Chapter – Assessing the Global Marketing Environment—The Global Economy and Technology “If GM had kept up with technology like the computer industry has, we would all be driving $25 cars that got 1000 MPG." Bill Gates McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc All rights reserved Outline PESTEL Model The Global Economy • Economic Growth • World Trade High-Tech Products • Characteristics of High Tech Markets • Globalization of Technology • Technology & Global Financial Services Global Countries & Global Companies • Global Demographics • The Green Economy 2-2 A PESTEL Analysis of the Macro-Global Environment 2-3 Economic Growth and World Trade Growth in global trade has exceeded domestic growth • The growth in world trade in from 2007 increased from 10% to 30% until the 2008 economic crisis, while world industrial production averaged about percent over the same time frame World trade is manufacturing-intensive and durable good purchases are postponed when income becomes less secure 2-4 Largest Exporters and Importers 2-5 United States Exports by Region 2-6 U.S International Trade in Goods & Services Figure 2-2 2-7 High-Tech Products Lead World Trade The high-tech manufacturing sector has grown twice as fast that of other manufactured goods Many high-tech products, such as computers, are manufactured from components made in several countries • Provides emerging markets with assembly and export opportunities 2-8 Characteristics of High-Tech Markets Highly dynamic Complex Risky As a result, markets mature rapidly, and are Product developers must anticipate consumer needs even before consumers are aware of them • Fast-moving • Expensive • Competitively intense • Consumer rather than production-oriented 2-9 Reducing the Risk of High-Tech Product Failure Determine if "first-mover" advantage is preferred over longer introduction lead times that assure sufficient market interest Rethink the value of market research before product launch Target the market carefully, identifying consumers most likely to purchase the product Exploit the innovators and early adopters 2-10 Hi-Tech Market Entry Low resource commitment Directed toward commercialization rather than production Global supply chain performance critical 2-11 Global IT Spending by Financial Services Firms Global financial services are becoming more dependent on IT infrastructures in order to gain competitive advantage Figure 2-4 2-12 Global Companies & Global Countries Countries and companies can be typed according to their level of globalization • The Foreign Policy/AT Kearny Globalization Index rates countries: Economic integration Personal contact Technological connectivity Political engagement • In 2007, Singapore was the most globalized country, United States was number 2-13 Top 10 Transnational Companies by Foreign Operations 2-14 Transnational Corporations and Countries 2-15 Population Changes: Aging Populations Figure 2-6 2-16 The Green Economy The Green Economy • An emerging marketplace that seeks to optimize the synergy among three sets of values: social, environmental and financial • This is most commonly referred to as the "triple bottom line." The Green Economy is:’ • Environmentally sustainable • Socially just • Locally rooted 2-17 Globalization: Opportunity or Threat? Opportunities • Trade liberalization means that the demand for a country's products is not limited to the home market, while investment, technology and knowhow move more freely across borders to both developed and developing countries Threats • Much of the discontent concerns the fact that the benefits of globalization have not been spread equally among peoples and countries 2-18 Summary The PESTEL model is an excellent framework to use when scanning the macro-global environment Global trade has outpaced economic growth in most industrialized and emerging countries Most world trade is regional Technological exports and imports dominate world trade, especially among developed countries According to the Foreign Policy/A.T Kearny index, the United States is the seventh most globalized country The green economy offers employment and income 2-19 ... Global Countries & Global Companies • Global Demographics • The Green Economy 2-2 A PESTEL Analysis of the Macro -Global Environment 2-3 Economic Growth and World Trade Growth in global trade has... Model The Global Economy • Economic Growth • World Trade High-Tech Products • Characteristics of High Tech Markets • Globalization of Technology • Technology & Global Financial Services Global. .. advantage Figure 2-4 2-12 Global Companies & Global Countries Countries and companies can be typed according to their level of globalization • The Foreign Policy/AT Kearny Globalization Index rates