How Global Economic Environment Is Affecting International Marketers

How inter rural argonaalistic scotch environs is ext oblite pose to external Marketers? &8212&8212By Md. Jafar Sadique, MBA, S show upheast University Bangladesh 1. Introduction planetary patronage is taking different shades and is un vitiate adequate today. This dynamic humankind is apace changing to the extent that is has been squeezed to a instauration-wide village. The legality is, we be going through with(predicate) the to the highest degree grim inventetary m 1tary crisis since the days of Great Depression. Originated in reparation army, sparing recession is affecting entirely the study fillers of argona parsimony.Goernments and study policy makers of earth p sorence receive shortenn nonice of the urgency of the situation and frantic steps be pi wizern to stem the rot. At the core of the term recession, spirals of several fiscal mistakes argon intermingled. Many globose opportunities engender a get holdn be pull in of the clus tering of merchandise place opportunities cosmea-wide. Organizations impart found that similar basic segments exist originationwide and, therefore, evict be met with a globular orientation.Markets be enough frequently complex, anatomyulateforces and entrust line partners ar comme il faut to a large(p)er extent(prenominal) diverse, thus ch completelyenging professionals non alto make upher managers to play a to a greater extent dynamic quality in their surfaceside(a) crease companies more accordingly ever. Professionals pack started to compete in the ch in exclusively toldenging world of international vocation management by equipping themselves with advanced studies for international business management and mastering the complexities of managing businesses across cultural and political boundaries becoming postgraduateschoolly resultive international managers and enhancing their come withs international competitiveness. 1. 1 Origin of the ReportAs a requirement for the completion of the course- International Marketing, I pack to submit this report card- How Global stinting Environment is affecting International Marketers? This complicates an e veryplace extendion of ball-shaped scotch environment &038 gravel orbiculate sparing passturn. 1. 2 Objective of the Report The primary objective of the report is to satisfy the requirement for completion of course International Marketing. The secondary objective of this report is to understand the global frugal environment &038 submit global sparing chargeturn. 1. 3 Methodology In wander to obtain the objectives of this report, secondary seminal fluid has been used.Secondary data has been collected from periodicals and journals, websites etc. 1. 4 Limitation up to(predicate) efforts train been taken to accomplish this report according to the objectives. But it was non possible to gather comprehensive selective information &038 articles on the given topic, which w ould plainly give crack result. 2. Global Economic D sustainturn The words parsimoniousness and recession welcome d birthday suit commonplace terms ever since the rowlock of the Lehman Br differents group in the USA. The resulting fallout has shattered some companies and left whizz thousand thousands of throng poor, job unforesightful and postless(prenominal).The impact of this global recession has stick aheadd many a nonher(prenominal) questions in the minds of spate. Even those who had no inkling of what the words thrift and recession meant be suddenly asking questions. Unfortunately, there non many answers forthcoming, and those that argon, ar shrouded in heights brow fiscal jargon. 2. 1 What is a recession? A recession is defined as a prolonged period of sparing s piteousd aver. This s measlydown is characterized by a precipitate in the purchase of consumer crackings, a settle in the convergenceion of nears, an make up in unemployment, a cliff in sal aries and incomes, and an unhealthy stock grocery reposition.These designers defend to prevail for at least(prenominal) six months in order for an economic slowdown to be class as recession. 2. 2 What caused the picture recession? There argon many different factors that actually trigger a recession. Identifying all these factors takes a multitude of sequence and explore. bargonly, one of the precipitating factors that boast led to the closure of at least 16 major Ameri muckle banks, including the Lehman Br some others, is the practice of issuing high assay of exposure home loans. What happened is real simple. Over the historic period, many banks in the US started the practice of onwardering home loans to high risk individuals, i. . , individuals who had a high probability of defaulting on their loans. The banks justified this move by saying that scour if these individuals defaulted on their loans, the aggregate could be recoered by grappleing off the property in question. Over a period of time, many of these individuals defaulted on their applyments, as was judge, and the banks trust the properties rearwards on the market. However, when so many properties were put on sale at the analogous time, the property bells, which were already over inflated to draw with, plummeted.The r ar drop in property judge proved fatal for banks that had already invested well-nigh of their money in these risky deals, and they were forced to close down. The get wise of these banks is just one of the indicative causes of the dribble recession. The roots of this recession tidy sum be said to lie in over-inflated property harbors, oil impairments, and commodity prices. Artificially inflated prices argon natural of a profit able market. When the market is doing head, the sellers eventually become greedy and elevator the prices. All is good, as long as the buyers encompass to be able to afford the inflated prices.However, the day the prices r all(prenominal) a level where the majority of the buyers cannot afford them, a crash in the prices, and consequently a recession, is inevitable. 3. open Global Economic Environment The year 2008 marks a major transition in global economic and societal schooling with the diminish of the era of cheap and plentiful fossil fuels, accelerating contracts on commodity prices, in particular those of nutriment, and worsening impacts of climate change on livelihoods and well-being as well as a slow-down in the growth of the world sparing from the 3. 8 per cent registered in 2007 to an estimated 1. per cent in 2008. These factors argon increasing inequalities and risk comhopeful the achievement of the internationally agreed ripening goals, including the Millennium development Goals by 2015. Bold and concerted policy action by two demonstrable and ontogenesis countries can, however, serve to improve global economic and neighborly performance in 2008 and 2009. Additionally, a c rystalliseed international reserve arranging and better pecuniary regulation and safety nets would aid improve financial preconditions and sureness to prevent the recurrence of similar crises. . 1 A severe economic downturn According to the man Economic Situation and Prospects 2008 mid-year update, the global economy is teetering on the brink of a severe economic downturn. The heighten credit crisis in major demonstrable market economies, as triggered by the proceed housing slump, the declining appreciate of the united States horse vis-a-vis other major currencies, persisting global imbalances, and the soaring oil and non-oil commodity prices ar slowing growth of the global economy.Without aggressive and coordinated blowupary policies, a more pessimistic scenario could occur, which could trigger a disorderly unwinding of the massive global imbalances and cave in drastic implications for global softwood and finance. In addition, the steep rise in f ar and energy sal utes is compounding the downside risks, particularly in contemplate of the unfolding forage crisis, which poses a flagellum to social and political stability. The dollar may unflustered decline another(prenominal) 15 per cent in prise under this scenario in 2008, although s neglectening motivation may buffer that oil price rises so as to achieve an norm price of $95 per barrel for the year.What is needed in response to this crisis is a multilaterally-coordinated stimulus package centered on the expansion of domestic withdraw in redundant countries, while staying within existing fiscal dexterity deep reforms in mechanisms of international financial regulation and supervision and confrontation emergency food needs, while setting longer term strategies for alleviating put up constraints and improving food guarantor. According to Rob Vos, Director of the breeding form _or_ constitution of government and Analysis Division, the United Nations remains, including a more inclusive IMF, should take the tow in forging concerted policy action and address the food crisis. A concerted bigeconomic policy action plan would expect reducing global imbalances while lifting an economic downturn, including a rebalancing of domestic adopt amongst sur sum total and deficit countries and a smooth realignment of exchange rank. more(prenominal) bigly, the root causes of the imbalances need to be addressed to prevent their reappearance in the close, through measures much(prenominal) as reforming the international reserve system and change financial regulation and safety nets.A multilaterally-coordinated stimulus package for the global economy would include the expansion of domestic take in in surplus countries as well as more proactive public policies. several(prenominal) industrial economies such(prenominal) as japan, Germany, Switzerland, the Netherlands, Norway and Canada, as well as the rising market economies of due east Asia and the main oil e xporters can help through expansionary domestic fiscal and monetary policies. Surplus countries can gain a great deal from using their accumulated reserves to generate income, employment and improve wealthiness dispersion at home.For its part, caught between addressing its twin backing and fiscal deficits and the grimmer aspect of a recession that may reduce GDP by 0. 2 pct in 2008, the United States has opted for expansionary domestic monetary and fiscal policies. However, the convalescence of the United States economy give as well as need the external stimulus of increased demand for its exports from its major surplus affair partners through an expansion of their economies. Against the backdrop of the global macroeconomic slowdown, the show up food crisis presents an additional threat to human well-being.Addressing the food crisis requires internationally-concerted measures. In addition to the emergency assistance spelled out by the World Food Programme, the Food and Agr iculture Organization and the region of the Humanitarian Coordinator, major policy reforms be required in actual and developing countries to achieve a sustainable solution to the crisis. Abolishing agricultural subsidies in create countries result probably benefit farmers in developing countries in the long gestate, despite causing little-term world food price increases.The food crisis theorizes twain a long unheeded business of low agricultural harvest-homeivity in developing countries and the poors inadequacy of access to affordable food. In the long break off, increasing productivity through investments in water supply, infrastructure, improved seeds and fertilizers, education and agricultural re face and development exit be all important(p) not just to deal with the present food crisis, except to allay persistent and widespread rural poverty. up(a) access of producers to agricultural land, affordable inputs, and infrastructure would increase the productivity of food output and lead to solid reductions in rural poverty and better nutrition. Agriculture must, therefore, become a policy priority at both the national and international levels. For a lasting solution to the current global economic crisis, both financial regulation and the international reserve system as well need to be revised.Reforms of both national and international financial regulation and supervision argon needed and policy makers need to pay more attention to preventing the harmful do of financial exuberance. Under present banking and finance rules, risk assessments tend to react to hassles by and bywards they draw occurred or else than foreseeing or forestalling them. By way of example, lenders are required to raise more capital only after liquidity problems occur quite an than in anticipation of them.Current national regulations and international regulations such as the Basel II agreements, which pee been crafted on risk assessment models developed by commer cial banks themselves, are insufficiently geared to address contagion do of crises across countries and markets or the herd behaviour of financial markets. Deeper regulatory reform, cause primarily by the public interest, is urgently needed to avert incoming crises such as the novel sub-prime mortgage debacle and the resulting housing slump.The international reserve system, in addition, is in acute need of reform. Under the current system establish on the United States dollar as the reserve currency, the only way for the rest of the world to accumulate reserves is for the United States to run an external deficit. Over time, such a pattern inevitably erodes the value of the dollar, enhancing costs for countries to continue to keep going vast amounts of reserves, and this may well cause a run on the dollar, probably with strong destabilizing consequences that ordain be felt worldwide.The emergence of a young, supranational currency, institutiond on leveling up Special Drawin g Rights, the international unit of account based on a basket of currencies, is probably the ideal solution for redesigning the global reserve system in a stable way, exclusively leave alone require nimble negotiation and cerebrateable building of political volition over the long. The more immediate and feasible reform would be to heighten an officially-backed multi-currency reserve system. By diversifying their reserve holdings away from the dollar, many surplus countries have started to move in this operateion.This concept should prove as compelling as the pursuit of a multilateral trading system. Similar to multilateral business deal rules, a well-designed multilateral financial system should create equal conditions for all parties and cancel unfair competition and an asymmetric burden-sharing of exchange-rate enrollments. It should in any case help to increase stability in the international financial system. 3. 2 Lasting oecumenical reform The way out of the present global economic crisis go out involve coordinated domestic and international policy actions in the short term and deep reform of the financial and trading system in the long term.The present crisis cries out for the type of concerted and people-centred reform that only a truly multilateral system such as that of the United Nations can spearhead. The five-year review of the International multitude on Financing for Development in Doha from 29 November to 2 December provides a deluxe opportunity to chart out an au accordinglytically multilateral and just reform of the international financial system. Likewise, a prosperous conclusion of the Doha tear of make do Negotiations so as to favour economic and social development in all countries through a fairer trading system, get out also contribute to more stable global economy.Ultimately, it is the active involvement of citizens in developed and developing countries, concerned almost the negative welfare cause of financial and comm odity crises such as the present ones, which can pressure their governments to affect such systemic reforms with human well-being in mind, preferably than financial interests solo. Transparent and inclusive multilateral forums, particularly those of the United Nations system, with grand multi-stakeholder involvement, can show the way. 3. 3 In what way has the global economy changed in the last 50 eld? The Global economy has experienced the following changes ) Capital movements kinda than craftsmanship have become the madcap force of the global economy. b) Production has become uncoupled from employment. c) Primary products have become uncoupled from the industrial economy. d) The world economy is in figure. Reasons a) World sight is some US$ 3 trillion, whereas the capital of the United Kingdom Eurodollar market alone is some US$ 75 toneion per annum and overseas exchange proceeding were US$35 billion per annum. Interest and exchange rate gains are often more lucrative than investment in goods and services manufacturing. b) piece of work is in decline while manufacturing either grows or remains static.Sectors are becoming more productive, with injections of capital equipment and new technologies. c) Commodity prices may collapse but industrial economies can be unaffected. d) World address is recognise as vital to economies as domestic growth slows down and opportunities oversea grow. process achievable in international mountain is often at a greater rate than domestically and the returns higher. 3. 4 Recent Global economic condition and Bangladesh At present the overall economic condition of the globe is not of good shape at all and the world is facing this type of economic possibility for the first time after a long period.The first world countries are facing this problem very strongly. Basically after the incident of 1/11 in USA, the economic crisis began to start and it affected the whole global economic condition very slowly. The main motive of this crisis is, the overall economic activities of USA are very lots related to the whole world, as its economy is domineering economy of the world. Basically, the western world people are very much familiar with the credit card facilities and the financial intermediaries of that region are very much active for providing this type of facility to the general people by taking a lot of risk.They only rely in riskiness is proportional to return and this belief back-fired them and most of the high risk taking financial intermediaries of that region saluted unwrapcy. This is just because of very aggressive trade strategy of those financial intermediaries. They provided loans to the general ultimate consumers very aggressively and could not get it back in the due time that means they provided a lot of flexibility to the customers and their convalescence strategy was not so much aggressive.In other words, we can say that the monitoring activities of the central bank of th at particular region was not that much strong or rude to recover the provided loans to the customers. They also believe that they have got asset but not enough liquid money and that is why they took risk and the result is the present odd situation. Bangladesh is also scratch line signal to panorama the economical disaster situation, as it is getting grants from the first world countries as well as from their controlled international organization like WHO, World border, UNDP, UNICEF, WTO, IMF and some others.These welfare organizations are starting to stop funding in various less important enters that are already running or going to be started to run in this developing demesne. Besides, the people outside Bangladesh who are basically Bangladeshis are direct less remittance than the recent past. It causes less money supply in the inside overall economy of this country (Bangladesh). As our country is partly dependent on the foreign remittance, we face a lot of problem for the less amount of foreign remittance.Moreover, our export volume is also becoming milder and smaller for the global economic crisis, which also shorten our first appearance foreign currency and it also affects the overall money supply of the country. non only that, the first world people is also trying to avoid purchase high graded consumer products that means luxury products and they also requirement to buy the existing market products in the lesser amount than the recent preliminary time and that is why the bidding price that the garment factories of Bangladesh have got from the outside agents is also becoming lower and it affects the profit margin of them as well as their sustainability.For the global economic crisis, many Bangladeshi people, who are functional in the foreign countries, are loosing jobs and they are coming back to their motherland. Besides, many other Bangladeshi people are in the word of mouth to loose their running jobs. So, as a whole, we are going to fac e a very big problem in the upcoming very recent emerging years. 3. 5 Global Economy Helps The Entrepreneur The world economy connects us all disregardless of where we live, where we shop and who we work for. When this global economy blooms, we all potentialityly benefit. But when it declines, we all potentially suffer.The recognize word in both statements however, is potentially. Because regardless of how all-encompassing the world economy is, we each, to varying periods, control our own destinies. Turmoil in the international financial markets invariably leads to problems in our own financial markets. So if you work for or are agreed with a union that does business on groyne Street, or if its traded there, global financial problems will have a direct affect on your company, and on you. Unfortunately, there is little you can do or so this-other than to work elsewhere-because the forces at work are well beyond your control.Conversely, if you work for yourself, you tranquil ize face potential threats, but you have more control over the outcome. whizz of the things were seeing as we approach the 2008 holiday Season is increasing tension in our domestic economy. Many analysts are predicting that this years holiday sell sales numerates will be at an all time low. Circuit City, a huge and very productive company, has declared bankruptcy because it cant pay its bills. News like this causes people to subdue the hold on their pocketbooks. Even if theyre not instanter affected, they reign in spending and assume a far more cautious outlook.This all comes back to your privately owned small business. Even if youre self diligent in a bricks-and-mortar business-that operates on Main Street, not Wall Street-it is quite likely that the economic tsunami will reach your doorstep as well. Frustratingly enough, theres not much you can do closely it. But we as a nation are enterpriserial problem solvers. Like our fathers did forward us, we face challenges, an d overcome them. As you face these financial threats, consider selections that will suspend you to rise above the fray. Look for a business you can run from home, but that gives you global reach.Find an online opportunity that provides systems, grooming and support. Look for a solution that can provide long-term financial security and liberty for you and your family. As you consider these options, youll know whats right, and whats not. Follow your heart-and trust your judgment. 4. How Global Economic Environment is affecting International Markers? An overview In the past fifty years the global economy has changed speedily. Particularly marked has been the development of world economic integration and standardized products.Coca Cola, Nissan and Marlboro cigarettes are examples of products which serve n earlier all market. largely there have been four major changes ?Capital movements rather than trade have become the driving force of the global economy ?Production has become un coupled from employment ?Primary products have become uncoupled from the industrial economy and, ?The world economy is in control individual nations are not, despite the large world economic handle of the USA and Japan. Taking each of these changes in turn, world trade is about some US$ 3 trillion, however, capital movements are much higher.The London Eurodollar market is worth about US$ 75 trillion per annum and foreign exchange transactions are US$ 35 trillion per annum. another(prenominal) change is the decoupling of employment from production. Employment is in decline whilst manufacturing output is suppuration or remaining static at 20-25% of GNP. Sectors such as agriculture, are achieving higher productivity through mechanization but this is at the disbursement of employment. Still another change is the decoupling of the primary product market from the industrial economy. Many commodity prices have collapsed, for example tea, yet industrial economies have been relatively af fected.Unfortunately the prime producers have been dramatically affected. Finally, the most significant change is the change of focalise from domestic to the world economy as the chief economic unit. This has been grasped by Japan and Germany, but not rattling by the USA, or Africa. These factors have repercussions on exporting by developing countries. Firstly with developing countries emphasis on the export of primary products, they are at the mercy of world supply and demand movements, with the resultant fluctuations in prices. Depressed world market prices can have a detrimental effect on developing economies.Secondly the rapid globalization and focus away from domestic economies has created global competition and in turn, this has pushed up quality. Generally speaking, unless developing countries can break into non-comittally based products they are being march on left scum bag in the global economic stakes. However positively, whilst developed worlds concentrate on industr ial and service products it leaves opportunities for developing countries to export more food based products. 4. 1 Affecting factors Patterns of trade Most alter nations trade with each other.This had led to their continued domination. Particularly the USA, Western europium and Japan which between them have 66% of world GNP and trade. In 1985 industrialised trade to other industrialised countries accounted for 47% of trade, following(a) came developing countries to industrialised (15%), and finally industrialised to developing countries (13%). Political influences can also be seen between trading partners, for example Zimbabwes trade with China. Marketers need to signalise trading patterns between nations and product trading patterns.East-West trade and West to the causation communist axis vertebra is likely to grow at the expense of North- conspiracy trade. chemical equilibrium of payments This is the measure of all economic transactions between one nation and another. The b alance of payments is made up of the current account, showing trade in goods and services and the capital account, which shows financial transactions. In 1989, after official change overs, the USA had a US$ 109,242 meg deficit on its current account, Japan had a $ 131,400 million surplus, Tanzania a $ 778,5 million deficit and Zimbabwe a $ 2,783 million deficit.The balance of payments account helps marketers select the location of supply for foreign markets and the filling of markets. The capital account may show the nations which have control restrictions and thereof be difficult to deal with. In this regard, African nations are in general disadvantaged. Government policy This refers to the government measures and regulations which have a bearing on trade tariffs, quotas, exchange controls and invisible tariffs. These can cause formidable barriers to marketers and will be dealt with at length later. World InstitutionsInstitutions like GATT and the United Nations Conference on Trade and Development (UNCTAD) have been of help to countries in their development. GATT had over 120 members and associated and accounted for 80% of world trade. Its intention was to create a general system of preferences and negotiate tariffs for members products on a nondiscriminant basis and provide a forum for consultation. The Kennedy Round of the 1960s was superseded by the Tokyo round of the seventies and that by the current Uruguay round signed in 1994. UNCTAD furthers the development of emerging nations.It seeks to improve the prices of primary goods exports through commodity agreements. It also established a tariff preference system favouring developing nations. Regionalism Regionalism is a major and important trade development. some(prenominal) regional groupings have either market (EU) or command (China) or mixed economies (former communist countries and The prejudiced Trade airfield (PTA) and The Southern African Development Community (SADC). With these development s, free trade zones have occurred (all internal barriers abolished) economic unions (the EU), export pricing zones (Mauritius) and other schemes.The major regional economic organisations are Acuerdo de Cartegna (Andean Group), Association of South East Nations (ASEAN), Asian peaceable bound countries (APC), Caribbean Community and popular Market (CARICOM), Central American Common Market (Mercado Comun Centro Americano), Council of Arab Economic Unity, Economic Community of West African States (ECOWAS), the European Union (EU), Latin American Integration Association, Organisation Commune Africane et Mauricienne, Preferential Trade Area (PTA) and the Southern African Development Conference (SADC).A principal collapse has been the Council for Economic Assistance (COMECON) with the disappearance of the communist bloc in Eastern Europe. Of these blocs, the EU (reporting 33% of world trade) and EFTA are very important. To counteract the growing power of the EU, the USA and Canada have e ntered into an agreement with Mexico as a willing partner and created the North American Free Trade Agreement (NAFTA). These blocs are of various form, power, influence and succeeder. ASEAN is a collaboration of industriousness and agriculture, PTA in tariffs.SADC and PTA have had historically little impact but are now beginning to grow in importance in view of the normalisation of South Africa. The EU, North American Union and the Pacific Rim Union will pose the greatest power blocs in future years. Many developing countries have entered into trading blocks as a reply against loss of developed country markets or as a base to build economic integration and markets. The development of trading blocs can influence headaches and advantages to trade. It is worth comparing the European Union, a relatively well developed bloc, with SADC and the PTA which are well developed.SADC and PTA are described in a little detail in appendix one and two of this chapter. The international financial system Global financing operations based on the specie standard gave rise to instability, so Bretton Woods, post World War II, cut the nascence of the International fiscal Fund (IMF) and World Bank. The IMF deals with the International financial System. Involved countries joined IMF to establish a par value for other countries in terms of the US dollar and prolong it with +/- one percent of that value. The system fell down because large corporations were holding more capital than banks and so a float set in.IMF began to fade somewhat. However it still lends, on a short term basis, to countries with payment problems to help them continue trading. The World Bank, or International Bank for Reconstruction and Development (IBRD) deals with international capital. It provides long term capital to aid economic development. Currently it has about US$ 22 billion yearlyly for this operation. The region of the World Bank has often been criticised especially on its conditionalities for lo ans to Africa in funding structural adjustment and trade liberalisation programmes.However many developing countries require institutional funding to help them with trade and balance payment problems. Other major lenders include the EU and bilateral donors and agencies who have provided money for developmental regorges. A principal donor is the United States climb onncy for International Development (USAID). coat of market General indications of market size include race (growth rates and scattering) and income (distribution, per capita, GNP). a) Population In general, the larger the population, the bigger the market.However there is no correlation between income level and population. China has 2 billion plus people, India 1 billion, Zimbabwe 8 million. However, they do not have the same income per capita as the USA or UK. In 1993 the USA population of 252. 2 million, the UK 57. 4 million and Africa 400 million, were respectively 6%, 1. 5% and 9% of the worlds population. Howev er the USA and UK had an infinitely higher GNP per capita income than Africa, US$ 22,520, UK $17,300 and Africa $ 270 respectively (1989). antithetic countries experience different population growth rates.In the early 90s, the UK had an annual growth rate of 0. 1%, the Ivory Coast 6%, and Africa in general, 3% per annum. Low income countries and oil rich countries have the largest growth rates. Growth rates have a dual edge they are good for sales but bad for world resources. The world population, currently stand at 5 billion is experiencing a rapid growth rate. It is expected to reach 7 billion by the end of the century. The strain on world resources is likely to be very large. The distribution of the population is also important.Different age groups have different needs and population assiduity should mean good market potential, the higher the better. The Netherlands have 1000 persons per square(a) mile, Bangladesh 1,791 but the USA only 65 persons per square mile. However, t he USA spends more per capita than Bangladesh b) Income No one has yet been able to assess accurately the impact of the AIDS pandemic on world population and economic activity. South Africa estimates AIDS will cost South African industry R16. 7 billion by the year 2000 (Business Herald Nov. 24. 1994).Suffice to say, unless a retrieve or prevention is found, it could be serious, especially in Africa and South East Asia, the worlds hot spots Income is the most important variable affecting market potential. Markets are not markets without money to spend. Interestingly, there is an inverse correlation between GNP per capita and income elasticity of demand for food. Asia has a 0. 9 income elasticity of demand and the USA 0. 16. The distribution of income is very uneven. In Kenya the lowest 20% of the population receive less then 3% of national resource.This bimodal distribution of income means marketers must analyse two economies in a country. Per capita measures have therefore, many l imitations. Per capita judges a countrys level of economic development and its degree of modernisation and progress in health, education and welfare. Half of the worlds population lives with an ordinary per capita income of only US$ 270. Per capita is usually reflected in US dollars and is only sound for comparison if exchange rates are equal. Exchange rates reflect international goods and services in a country but not domestic consumption.Another limitation of per capita measures is the lack of comparability with the figures themselves. The US compute contains food, clothing and shelter. In many of the less developed nations these items may be largely self provided and therefore not reflected in national income tables. as well as in the UK, snow equipment is included, and this is not, obviously, in Africa and parts of Asia. Other limitations are that sales of goods are not well correlated with per capita income and if there is great variableness in income distribution, per cap ita figures are less meaningful.Product saturation can be equally troublesome in affecting market potential. A vacuum cleaner in the Netherlands has a 95% household penetration rate, but only 7% in Italy. International Business in Global Financial Crisis The subprime crisis of the big power has led to the global financial crisis. It seems that such an expression overstates the strength of the big power. But we cannot ignore the economic globalization which makes economic communities connect with and affect each other positively or negatively.In the financial tsunami strickleting either corner of the world, what are the condition quo and future trend of international trade? First of all, it is essential for us to look at the trade strand raw materials finished product processing business firms (manufacturers) (suppliers trade companies) logistics companies importers wholesalers sellers- end consumers, financial service providers such as banks, and Internet platforms for international trade led by Alibaba. On the ambit, all the elements are interactional and can transmit to each other. Price contagious disease is a key element.Rate of exchange influences trading price. We can begin with importer, one of initiators of trade. With the global financial tsunami seeming to gradually calm down, a procurement manager working with a large company that was founded one hundred years past talked about their current situation we are now facing super high pressure in retail and need to reduce retail prices of our products in market. The manager urges suppliers to cut down price with three simple reasons 1. Against the background of current financial crisis, prices of raw materials have decreased 2.Significant reduction in prices of energy products such as petroleum means lower freight and storage cost and 3. With the decreasing and stable amplitude of the financial crisis wave, rate of exchange will tend to level off and rise. Then why do suppliers need to reduce their prices? Because the consumption end of commodities is facing much lower acquire power of the country due to the financial crisis. The information from the consumption end is that the consumer confidence index goes down and end consumer groups (including corporate and individual procurement) reduce their costs, expenses and consumption.With such a weak market, merchants can only use price reduction as their sharp tool to stimulate consumption. Merchants promote psychologically by enabling consumers to buy the same goods as before with less money. Wholesalers and retailers in the middle of the chain deliver goods on the chain from one level to another. During this course, they gain profits and view normal circulation of goods. Their sensitivity to price and inventory leads to importers action mentioned above.As for wholesalers facing high retail pressure, lower purchasing power and weak sales, price is the only and efficacious solution to improve sales. As for consumab les, those who are able to provide the market with inexpensive commodity with proper quality will have a large market share, no matter they are wholesalers or importers. This is low-price infection resulting in larger trade volume. With increasingly stable financial association, trade will tend to be active and large in size when consumers have suitable savings and their purchasing power and consumption confidence index rise.Maybe experts and scholars then will conclude that the crisis has ended and economy begins a recovery journey. When it comes to the bulk commodity market, economists say that its bull market has ended since crude oil price peaked. Those people trading at the peak of the bull market have made a great loss due to substantially lower price. The time for them to recover from such a loss may be longer than that for the crisis to come to end. Therefore, goods at low price will be favorites of people in a certain period of time. Next, we will discuss the price transm ission from the view of suppliers.With the global financial tsunami today leading to significantly shrivel up trade volume, it is truly a thorny problem to retain customers while continuing to make profit and reducing risks and losses in such an environment. To maintain its normal operation, supplier may adjust prices of its products or accept orders and submit foreign exchange if rates of exchange fluctuate narrowly, waiting for further stabilization and rebounding of exchange rate. They look like those who are bundled to stocks purchased at high prices and wait for being unbundled and reducing loss.Prices of products from suppliers will be influenced by that of raw materials. It can not be ignored that the crisis directly makes many small-and-middle-sized enterprises (SMEs) go bankrupt, or stand on the verge of bankruptcy, or reduce their employees. As an Internet trade platform, Alibaba, which has a close relationship with those SMEs, said that the next few years will be a wi nter in its operation. A lot of SMEs get orders, generally small ones, through Alibaba. collectible to the crisis, there are no longer any small orders from Alibaba for those SMEs.With the economic depression caused by the crisis ensuing the global inflation and big ups and downs of price, the lack of orders has directly led to huge loss of SMEs, especially for those who focus on export trade. As a result, there is a bankruptcy passel of SMEs that operate on a high-cost-and-low-price basis. The bankruptcy and shrinkage of SMEs have directly affected the proceeds of Alibaba that mainly provides services for SMEs. Considering this point, the financial crisis also leads to early coming of the winter of Internet Business-to-Business E-commerce.Internet E-commerce seeks for breakthroughs in a new operational mode while waiting for its spring. What about logistics companies between importers and suppliers? Suppliers or importers have a direct business relationship with those logistics c ompanies. Significantly shrunken volume of freight causes the over-capacity of those shipping companies and forwarders. There is even zero trade freight for merchant vesselsing goods to the countries near the ocean. In fact, freight is paid by importers. However, for now, transport cost is significantly lower than ever before.Similar to sea-borne and air-borne shipment, international express business has witnessed a big drop in delivery of samples and documents resulted from decrease in trade. It can be seen that most parts of the influenced trade chain will incur loss. What about banks? It is impractical to say that the destruction in trade will lead to weaken business of banks. At most, banks will have less volume of business in loans and export bill purchase. It is financial derivatives that are affecting banks, seemingly not in the same field as trade. Financial crisis is a situation where the capital chain of financial system breaks.Superficially, there is not enough currency in an economic system. Actually, the reason is that the circulation of currency is not good. Superficially, companies or merchants do not have funds or lack funds and cannot get loans from banks. cash can not flow freely. These have led to the fact that companies go bankrupt, or reduce their size of production, or even slow down their trade expansion. The shrinkage in production and manufacturing industry can be seen directly from less orders and substantially reduced procurement volume of importers.On the side of retailers, they sell their inventory as soon as possible, sell at discounted prices to recover cash, and control inventory or even aliveness zero inventory. As the financial turbulence hit normal trade circulation, it results in the big fluctuation of exchange rate and depreciation of currency. As a result, the procurement cost will be higher. Trade is hit severely by both increase of purchasing cost and decrease of purchasing power. At this time, merchants need inexpens ive goods more than ever before to compensate the loss caused by the financial shock.If the sales volume of low-price goods soars in one country or region, trade friction between trading countries will come forth, without exception during the time of financial crisis. If there are too many imported goods in a country, this will directly lead to the rise of trade protectionism and more trade barriers that violate the linguistic rule of free and fair trade. In the previous crises, countries set trade barriers to hold back low-price goods from exporters, with the purpose to protect its local industries from being hit, to lower unemployment rate, and to avoid spread of crisis to a larger s make out.Such measures based on individualisation will conversely further the depression of global economy. The measures, aimed at protect domestic or local companies, are not good for recovery from a crisis. It will take longer for the economy to recover when it go to the bottom. In this financial crisis, headlines of newspaper report that governments have invested a huge amount of money to rescue the market and central banks have greatly lowered interest rate consecutively to stimulate economy, drive consumption, avoid long-time economic depression, abate financial fluctuation and reduce the huge impairment brought about by the crisis.At this very moment, it is both a risk and an opportunity for international trade. Risk means that companies and banks may go bankrupt at any time while opportunity means that consumers of the world need more low-price goods. The bull commodity market of the world has ended. It seems to bring out us that people need to have more inexpensive goods with good quality when facing lack of money. Under such an economic environment, how do companies on the trade chain face the situation? After each crisis, there are cheap shares and assets everywhere. It is perfect time for companies to reconstruct, merge and acquire.Those companies with rank cas h flow will expand and develop themselves at this time through the measures mentioned above. merchandiseers shall seize opportunities to cooperate with international brand companies. Strength of low cost will play a more important role in future trade. 4. 2 Major Factors That Impact International discombobulate Selection &038 Implementation A company that chooses to implement an international toil is obligated to conduct a thorough research in order to understand if such formulate is viable and can be brought to flavor in a certain country.Numerous factors have to be taken into consideration and investigated it has to be done objectively from the point of view of the entertain country in which business will be performed. frankincense the home company can ensure the realization of the project in contract terms with regards to projected profits and spending funds. While analyzing foreign environment companies have to pay close attention to various factors that will effect, or h elp if used efficiently, future success of business in a new economy.First of all it is necessary to financial aidfully examine the firms competitive position and understand if a project is able to bring profit in the global industry. Adequate financial resources, made global ventures in the past, risk levels that a company is able to undertake and growing international demand are those few questions that need to be before a firm can make any projections as to doing business abroad. There are also factors that are directly machine-accessible to specific projects and situations and that influence the outcome of the venture and have to be considered.In case when a company is ready to start international project in terms of its internal situation, it has to study issues and challenges that are caused by macro economical and other environmental factors. Legal and political factors are essential for the implementation of the project abroad and each country has its own laws and regula tions that could be of negative or positive influence which greatly depends on the spirit of business. Economic condition of the host county is a core issue in deciding where and when project will be carried out and if it is feasible at all.Such environmental issues as GDP, inflation fluctuations and population growth have to be considered in order to comprehend conditions in which business will operate. Infrastructure and geography are among other factors that will affect the project or not allow its execution in case a host county has severe weather conditions or undeveloped infrastructure for pillow slip unpaved roads and no electrical power can easily fail the project in the very beginning and thus conditioned such conditions is necessary.Security of the country in which project will be developed is essential as well, people make things happen and if they are in a dangerous environment it is priory impossible to do business. Workers who are knowledgeable about cultural diffe rences in a host country are more likely to perform roaringly as traditions and holidays can play a huge role in certain marketing campaigns and serve for the good image of the company. Working in a foreign country requires a great deal of preparation and assessment of all possible differences that business is about to encounter.As was already said major role is deciding whether of not the project will be successful is comprehending macro environment of a new country. Studying its economical condition, security levels and infrastructure system is a core competence of a company who privations to be more successful that its competitors. In case when all of those factors are studied and considered advantageous for a new enterprise it is important to bear in mind that cultural differences can make all efforts void.Thus such countries as the United States must attentively analyze what changes have to be made in the business plan and what people are best suit for the its implementation. Often companies hire professionals already experienced in such ventures with foreign education who speak two or more languages. Those intermediaries who are familiar with host countrys traditions and have social connections are great helpers in establishing a good image of the company abroad and in avoiding mistakes in a setting up period. Selecting and training employees for the international project is very important for the future success of the company. subtlety shock and coping with it are issues that have to be addressed to potential workers because people who cannot sleep at night of nervous breakdown are unable to work effectively. Consequently firms need to inform and train employees how to cope with cultural diversities and benefit from them to better manage in the new environment. multiplicity of the factors that have to be thought through by the international project managers can be outstanding but successful implementation will be rewarded by monetary and personal con tentment. 5.Finding New Opportunities in the Global Economic Crisis The current global economic crisis is forcing many individuals and businesses to hard reconsider their strategies for economic survival. Much like the giant shooting star that scientists believe hit our planet more or less 65 million years ago and caused the extinction of the dinosaurs, major catastrophic events tend to spell tragedy and disaster for most of us, but they can also reveal hidden opportunities for those of us who can adapt to the new circumstances in their environment. When the dinosaurs vanished, for xample, small little furry animals survived, multiplied and evolved to take over the planet. In this article, I want to list several doable options that can help you create long-term financial security in todays uncertain economic climate. abuse 1 Accept and Embrace Change The world changed significantly around 20-30 years ago when the Internet started becoming more popular. Since then, although many people migrated and evolved into knowledge Age thinkers, many more unfortunately chose to stay loyal to industrial Age principles and beliefs a paradigm that was rapidly becoming obsolete.If you are still clinging to Industrial Age concepts like the idea that a good academician education will lead to benefits and job security, then you may be leaning towards experiencing a fate similar to that which befell the giant lizards after the meteor struck. Regardless of where you are at, the solution is to accept that the world has indeed changed, then brood the Information Age unconditionally and without making excuses (i. e. too old, too busy, too broke, too late), and start looking for new opportunities with a more entrepreneurial mindset.I am not necessarily suggesting starting your own business if your core value is to find financial security through employment. There are always opportunities for people who can add value to other businesses and these are generally the last people a ny employer will want to let go of when times are really tough. Step 2 Start An Online Business Once you embrace the Information Age there should be no doubt in your mind that, regardless of whatever else you plan on doing, you should also start seriously considering creating one or more streams of income online. There are seven ways of starting a web-based business ) Start A Blog A communicate (short for weblog) is a very easy way to get started online. Essentially, the general plan is this a) set up a blog, b) start posting regularly about a particular and hopefully profitable niche area of interest, c) monetise your blog to generate a revenue stream. There are many great resources you can find online to help you profit as a blog writer. So get blogging 2) Become An tie in Marketer Affiliate marketing can be very appealing to many people starting out doing business online, because you dont need to own your own product and, in many cases, you dont even need to have a website .You exclusively market someone elses products using a special coded link with your affiliate ID, and every time a product gets purchased using your affiliate link, you get paid a commission payment for the sale. Like anything else, to become successful at affiliate marketing does require a certain amount of work, knowledge and skills, but all the information you need is out there. You can purchase e-books, e-courses or join online rank sites to learn how to become a better affiliate marketer and its not at all dear(p) to get started. ) Set Up An Online Store Millions of people and businesses are sell stuff online everyday. If you have something you would like to sell online, consider starting up an e-commerce store with eBay, Etsy. com, Yahoo stores, or a number of other places. Some years ago my wife started a little part-time eBay business and, before too long, she was negotiating product shipments with manufacturing companies in China and leaving our neighbors question why so many courier trucks were driving in and out of our street every single day.Even if you decide to start a traditional business, there are many cost-effective opportunities for expanding online, and e-commerce is definitely an option to consider. 4) Start Up Your Own Online Community The recent phenomenon of social networking is creating unprecedented new opportunities for people online. One of the most recent trends is to start your own online community, targeting a specific area of interest. For example, I recently started an online social networking community site for beaders (www. BeadHuddle. com).This site grew to over 1,000 members in the first six weeks after launching and it now has beading enthusiasts from all over the world, as well as craft-related advertisers. If the idea of owning your own community site interests you, I urge you visit www. SocialBusinessWeb. com and download a free report entitled How To receipts With Your Own Social Networking Site that will show you how to get started. 5) wee-wee And Sell Information Products Online This option is similar to starting your own e-commerce store (e. g. Bay), but the focus here is specifically on creating digital information products that can be downloaded online. Examples of digital products are e-books (electronic books) and information reports, audio recording books and podcasts, movie training products, membership sites, software and web services, etc. Once again, there are many great resources available on how to do this successfully and, if you do create a winning product, it can be an extremely rewarding and profitable venture, since most of the business can be automate through the use of systems, software and outsourced suppliers.I have personally developed a couple of information products over the years that sell regularly online and, since there are no costs associated with areas like shipping and delivery, every sale I make is pretty much 100% profit. 6) buy A Ready-Made Online Business If the idea of building your own online business seems too overwhelming, there are many online turn-key businesses available which you can apparently purchase and start operating fairly immediately.Just like buying a regular business, however, you need to exercise due diligence and research the business, the vendors, the market and the opportunity before you hand over your money to anyone promising you an online money-making machine. Ready-made online businesses can range from simple reseller web sites that include a home pageboy with the sales copy, a zipped file containing the product that you then upload to your own server and a download page where you send customers to after they successfully complete a purchase, to complete online franchise-like stores.Often, the cost is surprisingly affordable. For example, in 2005 I bought an online retail store outlet that sells thousands of downloadable audio book titles from best-selling authors and leading audio-book publishe rs for $1,000 dollars. Today I make regular sales of audio books from this store (www. AudioBookOne. net) and the best part of the business is that everything is handled for me by the parent company (e. g. stock selection, product delivery, customer support, etc ) for a small monthly fee. ) Become An Online Service Provider If the thought of being an online entrepreneur running your own business seems too risky for you to consider at the moment, then why not continue working for others, but transfer your skills, knowledge and experience to the online sphere? There are many opportunities for working online for other companies. One growing trend, for example, is the outsourcing of tasks like creating, managing and updating web content, providing search engine optimization and online marketing services, business training and consulting services, etc.The work can vary from doing routine tasks that other business owners would rather outsource to someone else, to providing mentoring and helping others become successful online (this is definitely an option to consider as you gain more experience and success online). Step 3 Dont Stop Learning, Growing and Improving The Information Age is constantly and rapidly evolving. This means not only keeping abreast of new developments and trends, but also keeping an eye open for new economic opportunities for growth, success and expansion. Fortunately, you dont have to do it alone.There is a plethora of social networking groups, online communities and membership sites you can join, that focus exclusively on your particular area of interest. If youve been tactile sensation depressed lately about the current state of the global economy, then hopefully this article will help you see that there are many positive and exciting things to be gained if you are willing to embrace change, start looking for new opportunities and make a decision to take action steps today to secure your own financial future in the new world that is emer ging around you. . Managing Global Economic Challenges The modern day global economy is a highly interconnected one. With the increased connectivity the challenges before the global economy has achieved an altogether new dimension. On one hand is the positive impact of instant access to the global information network. On the other hand, market volatility is using the economic inter linkage channels to spread like wildfire. The International Monetary Fund revised down the estimated world growth rate for 2008. This was a fall out of the US sub prime crisis.At present economies through out the world is facing stock market volatility and rising unemployment figures as an after effect of the US crisis. As per estimates, around one billion people worldwide survive on less than a dollar per day. Over one billion do not have access to clean water. Basic sanitation facilities are take out for around 2. 4 billion people. Around 5 million children worldwide die from starvation. To sum up, th e challenges before the global economy are by no means simple. Timely intervention in the form of take into account policies and fiscal help from the world bodies are needed to tide over the crisis.No less important is the political will needed for the unseamed implementation of the policies. Poverty ?Sub-Saharan Africa has been witness to the most severe form of poverty. Nearly 50% of the population survives on less than $1-a-day. Malnutrition, internal conflicts, unutterable diseases like AIDS and improper governmental measures are the main reasons screw this extreme poverty. ?As far as poverty goes, it is the Southeast Asia that comes next to sub-Saharan Africa. Around 85% of the total population of the Southeast Asia survives on below $2-a-day. Despite 50% of population living under $2-a-day, the number of poor people in Eastern Asia and Pacific has declined significantly in recent past. It is mainly due to the social and economic progress achieved by China over the passage of time. ?When it comes to Latin America, inequality in income distribution resulting from poverty is a matter of great concern. ?Some 300 million of Indias people still live in abject poverty, and another 300 million hover precariously above the poverty line. One challenge is to reach the poor with programs and policies that workInflation ?Considering the failure of US sub prime market and the subsequent recession in US economy, controlling the increasing rate of inflation is the greatest challenge that the world is confronting for some time now. ?The Indian and Chinese governments are taking care of the inflationary situations very seriously. In Europe, interest rates have been hold at higher side to keep inflation under control. ?fiscal policy measures like reducing government expenditure and increasing rate of taskation can also be used to check inflation.Attempts are on to bring about regulatory changes to face the challenge of inflation. contrast ?Globalization is considered by many to be the main cause behind the perpetration of an increased income inequality in wide areas of the globe. ?However, an increased trade globalization has only worked towards the eradication of this inequality. The need of the hour is policies, which will ensure that the proceeds from technological innovation and globalization are distributed among the cross subdivision of a countrys population. ?Developing countries are primarily agriculture based and they can promote gricultural exports for reaping the benefits of trade liberalization. Climate change ?Environmentalists all over the world are trying their best to protect the planet from the adverse effects of climate change. The European Union has played a crucial role in these movements. ?The primary objective of the Convention has been to urge the developed nations to check the emission of greenhouse gas. The target regarding greenhouse gas emission that has been set in Kyoto Protocol needs to be achieved within the perio d of 2008-2012. The European Climate Change Program or ECCP in another major initiative towards environment protection. ?However, to control the emission of greenhouse gas it is necessary to create general awareness among the common people. Substantial change in energy system, use of environment-friendly technologies in production, alternative energy efficient fuels, negligible use of fossil fuels and change in the pattern of living are the key factors that can bring about positive changes in environment. uprising food prices The urban poor will be affected the most due to this rising food prices.In most of the sub Saharan country, the common trend is that the farmers leave their land and head to other lines of production in the urban areas. According to the World Food Program, the countries that are most affected are Eritrea, Gambia, Togo, Cameroon, Niger, Senegal, Zimbabwe, Haiti, Myanmar, Yemen, Cuba etc. Trade- key to lower food prices ? hypothesis up of economy or trade liber alization can help to reduce food prices. ?Different countries have adopted different measures of trade in order to deal with the escalating food prices. Saudi Arabia has resorted to import tax cuts on wheat from 25% to zero.Tariff is also decreased for dairy farm products, vegetable oil and poultry. ?India slashed its tariffs on maize and edible oils. Export of rice was also stopped leaving out the high value basmati. ?For the last 2-3years India has to fill the demand supply mismatch in food through imports. There are high exporting countries like Ukraine, which are also imposing export restrictions on its food products. Afflation in the global economy ?Structural changes within an economy are an important reason behind Afflation. There is a rise in per capita income in the be countries like India and China.Consumption of food grains as feedstock has also increased. ?According to the International Grain Council, the world grain production would reach 1660m tones in 2008, which e xceeds the previous year by 90m tones. Even then demand is likely to shell supply. ?Inflation in the agricultural sector can be attributed in the main to crops like coffee, corn, wheat, and soybeans, sugar, cocoa and meat and poultry products. Trend in demand for and supply of food grains It is estimated that the world population will rise by 800 million per decade till 2025.The production of food grains is expected to rise to 2. 6