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Copyright2001byHarcourt,Inc.Allrightsreserved.Requestsforpermissionstomakecopiesofanypartoftheworkshouldbemailedtothefollowingaddress:PermissionsDepartment,Harcourt,Inc.,6277SeaHarborDrive,Orlando,Florida32887-6777.,INTERNATIONALMARKETING6e,NewlyEmergingMarkets,Chapter23,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-2,NewlyEmergingMarketEconomies,TherearelargedisparitiesinpopulationsizeandGDPpercapitaintheformerEasternBloccountries.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-3,ABriefHistoricalReview,LeninsTradeDecreeof1918FormalizedtheSovietforeigntradesystemasastate-controlledmonopoly.ThesystemwassubsequentlyadoptedbyCentralEuropeansatellitesoftheUSSRPeoplesRepublicofChinaCentralizedeconomiccontrol(five-yearplans)Unlinkedthemarketforcesofdemandandsupply.Thelackofcompetitionresultedininefficienciesandthemisallocationofresources.Distributionchannelswerepoorlydeveloped.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-4,State-controlledMonopolies,InternationaltradetransactionswerecontrolledandreviewedbyForeigntradeorganizations,ministriesoftrade,andstatecommitteesThemonopoliesresultedinHighlevelsofbureaucraciesLowstandardsoflivingandpercapitaincomes.Stagnantlow-growthinternaleconomiesIsolationfromtheWesterneconomies.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-5,TheShiftofthe1980s,ExportingoutsideofthecommunistblocwasencouragedandtradewiththeWestwasemphasized.ProtectionfrominternationalcompetitionwasremovedasWesternimportswereallowedentryandforeigndirectinvestmentencouraged.NewSovietpoliticalandeconomicprogramsPerestroikaGlasnost,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-6,TheDemiseoftheSocialistSystem,From1989to1992:TheIronCurtaincrumbedalmostovernight.Thecommunistempiredisintegrated.NewlyEmergingDemocracies(NEDs)inCentralEuropeandtheSovietUnionbeganshiftingtoamarket-basedeconomy.Communist-dominatedgovernmentswereremovedfrompoliticalpower.EastGermanyreunifiedwithWestGermany.TheSovietUnionseparatedintoautonomousstates.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-7,TheRealitiesofEconomicChangeinNEDs,Abolishingacentrallyplannedeconomydoesnotcreateamarketeconomy.Lawspermittingprivatesectorentrepreneursdonotcreateentrepreneurship.Reducingpricecontrolsdoesnotmakeproductsavailableoraffordable.Fundamentalconceptsofamarketeconomyarenotalwaysaccepted.Lawsandlegalprotectionsforproperty,tradeandbankingarenotfirmlyinplace.Infrastructuredeficiencieshampergrowth.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-8,RealitiesofEconomicChangecontinued,Investmentcapitalshortagesareamajorgrowthconstraint.Uniquedemandandbuyinghabitsexist;minimalmarketinformationisavailable.Substantialknowledgeresourcesexist;thereiswidespreadlackofmanagementskills.Managersandemployeescontinuetofollowoldworkingpatterns.Thelackofamarketorientationcreatesdifficultyinmanagerialdecision-making.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-9,AdjustingtoRapidChange,Expectresistancetochange.Comprehendingandunderstandingnewlinkagesandinteractionswillnotoccurovernight.Inefficientfirmsshouldgointobankruptcy.Increasedefficiencyandproductivitywillcauseunemployment.Unemploymentwillincreaseasmilitarypersonnelarebroughthomeordemobilized.Emergenceofanewentrepreneurialclasswillrelegateblue-collarworkerstosecond-classstatus.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-10,AdjustingtoRapidChangecontinued,Risingandwidespreadpricechangesmaycauseinflation.Politicalandsocialuncertaintymayproduceunanticipatedshiftsineconomicandpoliticalthinking.Thereducedthreatofwarwillchangetheeconomicdynamicsofallparticipants.Reorientationoftradeflowswillresultasoldrelationshipsaredisplacedbyeffortstoenterglobalmarkets.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-11,MarketingOpportunitiesandChallenges,ChangeintheNEDscreatesopportunitiesforvastmarketexpansionsinpopulationswithhugepotentialsforconsumerdemand.Theknowledgeoftheinternationalmanagerisveryusefulthesecountrieswhichneedassistanceinbuildingtheirowneconomiesandexpandinginternationally.ProblemsinNEDmarketingLackofavailablemarketresearchdataLackofahardcurrencyDifferencesinmarketingfocus,orientation,objectivesandtechniques.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-12,SourcingfromNEDs,ChallengesFunctionallygoodbutpoorlyfinishedproductsNegativeattitudestowardsNEDsproductsImportpossibilitieslimitedtoindustrialproductsProtectionofintellectualpropertyrightsOpportunitiesUniquenessappealofNEDproductsFully-developedindustrialproductsLargelow-costskilled-laborpoolTechnologytransfers,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-13,State-OwnedEnterprises(SOEs),ReasonsforSOEsNationalsecurityEconomicsecurityCapitalinvestmentsrequiredforlargeindustriesRescueoffailingprivateenterprisesForthegreatersocietalgoodofthecountryUsefulforpoliticalpurposesSOEeffectsoninternationalmarketingInhibitlocalmarketentryMixthesourcingrelationshipwithpolicies/politicsengaginginunfairinternationalcompetition,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-14,StrategicResponsestoState-OwnedEnterprises,Showbenefitsofworkingthroughprivatesectorandfree-marketactivities.Internationalnegotiationandgovernmentinterventionto“leveltheplayingfield.”RelaxantitrustlawssosmallercompetitorscancooperateincompetingwithSOEs.PersevereinthemarketfortheshorttermEnterintojointventuresandcooperativeagreementswithSOEs.Allowforcofinancingoflargeprojects.,Copyright2001byHarcourt,Inc.Allrightsreserved.,23-15,Privatization,Turninggovernment-runbusinessestotheprivatesectorresultsin:ThecuttingofgovernmentbudgetcostsThecreatio

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