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Chapter 2:Global Marketplaces andBusiness Centers

International Business, 4th Edition

Griffin & Pustay

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Chapter Objectives_1

Evaluate the impact of the political and economic characteristics of the world’s various marketplaces on business

Appreciate the uses of national income data in making business decisions

Discuss North America as a major marketplace and business center in the world economy

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Chapter Objectives_2

Describe Western Europe as a major marketplace and business center in the world economy

Discuss the problems facing the economies of the former communist countries of Eastern and Central Europe

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Chapter Objectives_3

Discuss Asia as a major marketplace and business center in the world economy

Assess the development challenges facing African, Middle Eastern, and South American countries

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Vital Information in International Business

Basic geography Market characteristics Culture Politics

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World Economic Activity

Triad– Japan– European Union– United States

Quad– Triad– Canada

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Figure 2.1 Shares of World’s GDP, 1970

United States36%

Canada3%

Japan7%

European Union26%

Rest of world28%

United StatesCanadaJapanEuropean UnionRest of world

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Figure 2.1 Shares of World’s GDP, 2001

United States32%

Canada2%

Japan14%

European Union25%

Rest of world27%

United StatesCanadaJapanEuropean UnionRest of world

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Classifying Countries by Income Levels

High Income Countries$9,206+ annual

per capitaincome

Lower Income Countries$725 or less annual

per capitaincome

Middle Income Countries$745 - $9,206 annual

per capitaincome

Least DevelopedLow literacy rates,

Low per capita incomeLack of infrastructure

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High Income Countries

Cluster 1:OECD member countries

Cluster 3:Hong Kong, Israel, Singapore, Taiwan

Cluster 2:Kuwait and

United Arab Emirates

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Marketplaces of North America

United States Canada Mexico Greenland Central America Caribbean islands

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Map 2.1 North America

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United States

3rd largest population in world 4th largest land mass Largest economy 2001 GDP: $10.2 trillion Prime market for lower-income

countries trying to raise standards of living through exports

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Figure 2.2 Headquarters of World’s Largest Corporations in 2000 by Country

# o

f c

orp

ora

tio

ns

Un

ited

Sta

tes

Jap

an

Fra

nce

Un

ited

Kin

gd

om

Ge

rma

ny

Ca

na

da

Ch

ina

So

uth

Ko

rea

Sw

itze

rla

nd

Ne

the

rla

nd

s

Italy

Au

stra

lia

Sp

ain

Re

st o

f wo

rld

0

20

40

60

80

100

120

140

160

180

200

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Canada

2nd largest land mss 80% of population concentrated in a

100-mile band along U.S./ Canadian border

Rich natural resources Trade with U.S. - single largest

bilateral trade relationship in world

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Advantages of Canada

Proximity to U.S. market Stability of legal and political systems Excellent infrastructure and

educational systems

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Mexico

Largest Spanish-speaking nation Federal government system Participant in NAFTA along with U.S.

and Canada

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Central America and Caribbean

Population collectively of 74 million Total GDP of $199 billion Economic development hindered

– Political instability– Chronic U.S. military intervention– Inadequate educational systems– Import limitations

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Marketplaces of Western Europe

Group 1: European Union (EU) member countries

Group 2: Other countries in region

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Map 2.2 Western Europe

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Marketplaces of Eastern and Central Europe

– Bosnia-Herzegovina– Croatia– Macedonia– Slovenia– Serbia– Montenegro

Eastern Europe– 15 countries resulting

from disintegration of Soviet Union

Central Europe– Albania– Austria– Bulgaria– Czech Republic– Slovak Republic– Hungary– Poland– Romania

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Map 2.3 Eastern Europe

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Map 2.4 Central Europe

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Marketplaces of Asia

Japan Australia and New Zealand The Four Tigers China India Afghanistan and Central Asian Republics Southeast Asian Countries

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Map 2.5 Asia

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Map 2.6 Australia and New Zealand

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The Four Tigers

South Korea Taiwan Singapore Hong Kong

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Marketplaces of Africa and the Middle East

Africa– 815 million people

– 54 countries

Middle East– Cradle of civilization

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Map 2.7 Africa and the

Middle East

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Map 2.9 South America