Regional Cooperation Groups |
There are five fundamental groupings for regional economic integration, ranging from regional cooperation for development, which requires the least amount of integration, to the ultimate integration of political union.
The most basic economic integration and cooperation is the regional cooperation for development (RCD). In the RCD arrangement, governments agree to participate jointly to develop basic industries beneficial to each economy. Each country makes an advance commitment to participate in the financing of a new joint venture and to purchase a specified share of the output of the venture. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:16:06 GMT |
|
| Cultural Factors |
But, generally, cultural similarity eases the shock of economic cooperation with other countries.
The more similar the culture, the more likely an agreement is to succeed because members understand the outlook and viewpoints of their colleagues. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:12:02 GMT |
|
| Geographic and Temporal Proximity |
Although geographic and temporal proximity are not absolutely imperative for cooperating members of a customs union, such closeness does facilitate the functioning of a common market.
Indeed, the most recent research demonstrates that more important than physical distance, are differences across time zones.
That is, trade tends to travel more easily in north–south directions than it did in ancient times.
Countries that are widely separated geographically have major barriers to overcome in attempting economic fusion. However, with increasing efficiencies in communication and transportation, the importance of such factors appears to be waning. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:12:02 GMT |
|
| Sate Sovereignty |
State sovereignty is one of the most cherished possessions of any nation and is relinquished only for a promise of significant improvement of the national position through cooperation. Economic considerations are the basic catalyst for the formation of a customs union group, but political elements are equally important
The uniting of the original European Union countries was partially a response to the outside threat of the Soviet Union’s great political and economic power; the countries of western Europe were willing to settle their “family squabbles” to present a unified front to the Russian bear.
The communist threat no longer exists, but the importance of political unity to fully achieve all the benefits of economic integration has driven European countries to form the Union (EU). |
0 |
blairstonecipher Mon, 06 Feb 2012 04:12:02 GMT |
|
| Political Factors |
Political amenability among countries is another basic requisite for development of a supranational market arrangement. Participating countries must have comparable aspirations and general compatibility before surrendering any part of their national sovereignty.
State Sovereignty |
0 |
blairstonecipher Mon, 06 Feb 2012 04:12:01 GMT |
|
| Demise of LAFTA |
The demise of the Latin American Free Trade Association (LAFTA) was the result of economically stronger members not allowing for the needs of the weaker ones. Many of the less well known attempts at common markets have languished because of economic incompatibility that could not be resolved and the uncertainty of future economic advantage. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:07:39 GMT |
|
| Nations with Complementary Economic Bases |
Nations with complementary economic bases are least likely to encounter frictions in the development and operation of a common market unit.
However, for an economic union to survive, it must have agreements and mechanisms in place to settle economic disputes. In addition, the total benefit of economic integration must outweigh individual differences that are sure to arise as member countries adjust to new trade relationships. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:07:39 GMT |
|
| Markets are Enlarged Through |
Every type of economic union shares the development and enlargement of market opportunities as a basic orientation; usually, markets are enlarged through preferential tariff treatment for participating members, common tariff barriers against outsiders, or both. Enlarged, protected markets stimulate internal economic development by providing assured outlets and preferential treatment for goods produced within the customs union, and consumers benefit from lower internal tariff barriers among the participating countries. In many cases, external as well as internal barriers are reduced because of the greater economic security afforded domestic producers by the enlarged market. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:07:39 GMT |
|
| Recent Creation of Multinational Groups |
The cooperative agreements among European countries that preceded the EU had their roots in the need for economic redevelopment after World War II, the belief that economic integration created peace between and the political concern for the perceived threat of communism. Many felt that if Europe was to survive, there had to be economic unity; the agreements made then formed the groundwork for the European Union. The more recent creation of multinational market groups has been driven by the fear that not to be part of a vital regional market group is to be left on the sidelines of the global economic boom of the 21st century. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:07:39 GMT |
|
| Successful Economic Union |
Successful economic union requires favorable economic, political, cultural, and geographic factors as a basis for success. Major flaws in any one factor can destroy a union unless the other factors provide sufficient strength to overcome the weaknesses.
In general, the advantages of economic union must be clear-cut and significant, and the benefits must greatly outweigh the disadvantages before nations forgo any part of their sovereignty.
In the past, a strong threat to the economic or political security of a nation was the impetus for cooperation. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:04:31 GMT |
|
| Regional Trading Blocs |
Governments and businesses worry that the EU, NAFTA, and other cooperative trade groups will become regional trading blocs without trade restrictions internally but with borders protected from outsiders. But as each of these trade groups continues to create new agreements with other countries and groups, the networked global economy and free trade are clearly on the ascendance. The benefits are clear for consumers; however, global companies face richer and more intense competitive environments. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:04:31 GMT |
|
| Economic Cooperative Agreements |
The world is awash in economic cooperative agreements as countries look for economic alliances to expand access to free markets.
Indeed, part of the 192 member countries in the United Nations efforts include mutual economic development; and, of course, the World Trade Organization with its 151 members and 31 observers is wholly dedicated to make trade among nations more efficient. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:04:31 GMT |
|
| Multinational Market Regions |
The evolution and growth of multinational market regions — those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers — are the most important global trends today.
Organizational form varies widely among market regions, but the universal goals of multinational cooperation are economic benefits for the participants and the associated peace. |
0 |
blairstonecipher Mon, 06 Feb 2012 04:04:31 GMT |
|
