1. Understanding Economics Advanced Marketing
Competency 51: Analyze Evolving Economic Systems
Competency 52: Describe Impact of Global Marketing on Business in America

2. Analyzing Evolving Economic Systems
Knowledge Required to Conduct Analysis:
Understanding of the types of economic systems
Advantages and disadvantages of each type
Understand definition of global marketing
Understand impact of economic interdependence among nations resulting from evolving economies

3. Types of Economic Systems
Market Economy
Mixed Economy
Command Economy
Custom-based Economy
Economic systems are developed by each nation based on resources of the country and how the nation wants to answer three basic questions in how to use those limited resources

4. Market Economy
Market (consumers and businesses) answers the three basic economic questions:
What will be Produced- through purchases in marketplace
How products produced- businesses decide this; competition spurs businesses to be efficient and produce to be price competitive
For Whom to produce- produce for who has money to purchase
In a Pure Market Economy There is No Government Intervention

5. Command Economy Government answers the basic economic questions:
What will be Produced- one person; dictator of group of government officials based on what they believe is important
How products produced- government owns all property and therefor controls how goods and services produced
For Whom to produce- government decides this; in principle wealth is shared equally to meet basic needs
The individual/companies have no input

6. Traditions and rituals answer the three basic economic questions:
Traditional Economy
Traditions and rituals answer the three basic economic questions:
What will be Produced- based on the traditions- no choice in what to produce Ex: farming community that has farmed for generations
How products produced- bound by tradition- uses practices from generations
For Whom to produce- Tradition regulates who buys and sells and where and how exchange takes place
Cultural and religious practices passed down from one generation to another is basis for decisions

7. Mixed Economy No economy is purely traditional, market, or command
Every economy has influences that make it somewhat mixed
Meaningful classification of economic systems is made based on how much a government interferes with free market
Three political philosophies shape world economies: Capitalism, socialism, and communism

8. Number of social services does not match that of
Capitalism
Focus on:
Marketplace competition
Private ownership of business
Embraces principles of free enterprise (Private ownership, Risk, Profit, and Competition)
Government is concerned about people and cares for those who cannot care for themselves
Number of social services does not match that of
a socialist country

9. Communisim Government controls factors of production
No private ownership of property or capital
Theory is that goods owned in common (by government representing the community as a whole) are available to all as needed and that society is classless

10. Socialism
Originally referred to a system on its way to the communist ideal of a classless society
Most socialist countries today have democratic political institutions
Differ in capitalist nations in the increased amount of government involvement in the economy
Main goal is to meet basic needs for all and to provide employment for many
Characteristics include: more social services for everyone; free or low cost medical care; high taxes for business and individuals to pay for this
Government runs key industrices

11. Economies in Transition
Changing from centrally planned (government) economy to market economy
Undergo economic liberalization (market forces set prices rather than government)
Socialist countries moving towards privatization with selling off of state-run businesses to help balance their budgets
Developing countries that are mostly poor with little industrialization trying to become more prosperous and develop infrastructure and improve education levels of their work force

12. Impact of Global Marketing on Business
Benefits and Challenges of Global Marketing
Impact of Increasing Competition on American businesses
Resources of U.S. versus those of our foreign competitors

13. What is Global Marketing?
Marketing on world-wide scale
Exporting
Franchising
Provide valuable products, solutions and services to customers locally, nationally, internationally and worldwide

14. Benefits and Challenges of Global Marketing to American Businesses
Larger markets- potential for more markets
Lower costs for production and distribution
New supplier/vendor relationships
Brand prestige
Different strategies for cultural, religious, and language barriers
Increased expenses
Loss of domestic production/jobs
Risks

15. Impact of Increasing Competition on American Businesses
Compete with low cost producers (foreign production)
Mass market retailers (Walmart, Sears, Target, Costco, Best Buy) ability for volume purchases of low cost foreign products- results in American businesses going out of business
Pricing and Distribution create more difficult environments in which to compete (Internet)

16. Resources of US Versus Foreign Competitors
Abundance of natural resources- land mass and coastlines for shipping
Entrepreneurship and Labor Diversity
Skilled Labor
Foreign Resources
Only Canada and Australia has similar resource
Low cost producers often have unskilled labor