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ADEX 528: Lecture Notes #3

ADEX 528: Lecture Notes #3. Regionalization and Economic Forms of Integration European Union, Emerging and Transitional Markets. REGIONAL ECONOMIC FORMS OF INTEGRATION. FREE TRADE AREA CUSTOMS UNION COMMON MARKET ECONOMIC UNION ECONOMIC INTEGRATION. Responses to European Single Market.

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ADEX 528: Lecture Notes #3

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  1. ADEX 528: Lecture Notes #3 Regionalization and Economic Forms of Integration European Union, Emerging and Transitional Markets

  2. REGIONAL ECONOMIC FORMS OF INTEGRATION • FREE TRADE AREA • CUSTOMS UNION • COMMON MARKET • ECONOMIC UNION • ECONOMIC INTEGRATION

  3. Responses to European Single Market • EUROSCEPTICS • EUROBASHERS • UEROPHORICS

  4. What does European Integration Mean? • Removal of Trade Barriers: • Border Controls • Divergent Technical Standards • Restrictive Public Procurement Contracts • Different Value-added and Excise Tax Rates • Controls on Free Movement of Capital and People • National Government regulations on Financial and Transportation Services • Varying national Regulations Governing Mergers and Acqusitions, Trademark Registration and Patent Protection

  5. Think Global Act European By Pascal Cagni Vice President and General Manager of Apple (EMEA)

  6. Factors that make EU a single market: Borderless trade Dominant language Common currency Borderless communication Information availability by internet Improved transportation infrast. Factors that make EU heterogeneous: GNP/capita Computer penetration Internet adaption Channel development Taxes Pricing Language Glocalization in Europe

  7. What should be centralized? Treasury, acounting and legal fnc. Knowledge base Sales support, logistics, order entry Systems like SAP What should be localized? Products other than trend and fashion Processes like Marketing Communication Mix People elements like sales force, human resources. New Operating Model for EU

  8. Emerging markets • South Korea • Argentina • TURKEY • Indonesia • South Africa • Poland • Mexico • Brazil • Russia • India • China

  9. BEM and BRIC Country Characteristics • Physically large • High population • Markets for a wide range of products • Economic reform programs • Politically important within their region • Economic drivers within their region • Expanding relations with neighboring markets

  10. Global Edge: IB Resources • International Market Potential Index for Emerging and Other Markets • http://globaledge.msu.edu

  11. Transitional Economies • Czech and Slovak Republics, Poland, Hungary • Central Asia Independent States • Baltic States • Romania and Bulgaria

  12. Base Line Characteristics of Transitional Economies • Low consumer income/capita • High inflation, unemployment and foreign trade deficit • Small elite high income (urban) • High indirect taxes, import duties • Strict foreign exchange controls and inconvertable currencies • Sellers markets where Demand>Supply • Inadequate physical distribution logistics and communications infrastructure

  13. Rapidly Developing Economies(BCG) • 100 RDE Based Companies 70 Asia: 44 China, 21 India 18 Latin America: 12 Br, 6 Mex 4 Turkey: Koc, Sabancı, Şişe Cam, Vestel 7 Russia 1 Egypt

  14. Six Strategic Models of RDE • Taking RDE Brands Global • Turning RDE Engineering into Global Innovation • Assuming Global Category Leadership • Monetizing RDE Natural Resources • Rolling out New Business Models to Multiple Markets • Acquiring Natural Resources

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