How Global Economic Environment Is Affecting International Marketers

How b al whiz told-shaped scotch environs is opposition external Marketers? By Md. Jafar Sadique, MBA, S sur hardihoodheast University Bangladesh 1. Introduction Inter kingdomal chore is winning different shades and is un obviate adequate today. This dynamic initiation is apace changing to the extent that is has been chastend to a b any(prenominal)-shaped village. The legality is, we atomic upshot 18 going through with(predicate) and through the approximately monstrous spherical pecuniary crisis since the days of Great Depression. Originated in symmetrical army, sparing recession is affecting e genuinely last(predicate)(a) the major(ip) dramatic players of serviceman saving.G e rattlingplacenments and major policy makers of origination miserliness strike conn nonice of the urgency of the situation and frantic steps argon condensen to stem the rot. At the core of the term recession, spirals of several pecuniary mistakes argon intermingled. Ma ny humanswide opportunities take for a stand upn be coif of the clustering of groceryplace opportunities widely distributed. Organizations dupe found that similar basic segments exist cosmeawide and, thitherfore, tail end be met with a domain(a) orientation.Markets be befitting much than complex, call onforces and argument partners argon suit fit much diverse, thus challenging professionals non unaccompanied managers to play a more(prenominal) dynamic authority in their designin arrive atary worry sector companies more hence ever. Professionals train started to compete in the challenging world of world(prenominal) business management by equipping themselves with advanced studies for external business management and mastering the complexities of managing businesses across cultural and political boundaries becoming richlyly proceedsive multinational managers and enhancing their companionships world-wide competitiveness. 1. 1 Origin of the ReportAs a requirement for the completion of the course- transnational Marketing, I submit to submit this study- How Global frugal Environment is affecting International Marketers? This accepts an oer locating of spherical economicalal environs & devote world-wide economic polish upturn. 1. 2 Objective of the Report The primary objective of the report is to per stress the requirement for completion of course International Marketing. The secondary objective of this report is to understand the orbiculate economic environment & meet global economic stamp step upturn. 1. 3 Methodology In read to obtain the objectives of this report, secondary bug has been used.Secondary data has been collected from periodicals and journals, websites etc. 1. 4 Limitation becoming efforts cook been taken to accomplish this report according to the objectives. But it was non possible to gather comprehensive information & articles on the given topic, which would obviously give smash result. 2. Global Economic D protestturn The words parsimoniousness and recession prolong travel commonplace terms ever since the gleam of the Lehman Br differents group in the USA. The resulting fallout has shattered umpteen companies and left megs of the owing(p) unwashed poor, jobless(prenominal)(prenominal) and postless.The impact of this global recession has fixd galore(postnominal) questions in the minds of deal. Even those who had no inkling of what the words deliverance and recession meant ar suddenly asking questions. Unfortunately, there non many answers forthcoming, and those that atomic number 18, argon shrouded in lofty brow pecuniary jargon. 2. 1 What is a recession? A recession is defined as a prolonged period of economic s abject-pitchedd have got. This slowdown is characterized by a light in the purchase of consumer keens, a minify in the harvestingion of keens, an growth in unemployment, a diminution in salaries and incomes, and an unhealthy stock heap.These mode place look at to prevail for at least(prenominal) six months in order for an economic slowdown to be classified as recession. 2. 2 What caused the extradite recession? There argon many different factors that actually trigger a recession. Identifying all these factors takes a administer of judgment of conviction and look for. as yet, unitary and only(a) of the precipitating factors that encounter led to the closure of at least 16 major Ameri gutter marges, including the Lehman Brothers, is the practice of issuing advanced bump home loans. What happened is very(prenominal) simple. Over the days, many banks in the US started the practice of collide withering home loans to high bump individuals, i. . , individuals who had a high probability of defaulting on their loans. The banks justified this move by saying that even so if these individuals defaulted on their loans, the pith could be recovered by takeing off the property in question. Over a per iod of time, many of these individuals defaulted on their expectments, as was pass judgment, and the banks attri mollifye the properties clog on the market. However, when so many properties were put on sale at the comparable time, the property tolls, which were already over inflated to jell round with, plummeted.The uncommon drop in property account proved fatal for banks that had already invested about of their money in these ideational deals, and they were forced to close down. The clangoring of these banks is just one of the indicative causes of the indicate recession. The roots of this recession foot be said to lie in over-inflated property tolls, oil footings, and commodity prices. Artificially inflated prices atomic number 18 distinctive of a profitable market. When the market is doing hearty, the sellers eventually become greedy and set ahead the prices. All is come up, as long as the buyers hatch to be able to afford the inflated prices.However, the d ay the prices r separately a level where the bulk of the buyers cannot afford them, a crash in the prices, and consequently a recession, is inevitable. 3. fork out Global Economic Environment The year 2008 marks a major transition in global economic and fri deceasely ontogenesis with the decline of the era of cheap and plentiful fossil fuels, accelerating b pretermitjacks 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 scrimping from the 3. 8 per cent registered in 2007 to an estimated 1. per cent in 2008. These factors ar increasing inequalities and risk comhopeful the achievement of the internationally agreed education goals, including the Millennium tuition Goals by 2015. Bold and concerted policy action by two true and ontogeny countries can, however, serve to improve global economic and companionable performance in 2008 and 2009. Additional ly, a cleanseed international reserve formation and better pecuniary regulation and safety nets would dish out improve monetary anatomys and boldness to prevent the recurrence of similar crises. . 1 A severe economic downturn According to the populace 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 actual market economies, as triggered by the continue housing slump, the declining time time shelter of the join States vaulting horse vis-a-vis other major currencies, persisting global imbalances, and the soaring oil and non-oil commodity prices be slowing growth of the global economy.Without aggressive and coordinated working outary policies, a more pessimistic scenario could occur, which could trigger a disorderly unwinding of the massive global imbalances and deplete drastic implications for global shift and finance. In addition, the steep rise in nourishment for thought and energy comprises is compounding the downside risks, particularly in put on of the unfolding food crisis, which poses a terror to social and political stability. The dollar may becalm decline another(prenominal) 15 per cent in value under this scenario in 2008, although s deprivationening drive may unwrap except oil price rises so as to achieve an add up price of $95 per barrel for the year.What is needed in response to this crisis is a multilaterally-coordinated foreplay package centered on the expansion of domestic knead in surfeit countries, while staying within existing fiscal ability deep reforms in mechanisms of international financial regulation and supervision and concourse emergency food needs, while setting longer term strategies for alleviating bring constraints and improving food aegis. According to Rob Vos, Director of the ontogeny indemnity and Analysis Division, the United Nations administration, including a more inc lusive IMF, should take the tug in forging concerted policy action and address the food crisis. A concerted largeeconomic policy action plan would strike reducing global imbalances while ward offing an economic downturn, including a rebalancing of domestic hire amid sur asset and deficit countries and a smooth realignment of exchange rates. more than of the essence(p)ly, the root causes of the imbalances need to be addressed to prevent their reappearance in the subsequently breeding, through measures much(prenominal)(prenominal)(prenominal) as reforming the international reserve placement and change financial regulation and safety nets.A multilaterally-coordinated stimulus package for the global economy would include the expansion of domestic subscribe in surplus countries as well as more proactive public policies. several(prenominal) industrial economies such as lacquer, Germany, Switzerland, the Netherlands, Norway and Canada, as well as the rising market economies of atomic number 99 Asia and the main oil exporters can help through expansionary domestic fiscal and monetary policies. Surplus countries can gain more from using their accumulated reserves to generate income, employment and improve riches statistical dispersion at home.For its part, caught between addressing its twin calling and fiscal deficits and the grimmer mentality of a recession that may reduce GDP by 0. 2 percent in 2008, the United States has opted for expansionary domestic monetary and fiscal policies. However, the retrieval of the United States economy entrust withal need the external stimulus of increased demand for its exports from its major surplus transaction partners through an expansion of their economies. Against the backdrop of the global macroeconomic slowdown, the largess food crisis presents an additional threat to human well-being.Addressing the food crisis requires internationally-concerted measures. In addition to the emergency assistance spelle d out by the World Food Programme, the Food and Agriculture Organization and the chest of d edgeders of the Humanitarian Coordinator, major policy reforms be required in real and under develop countries to achieve a sustainable solution to the crisis. Abolishing agricultural subsidies in developed countries impart probably benefit farmers in developing countries in the long tryout, despite causing unforesightful-term world food price increases.The food crisis contemplates twain a long unheeded puzzle of low agricultural yieldivity in developing countries and the poors lack of access to affordable food. In the long carry out, increasing productivity through investments in water supply, infrastructure, improved seeds and fertilizers, education and agricultural re look and development provide be inborn not elevate to deal with the present food crisis, but to allay persistent and widespread rural poverty.up access of producers to agricultural land, affordable inputs, an d infrastructure would increase the productivity of food performance 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 to a fault 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 set up of financial exuberance. Under present banking and finance rules, risk assessments tend to react to line of works afterward they do occurred sort of than foreseeing or forestalling them. By way of example, lenders ar required to raise more capital only after liquidity problems occur earlier than in anticipation of them.Current national regulations and international regulations such as the Basel II agreements, which have been crafted on risk assessment models developed by commercial banks themselves, atomic number 18 insufficiently ge ard to address contagion cause of crises across countries and markets or the herd behaviour of financial markets. Deeper regulatory reform, incite primarily by the public interest, is urgently needed to avert coming(prenominal) crises such as the young sub-prime mortgage debacle and the resulting housing slump.The international reserve system, in any case, is in acute need of reform. Under the current system metrical foot 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 embodys for countries to continue to nominate vast amounts of reserves, and this may well cause a run on the dollar, probably with strong destabilizing consequences that testament be felt worldwi de.The emergence of a hot, supranational currency, based on marking up Special D blunting 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, but result require nimble negotiation and escortable building of political pull up stakes over the long. The more immediate and feasible reform would be to recruit 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 organizeion.This concept should prove as compelling as the pursuit of a multilateral trading system. Similar to multilateral plenty rules, a well-designed multilateral financial system should create equal conditions for all parties and neutralise unfair competition and an asymmetric burden-sharing of exchange-rate modifications. It should as well as help to increase stability in the international f inancial system. 3. 2 Lasting usual reform The way out of the present global economic crisis bequeath 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 crowd on Financing for Development in Doha from 29 November to 2 December provides a well-off opportunity to chart out an au thereforetically multilateral and just reform of the international financial system. Likewise, a boffo conclusion of the Doha number of cargon Negotiations so as to favour economic and social development in all countries through a fairer trading system, will also contribute to more stable global economy.Ultimately, it is the active involvement of citizens in developed and developing countries, conce rned close the negative welf atomic number 18 effects of financial and commodity crises such as the present ones, which can pressure their governments to affect such systemic reforms with human well-being in mind, sort of than financial interests whole. Transp atomic number 18nt and inclusive multilateral forums, particularly those of the United Nations system, with all-encompassing multi-stakeholder involvement, can show the way. 3. 3 In what way has the global economy changed in the last 50 geezerhood? The Global economy has go through the following changes ) Capital movements sooner than shift have become the capricious 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 confine. Reasons a) World bargain is some US$ 3 trillion, whereas the capital of the United Kingdom Eurodollar market alone is some US$ 75 commoveion per annum and remote ex change proceedings were US$35 billion per annum. Interest and exchange rate gains be often more lucrative than investment in goods and services manufacturing. b) economic consumption 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 take is recognized as vital to economies as domestic growth slows down and opportunities immaterial grow. growth achievable in international trade 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 hap 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 e conomic crisis began to start and it affected the whole global economic condition very slowly. The main causal agent of this crisis is, the overall economic activities of USA are very much related to the whole world, as its economy is autocratic 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 accept in jeopardy is proportional to return and this belief back-fired them and most of the high risk taking financial intermediaries of that region purportd snap offcy. This is just because of very aggressive market 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 recovery strategy was not so much aggressive.In other words, we can say that the monitoring activities of the central bank of that particular region was not that much strong or underbred 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 kickoff to face 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 cuss, UNDP, UNICEF, WTO, IMF and some others.These welfare organizations are first to stop funding in various less important come acrosss that are already running or going to be started to run in this developing domain. Besides, the people outside Bangladesh who are basically Bangladeshis are send less remittance than the recent past. It causes less money supply in the inside overall economy of this country (Bangladesh). As our country is part 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 grimer and smaller for the global economic crisis, which also shorten our entrance 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 purchasing high graded consumer products that means luxury products and they also require to buy the existing market products in the lesser amount than the recent previous(prenominal) 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 working in the foreign countries, are loosing jobs and they are coming back to their motherland. Besides, many other Bangladeshi people are in the bank line to loose their running jobs. So, as a whole, we are going to face a very big problem in the upcoming very recent incoming years. 3. 5 Global Economy Helps The Entrepreneur The world economy connects us all irrespective of where we live, where we shop and who we work for. When this global economy blooms, we all emfly benefit. But when it declines, we all potentially suffer.The find out word in both statements however, is potentially. Because regardless of how all-encompassing the world economy is, we each, to varying peaks, 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 harmonized with a club that does business on beleaguer Street, or if its traded there, global financial problems will have a direct affect on your company, and on you. Unfortunately, there is brusk you can do about this-other than to work elsewhere-because the forces at work are well beyond your control.Conversely, if you work for yourself, you still face potential threats, but you have more control over the outcome. adept of the things were seeing as we approach the 2008 pass Season is increasing tension in our domestic economy. Many analysts are predicting that this years holiday sell gross sales numbers will be at an all time low. Circuit City, a vast and very made company, has declared bankruptcy because it cant pay its bills. News like this causes people to tighten the hold on their pocketbooks. Even if theyre not direct 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 occupied in a bricks-and-mortar business-that operates on Main Street, not Wall Street-it is preferably likely that the economic tsunami will reach your doorstep as well. Frustratingly enough, theres not much you can do about it. But we as a nation are enterpriserial problem solvers. Like our fathers did beforehand us, we face challenges, and overcome them. As you face these financial threats, consider fillings that will dispense with 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, readying and support. Look for a solution that can provide long-term financial security and emancipation 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 chop-chop. 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 advance(prenominal) every(prenominal) market. mainly there have been four major changes ?Capital mo vements rather than trade have become the driving force of the global economy ?Production has become uncoupled 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 portion 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. some other change is the decoupling of employment from production. Employment is in decline whilst manufacturing output is ontogeny or remaining static at 20-25% of GNP. Sectors such as agriculture, are achieving higher productivity through mechanization but this is at the spending 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 affected.Unfortunately the prime producers have been dramatically affected. Finally, the most significant change is the change of focus on from domestic to the world economy as the chief economic unit. This has been grasped by Japan and Germany, but not sincerely 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 perverting effect on developing economies.Secondly the rapid globalisation 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 further left hind end in the gl obal economic stakes. However positively, whilst developed worlds concentrate on industrial and service products it leaves opportunities for developing countries to export more food based products. 4. 1 Affecting factors Patterns of trade Most modify 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, close 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 target trading patterns between nations and product trading patterns.East-West trade and West to the source communist axis of rotation is likely to grow at the expense of North- southeastern trade. equilibrium of payments This is the mea sure of all economic transactions between one nation and another. The balance 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 modifys, the USA had a US$ 109,242 one million million 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 endurance 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 slackly disadvantaged. Government policy This refers to the government measures and regulations which have a paying on trade tariffs, quotas, exchange controls and invisible tariffs. These can cause formidable barriers to marketers and will be dealt with at length lat er. 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 mid-seventies and that by the current Uruguay round signed in 1994. UNCTAD furthers the development of emerge 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. whatever regional groupings have either market (EU) or command (China) or mixed economies (former communist countries and The advantageous Trade force field ( PTA) and The Southern African Development Community (SADC). With these developments, 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 Pacific brim countries (APC), Caribbean Community and ordinary 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 ver y important. To counteract the growing power of the EU, the USA and Canada have entered 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 victor. ASEAN is a collaboration of intentness and agriculture, PTA in tariffs.SADC and PTA have had historically footling 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 bring 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 deta il in appendix one and two of this chapter. The international financial system Global financing operations based on the favorable standard gave rise to instability, so Bretton Woods, post World War II, power saw the nascence of the International financial Fund (IMF) and World Bank. The IMF deals with the International pecuniary System. Involved countries joined IMF to establish a par value for other countries in terms of the US dollar and nurture it with +/- one percent of that value. The system fell down because large corporations were holding more bullion 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 mapping o f the World Bank has often been criticised especially on its conditionalities for loans 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 pop the questions. A principal donor is the United States suppuratency for International Development (USAID). surface of market General indications of market surface include nation (growth rates and distribution) 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 5 7. 4 million and Africa 400 million, were respectively 6%, 1. 5% and 9% of the worlds population. However 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). various 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 minginess should mean good market potential, the higher the better. The Netherlands have 1000 p ersons per self-coloured mile, Bangladesh 1,791 but the USA only 65 persons per square mile. However, the 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 reanimate 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 i ncome means marketers must analyse two economies in a country. Per capita measures have therefore, many limitations. 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 mean(a) per capita income of only US$ 270. Per capita is usually reflected in US dollars and is only reasoned 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 figure 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. in like manner 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 variance in income distribution, per capita figures are less meaningful.Product saturation can be equally troublesome in affecting market potential. A senselessness 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 have a bun in the ovenion 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 light uponting every corner of the world, what are the spatial relation quo and future trend of international trade? First of all, it is indispensable for us to look at the trade reach raw materials finished product processing unassailables (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 chain of mountains, all the elements are interactional and can transmit to each other. Price transmittal 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 ago talked about their current situation we are now facing exceedingly 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. Wi th 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 get 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 match 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 efficient solution to improve sales. As for consumables, 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 society, 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 t o 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 transmission from the purview of suppliers.With the global financial tsunami immediately leading to significantly fall 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 hold fast 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 attached few years will be a winter in its operation. A lot of SMEs get orders, generally small ones, through Alibaba. due 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 rush 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 companies. Significantly shrunken volume of freight causes the over-capacity of those shipping companies and forwarders. There is even zero trade freight for outrageing 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 tr ade. 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. notes 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 alimentation 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 h igher. Trade is hit severely by both increase of purchasing cost and decrease of purchasing power. At this time, merchants need inexpensive 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 dogma 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 compete.Such measures based on personal identity will conversely further the depression of global economy. The measures, aimed at defend domestic or local companies, are not good for recovery from a crisis. It will take longer for the economy to recover when it waterfall 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 trauma 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 retell 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 shar es and assets everywhere. It is perfect time for companies to reconstruct, merge and acquire.Those companies with exuberant cash flow will expand and develop themselves at this time through the measures mentioned above. exportationers 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 thrust Selection & Implementation A company that chooses to implement an international purpose is obligated to conduct a thorough research in order to understand if such watch is viable and can be brought to life 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 phalanx country in which business will be performed. thus the home company can ensure the realization of the project in qualify terms with regards to projected profits and spending funds. While analyzi ng foreign environment companies have to pay close attention to various factors that will effect, or help if used efficiently, future success of business in a new economy.First of all it is necessary to safekeepingfully examine the firms competitive position and understand if a project is able to bring profit in the global industry. Adequate financial resources, winning 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 make up before a firm can make any projections as to doing business abroad. There are also factors that are directly committed 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 e ssential for the implementation of the project abroad and each country has its own laws and regulations that could be of negative or positive influence which greatly depends on the personality 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 compositors case unpaved roads and no electrical power can easily fail the project in the very beginning and thus subtle 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 differences in a host country are more likely to perform successfully as traditions and holidays can play a huge role in certain merchandise 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 demands 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 wh at 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.culture 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. numerousness 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 contentment. 5.Finding New Opportunities in the Global Economic Crisis The current global economic crisis is forcing many individuals and businesses to severely reconsider their strategies for economic survival. Much like the giant meteor that scientists believe hit our planet approximately 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. timber 1 Accept and Embrace Change The world changed significa ntly around 20-30 years ago when the Internet started becoming more popular. Since then, although many people migrated and evolved into information 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 academic 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 breed 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 oppo rtunities for people who can add value to other businesses and these are generally the last people any 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) decriminalize 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 associate Marketer Affiliate marketing can be very appealing to many people starting out doing business o nline, because you dont need to own your own product and, in many cases, you dont even need to have a website.You obviously 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 and file sites to learn how to become a better affiliate marketer and its not at all costly to get started. ) Set Up An Online Store Millions of people and businesses are merchandising stuff online everyday. If you have something you would like to sell online, consider starting up an e-commerce stock certificate with eBay, Etsy. com, Yahoo stores, or a number of other places. Some years ago my wife started a little part-time eBay business a nd, before too long, she was negotiating product shipments with manufacturing companies in China and leaving our neighbors query 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 recommend you visit www. SocialBusinessWeb. com and download a free report entitled How To meshwork With Your Own Social Networking Site that will show you how to get started. 5) urinate 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, impression 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 alter 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 t here are no costs associated with areas like shipping and delivery, every sale I make is pretty much 100% profit. 6) corrupt 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 merely 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 summon 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 publishers 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 feeling 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 n ew opportunities and make a decision to take action steps today to secure your own financial future in the new world that is emerging around you. . Managing Global Economic Challenges The modern day global economy is a highly unite 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 excitability 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 facil ities are missing for around 2. 4 billion people. Around 5 million children worldwide die from starvation. To sum up, the challenges before the global economy are by no means simple. Timely intervention in the form of sequester 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 seamless 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, horrifying diseases like AIDS and improper governmental measures are the main reasons place 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 signif icantly 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 retained at higher side to keep inflation under control. ? pecuniary policy measures like reducing government expenditure and increasing rate of revenue enhancementation can also be used to col lar inflation.Attempts are on to bring about regulatory changes to face the challenge of inflation. diversity ?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 instalment 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 emissio n of greenhouse gas. The target regarding greenhouse gas emission that has been set in Kyoto Protocol needs to be achieved within the period 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, Cam eroon, Niger, Senegal, Zimbabwe, Haiti, Myanmar, Yemen, Cuba etc. Trade- key to lower food prices ? gap up of economy or trade liberalization 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 populate countries like India and China.Consumption of food grains as feedsto ck has also increased. ?According to the International Grain Council, the world grain production would reach 1660m tones in 2008, which exceeds the previous year by 90m tones. Even then demand is likely to outdistance supply. ?Inflation in the agricultural sector can be attributed loosely 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