- •Marketing illustration botswana: the world’s fastest-growing economy
- •9.2 Percent. South Korea is the second fastest per- former, growing at 7.3 percent. China came in third at 6.7 percent.
- •Basis for international trade
- •Production possibility curve
- •Principle of absolute advantage
- •Units of computer
- •Advantage
- •Exchange ratios, trade, and gain
- •Units of computer
- •Factor endowment theory
- •Instead of enhance the country’s competitive advantage.7
- •The competitive advantage of nations
- •Limitations and suggested refinements
- •It’s the law 2.1 money laundering
- •Marketing strategy 2.1 how to move money
- •Marketing ethics 2.1 human trafficking: the worst kind of factor mobility
- •Economic cooperation
- •2.6, Some countries are members of multiple groups.
- •In a free trade area, the countries involved eliminate duties among themselves, while maintaining sepa- rately their own tariffs against outsiders. Free trade
- •Botswana Lesotho South Africa
- •Exhibit 2.1 regional groupings and their nations
- •Venezuela.
- •In 1993, the eu and the efta formed the world’s largest and most lucrative common market
- •Cultural dimension 2.1 the euro
- •Economic and marketing implications
- •2.7 Shows how the United Kingdom can serve as a strategic location for this purpose.
- •Initially, new trade policies generally tend to favor local business firms. For example, ibm encountered problems in Europe, where the eu
- •Questions
- •Discussion assignments and minicases
Marketing strategy 2.1 how to move money
It is anticipated that some $177 billion in funds will be transferred globally by 2006. In the case of Mexico, the central bank reported that the amount that Mexicans in the USA sent home ($6.3 billion) exceeded the amounts brought in by tourism ($4.9 billion) and foreign direct investment ($5.2 billion).
In the old days, immigrants used a courier or family member to send money home. Now banks and wire transfer companies fill the void – for a hefty fee. The fees are usually 10 to 15 percent of the amounts sent home. There is a reason why banks account for only 9 percent of the money sent home and why wire transfer companies take 83 percent. Illegal aliens in the USA do not use banks because they need to show US documents. Some are afraid that opening bank accounts may lead to detention or deportation. Interestingly, the nations with the highest number of money-transfer recipients often have the lowest number of people with bank accounts and debit cards.
On the other hand, when workers cash their checks
at check-cashing and cash-transfer companies, they lose as much as 3 percent of a check’s value. Western Union and MoneyGram dominate international money-transfer business due in part to their live agent
relationships. Western Union has 120,000 agent loca- tions, whereas MoneyGram has 50,000. Western Union and MoneyGram handle 40 percent of money transfers to Mexico, and they charge $25 for such a transaction.
Some banks have become innovative and compet- itive. Citigroup’s Grupo Financiero Banamex unit has launched binational accounts for Mexicans working in the USA, where they can deposit into their accounts a specific amount that their relatives in Mexico can withdraw using a Banamex ATM card. These bina- tional savings, checking, or debit accounts will be cheaper than wire transfers or other remittance ser- vices. In the case of Bank of America’s SafeSend, it allows Mexicans to send $500 home for a $10 fee. SafeSend recipients receive an ATM card that is used to withdraw money for free from an ATM in Mexico.
Sources: “Remittances to Mexico Top Tourism, Other Investment,” San José Mercury News, September 2, 2003; “Bank Offers Binational Accounts,” San José Mercury News, April 20, 2002; “More Bankers Are Saying ‘Hola,’” Business Week, May 13, 2002, 12; “ATMs Make a Play for Money Transfers,” Credit Card Management (November
2002): 45–6; “Repatriating Money Carries High Fees, Risks,” San José Mercury News, November 23, 2002.
Andrew Grove, Intel Corp.’s chief executive officer, “capital and work – your work and your counter- part’s work – can go anywhere on earth and do a job. . . . If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job.”15 Theoretically, if developments con- tinue along these lines, a worldwide labor market is possible.
In the 1970s and 1980s, workers in the Western world learned a painful lesson: manufacturing could be moved virtually anywhere. History may repeat itself, since it is becoming easier for firms to shift knowledge-based labor as well. This develop- ment can be attributed to the worldwide shift to market economies, improved education, and decades of overseas training by multinationals. As a
result, a global workforce is emerging, and it is capable of doing the kind of work once reserved for white-collar workers in the West. Advances in telecommunications are making these workers more accessible than ever. In electronics, Taipei, Edinburgh, Singapore, and Malaysia, although far away from the end-user and technological break- throughs, have emerged as global product-develop- ment centers. Therefore, conventional notions of comparative advantage are rapidly changing.
Production factors are now considered more mobile than previously assumed. However, because of government efforts to restrict the mobility of fac- tors of production, production costs and product prices are never completely equalized across coun- tries. Yet the amount of mobility that does exist serves to narrow the price/cost differentials. In