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Global Marketing Contemporary Theory Practice and Cases 1st Edition Alon Solutions Manual 1
Global Marketing Contemporary Theory Practice and Cases 1st Edition Alon Solutions Manual 1
LEARNING OBJECTIVES
• Understand the key issues and concepts associated with emerging markets,
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• Determine which emerging markets have the most potential and why.
While most consumers are free to choose between locally made and imported products, in
domestic industry. Protectionist policies include tariffs (taxes on imports), quotas (limits
on the quantity of imports), and non-tariff trade barriers such as mandates on the quality
or the content of imported goods. While enforced with little difficulty on a domestic
European Union, member states exhibit signs of protectionism. Yet most economists
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Regional trade agreements lower trade barriers among members without having to lower
agreements, the regional agreement has become the primary means of international trade
expansion. Free trade blocs such as the North American Free Trade Agreement
(NAFTA) and customs and monetary unions, like the European Union (EU) resulted in
the removal of trade barriers between member countries, and a concentration of trade
within regions rather than globally. These regional blocks significantly influence market
entry choices due to preferential trading terms and potentially reducing the costs of
While regional economic groups have accelerated international trade flows worldwide,
flows are still concentrated in developed countries, and in particular, in the Triad nations
of the United States, the European Union and China. The U.S. is still the largest exporter
and importer in the world, but may soon lose this distinction to China. China’s newly
dominant presence in world trade has created opportunities for many countries, but also a
staunch new competitor, particularly in industries such as textiles and electronic goods.
This contributes in large part to Asia’s status as the world’s fastest growing economy. It
is likely that global investment will shift from developed nations to the world’s emerging
"Single markets" as exemplified by the EU, NAFTA and Mercosur, represent integrated
protection. Firms doing business in these regions must abide regulations established both
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by the individual country and the economic region. These regional trading blocs exist in
one of three forms: free-trade areas, customs unions and common markets.
Free trade areas eliminate tariffs and other trade barriers between member nations, while
policies toward countries outside the agreement remain unaffected. NAFTA is the most
downfall of the arrangement is the potential for diversion. In this scenario, imports
formerly destined for one country within an FTA are diverted to another member with
lesser external tariff rates. The balance of the markets encompassed in the agreement is
then accessed at a lesser cost, enhancing the competitive position of the exporter.
Another well-known FTA is the European Free Trade Area, which includes those
countries that did not opt to join the European Union. Many bi-lateral agreements are
also in existence.
A customs union contains the same provisions as a free-trade area with one major
The most advanced form of trade bloc is the common market, which combines the
provisions of a customs union with two additional criteria, the free movement of people
and capital. The largest of the common markets is the European Union. The EU seeks to
further its inter-union ties via the creation of both monetary and political unions. And,
while internal tariff barriers have been eliminated, non-tariff barriers such as production
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standards is ongoing.
The ultimate objective of the EU…the political union …requires the renunciation of
While its size and relative success in synthesizing member nations make the EU the most
referenced trade bloc, most major geographic regions have formed blocs with similar
Free trade and fair trade are distinctly different concepts. While free trade refers to the
removal of trade barriers, fair trade addresses the issue of social justice in global
economies by concerning itself with the proffering of fair prices for goods and preserving
work to promote the fair trade concept. Global marketers should be aware of the growing
Emerging markets have been identified by many economists as the global opportunity of
the future. An emerging market essentially refers to any developing country, identified by
GATT as nations with low standards of living…an obtuse definition at best. Others
assume that emerging markets are those that are transitioning to a free market economy.
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The CAGE model is relevant to a profile of emerging markets. In addition to the obvious
and developed nations. This is certainly evident in the case of corporate social
responsibility. Administrative distances are most prevalent when emerging nations are
unengaged in any type of multilateral grouping. Geographic distances exist both within
One of the fastest growing groups of emerging economies is comprised of Brazil, Russia,
India and China. These BRIC countries offer high consumer potential and that could
soon overtake the economies of the developed world. BRIC countries are not only major
sources for manufacturing, but are consumers of basic products like food and clothing,
and high technology products as well. The lower average incomes prevalent in emerging
markets may require a repositioning of products targeted to the middle class in developed
nations. Alternately, products may be adapted for sale at lower prices. Yet the sheer
growth of these markets justifies the adaptation of the marketing mix. As the BRIC
countries experience rapid economic growth, other emerging markets such as South
Korea, Taiwan and many Eastern European countries are also developing rapidly.
1. Have students pair off and prepare for a debate. At issue: are American security
interests best served by retaining domestic control over security related products and
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2. Wal-Mart is often criticized for the amount of imported Chinese goods it retails.
The large volume of imports is perceived to have a negative impact on the U.S. economy,
resulting in higher unemployment and lower wages. Take a poll of students, ideally
using clickers, Twitter or Survey Monkey so that responses can remain anonymous. The
single question? If prices at Wal-Mart were 30% higher tomorrow than they were today
as a result of a new ‘buy American’ strategy, would you be as likely to shop there?
The results may vary, but generally students will respond in the negative. This provides
an exciting foundation for class discussion regarding the real benefits and disadvantages
made more relevant to students by providing them with different hypothetical revenues
for the manufacturer. Students are then able to compare and contrast the pre-and post
diversionary revenue stream that is derived under the higher and lower tariff levels. This
also sharpens their ability to apply simple math reasoning skills to global trade scenarios.
4. The differences between various forms of political integration can often confuse
students who are being introduced to the concept for the first time; variations can seem
subtle and unremarkable. Ask, “Why is the European Union not yet considered a fully
integrated economic and monetary union? Which European Union nation(s) have not yet
adopted the Euro, and why? What challenges are the nations of the EU currently facing
with regard to the economic crisis currently afflicting several of their countries?”
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5. Individually or as a class, have students visit the nearest grocery store and identify
5 products which are marketed as ‘fair trade’ products. Most likely merchandising areas
will include coffee, tea, chocolates, rices and other grains, flowers and gift merchandise.
Students should comment on how they recognized the product(s) as ‘fair trade’ products?
Do they notice any difference in price between fair trade and ‘non-fair’ trade items in the
same category? And, now that they’ve identified fair trade options, would they be more
INTERNET EXERCISES
impact, both positive and negative, on all three participating nations. Remember to
address not just trade-related impacts, but also secondary consequences to such factors as
2. Visit the Fair Trade USA site at Fair Trade USA | Every Purchase Matters. View
the trailer of the movie, “Black Gold,” and read the accompanying article. Then consider
What does "commodity coffee" mean for producers and for consumers?
What obligation, if any, should large coffee companies have to help small farmers?
Is fair trade the answer, or is it unrealistic for the Ethiopian economy to continue to
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Why do you think efforts to help Africa have focused more on providing aid than
3. Emerging markets such as those encompassed by the BRIC nations, and more
recently the BRICI designates which also include Indonesia, are considered hotbeds of
market potential for anything and everything digital. However, the opportunities for
digital products and services vary based upon the stage of internet and digital device
availability. Research the BRICI nations’ potential for digital products online, comparing
and contrasting the products and services most likely to succeed in each. Start by visiting
http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-59401.
1. Look up export statistics for your State. Are there exports to emerging markets? If
2. Do you agree that there is little difference between emerging markets and
Student responses will vary but these are the important points that should be surfaced:
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market-oriented economy. This is not the case with all developing nations. The
implication is that emerging countries are more likely to experience rapid economic
growth and support from organizations such as the World Bank and the IMF.
• It can be said that while all emerging markets are also developing countries, not
3. You are asked by the owner of a medium sized firm manufacturing digital alarm
clocks. He thinks there is a market for his product in the BRIC countries. How would you
The consultant should look for quantified market potential indicators. These include
market size and growth rate, market intensity and consumption capacity, commercial
Several of the factors noted above, while part of an index, speak to more qualitative
issues such as cultural fit of the product and the firm (market receptivity), commercial
ADDITIONAL RESOURCES
figures/index_en.htm
BBC News World Radio and Television BBC News - World Radio and TV
http://www.bbc.co.uk/news/world_radio_and_tv/
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http://translate.google.com/translate?hl=en&sl=es&u=http://www.mercosur.int/&ei=Qb
W1Tt_HB7OjsQKZne3ZAw&sa=X&oi=translate&ct=result&resnum=1&ved=0CC4Q7g
EwAA&prev=/search%3Fq%3Dmercosur%26hl%3Den%26rls%3Dcom.microsoft:en-
us:IE-
SearchBox%26rlz%3D1I7GGLL_en%26biw%3D942%26bih%3D486%26prmd%3Dimv
ns
The Official Website of the Association of Southeast Asian Nations The Official Website
http://www.aseansec.org/
Fair Trade USA Fair Trade USA | Every Purchase Matters http://fairtradeusa.org/
Subramanian and Yvonne Zhou, “The Internet’s New Billion Digital Consumers in
Brazil, Russia, India, China and Indonesia” The Boston Consulting Group Review,
September, 2010.
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