Bài giảng International Business - Chapter eight: Economic and Socioeconomic Forces

Learning Objectives State the purpose of economic analysis Identify different categories based on levels of national economic development and the common characteristics of developing nations Recognize the economic and socioeconomic dimensions of the economy and different indicators used to assess them Discuss the importance of a nation’s consumption patterns and the significance of purchasing power parity

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Economic and Socioeconomic ForcesMcGraw-Hill/IrwinInternational Business, 11/eCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.chapter eightLearning ObjectivesState the purpose of economic analysisIdentify different categories based on levels of national economic development and the common characteristics of developing nationsRecognize the economic and socioeconomic dimensions of the economy and different indicators used to assess themDiscuss the importance of a nation’s consumption patterns and the significance of purchasing power parity3Learning ObjectivesDiscuss the new definition of economic development, which includes more than economic growthExplain the degree to which labor costs can vary from country to countryDiscuss the significance for businesspeople of the large foreign debts of some nations4International Economic Analyses (Table 8.1)Economic AnalysisWhen a firm enters overseas markets, economic analyses become more complex5International Economic AnalysisSources for Economic InformationThe Commercial officers in embassiesThe World BankThe United NationsThe International Monetary FundThe Organization for Economic Cooperation and Development6Levels of Economic DevelopmentDeveloped A classification for all industrialized nations, which are the most technically developedDeveloping A classification for lower income nations, which are less technically developed7Levels of Economic DevelopmentNewly industrialized economies (NIEs)The fast-growing upper-middle-income and high income economies of South Korea, Taiwan, Hong Kong, and SingaporeNewly industrializing countries (NICs)The four Asian Tigers and the middle-income economies such as Brazil, Mexico, Malaysia, Chile, and Thailand8Dimensions of the EconomyImportant Economic IndicatorsGross National Income (GNI)GNI/capitaIncome DistributionPrivate consumptionUnit labor costsExchange ratesInflation ratesInterest rates9Dimensions of the EconomyGross National Income (GNI)The measure of the income generated by a nation’s residents from international and domestic activityPreferred over GDPGNI/CapitaUsed to compare countries with respect to the well-being of their citizens and to assess market or investment potential10Underground economyUnderground economyThat part of a nation’s income not measured by official statisticsunreportingunderreporting11Purchasing Power ParityPurchasing Power ParityThe number of units of a currency required to buy the same amount of goods and services in a domestic market that $1.00 would buy in the U.S.Helps to make comparisons possible across economies12Dimensions of the EconomyIncome DistributionA measure of how a nation’s income is apportioned among its peopleReported as the percentage of income received by population quintilesData gathered by World BankIncome more evenly distributed in richer nationsIncome redistribution proceeds slowlyIncome inequality increases in early stages of development but reverses in later stages13Dimensions of the EconomyPrivate ConsumptionDisposable income after-tax personal income Discretionary incomeincome left after paying taxes and making essential purchases14Private Consumption Based on Purchasing Power Parity15Dimensions of the EconomyUnit labor costsTotal direct labor costs divided by units producedCountries with slower-rising unit labor costs attract management’s attention16Dimensions of the EconomyReasons for relative changes in labor costsCompensationProductivityExchange ratesInternational firms must keep close watch on labor rates around the world17Dimensions of the EconomyLarge international debts of middle- and low-income nations affect multinational firmsWhen foreign exchange must be used for loan repayment, import of components used in local production is reduced Local industries must manufacture these components or production must stop18Major International Debtors19Socioeconomic DimensionsTotal PopulationMost general indicator of potential market sizePopulation size, used alone, is not good indicator of economic strength and market potential20Socioeconomic DimensionsAge DistributionDeveloping countries have more youthful populations than do industrial countriesBirthrates decreasing worldwidePopulation of developing countries accounts for over three-quarters of world’s population21Population Growth22Forces Reducing BirthratesGovernment supported family planning programsImproved levels of health, education along with enhanced status for womenMore even distribution of incomeGreater degree of urbanization23Concern: Birthrate DeclineConcern in Developed Nations: EuropeAn increasing number of young Europeans not marryingMarriages are later, with fewer childrenBy 2025, the present 9 percent unemployment rate in the EU will be replaced by a shortage of workers24Concern: Birthrate DeclineConcern in Developed Nations: JapanBy 2025, Japan’s population aged 65 and older will make up 26.8 percent of total populationBy 2025, Japan will have twice as many old people as children25Socioeconomic DimensionsPopulation DensityA measure of the number of inhabitants per area unitproduct distribution and communications simpler and cheaper in densely populated countries 26Socioeconomic DimensionsPopulation DistributionA measure of how the inhabitants are distributed over a nation’s areaChanging population distribution: rural- to-urban shift27Rural-to-Urban Shift (Table 8.8)28Socioeconomic DimensionsIncrease in the number of working womenMay require marketers to alter promotional mixResults in larger family incomesResults in a greater market for convenience goods29Population Distribution30
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