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Multinational Market Regions and Market Groups

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Presentation on theme: "Multinational Market Regions and Market Groups"— Presentation transcript:

1 Multinational Market Regions and Market Groups
Chapter 10

2 Multinational market regions
Defined: “Those groups of countries that seek mutual economic benefit from reducing interregional trade and tariff barriers” Having the following common factors help to create a more successful economic union amongst countries: 1. Economic unity 2. (Comparable) Political unity 3. Geographic Proximity 4. Cultural similarities

3 Patterns of Multinational Cooperation
5 Groupings for regional economic integration: 1. Regional Cooperation Groups (RCD- regional cooperation development, Joint ventures) 2. Free Trade Area (NAFTA) Reduces or eliminates tariffs amongst trading members 3. Customs Union Adds a common external tariff to countries outside union 4. Common Market (EEC) Unified economy that lacks political unity (EEC) 5. Political Union (EU) Unified economically and politically

4 Global Markets and Multinational Market Groups
Europe (1st “triad region”) European Community See exhibit 10.1 & pg. 284 and pg. 285 Stages and development of the European Union (ex pg. 286) Single European Act (1987) The “White Paper” “Harmonization” EC institutions The European Commission, The Council of Ministers, The European Parliament, The European Court of Justice

5 Europe European Free Trade Association (EFTA) and European Economic Area (EEA) EFTA Countries that wish to participate in a free trade area, but not willing to join the ECC (Iceland, Liechtenstein, Norway, and Switzerland) EFTA will most likely dissolve and its members will join either EU or EEA. EEA Countries that wish to also participate in free trade area, except when it comes to their domestic farm policies.

6 Europe European Union Economic and Monetary Union (EMU)
Maastrict Treaty in 1992 Goal of treaty was to create economic and political unity (including foreign policy) in European member countries. Euro Common currency for EU Central bank was created to fix rates of conversion, print and circulate euro banknotes and coins, and cancel member states previous banknotes and coins. Treaty of Amsterdam (1997) Laid the foundation for developing a single currency and enlarging the EU into Central and Eastern Europe.

7 Europe European Union Expansion Marketing in Europe
6 Countries waiting for acceptance in 2006 Czech Republic, Hungary, Poland, Estonia, Slovenia and Cyprus EU needs to address significant issues before countries will be admitted Illegal immigrants; cheap labor; integration of agricultural industries; human rights; impact on legislative process Marketing in Europe Opportunities Market Barriers Reciprocity

8 Europe Marketing Mix Implications
Companies will have to adjust their marketing strategies in the European market by: Standardizing their prices across countries to avoid the problem of parallel imports Using the internet to market products and services Reducing the number of brands offered The Commonwealth of Independent States (CIS) 12 former republics of Russia formed after the dissolution of Russia Exhibit 10.6 pg. 295 Central European Free Trade Area (CEFTA) Same 6 countries requesting admittance into EU Economically has been successful

9 Global Markets and Multinational Market Groups
The Americas (2nd Triad) U.S., Canada, Central America, South America NAFTA Originally Canada and U.S. joined together under (CFTA) to eliminate tariffs and other barriers to trade Mexico sought the same agreement with U.S. and Canada and formed NAFTA in 1994. Requires all 3 countries remove all tariffs and barriers to trade over 15 years; but allows each country to determine tariff arrangements with non-member countries Benefits to each of the countries include Canada has an advanced industrial economy, rich resources but needs more markets to sell (consumers) U.S. also has an advanced economy, but needs resources (oil) , more market opportunity and cheaper labor Mexico needs investment, technology, exports and other economic reinforcements to infuse their economy

10 The Americas NAFTA: Key Provisions of NAFTA (ex. 10-7, pg. 298)
What is happening with NAFTA and other Latin America groups? Chile was to be the first country to enter, then membership would extend south to the Free Trade areas of the Americas by 2005 Issues that need to be addressed first include: common tariffs, U.S. seeking to integrate foreign policies Success or Failure with NAFTA (somewhat mixed) Measurable positive effects include: Trade amongst countries has grown by nearly 75%, foreign direct investment has increased; job creation has increased in all 3 countries

11 The Americas SCFTA or “Mercosur” Other Latin America Market Groups
Brazil, Argentina, Chile, Bolivia… Treaty signed in 1991 to create a common market to allow free movement of goods, capital, labor and services amongst members Second largest common market in Latin-America Most influential and successful free trade area in South America Other Latin America Market Groups CACM, CARICOM, LAIA, (see exhibit 10.8 pg. 302)

12 Global Markets and Multinational Market Groups
Asian Pacific Rim (3rd “triad region) Trade Groups 1. Association of Southeast Asian Nations (ASEAN) 2. Asia-Pacific Economic Cooperation (APEC)

13 Global Markets and Multinational Market Groups
Africa 1. Economic Community of West African States (ECOWAS) 2. Southern African Development Community (SADC) See exhibits pgs Middle East Arab Common Market Economic Cooperation Organization (ECO) Organization of the Islamic Conference (OIC)

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