Multinational Market Groups

Background The globalization of markets, the restructuring of East Europe into independent market-driven economies, dissolution of Soviet Russia into independent states, emergence of south-east Asian economies, and the trend towards worldwide economic cooperation has divided the world market into Regional Economic Groups, popularly known as the TRIAD. The Triad represents the marketing areas of Europe, the Americas and the Asian-Pacific Rim. EUROPE European Union is the focus of the European region of the first Triad. European Community Of all the multinational groups, European Community has been the most prominent and successful economically. Earlier known as the European Common Market, the EC was created by the treaty of Rome on January 1, 1958. Despite diversity of languages, varied economic development and existence of other national interests, integration has taken place after 1000 years of economic separatism. The Single European Act (1987) finally removed all barriers to trade to make the European Community into a single internal market by December 31, 1992 and brought EC one step closer to the goal of economic integration.
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and all other individual currencies were withdrawn by January 1. Denmark and U. with wide divergences in economic levels.K.The Maastricht Treaty and European Union (Dec 1991). The agreement was ratified by 12 countries to create the European Union by 1994. were the last to ratify.K. did not join the monetary union and maintains its currency. comprises 27 members now (2008). The treaty provided for Economic and Monetary Union (EMU). The E.U. which have gained considerable authority over its members over the years. Parliamentary and Judiciary branches. 1999 as a parallel currency.. Authority The European Community’s institutions form a federal pattern with Executive. U. The E. and the ECB was also established in 2002.D. under the provisions of which a single currency.U.C. in 1995. with 3 applicants on the threshold. The E. Treaty of Amsterdam (1997) Brought the single market fully into effect and laid a solid foundation for both the single currency and enlargement of the Union into Central and Eastern Europe. G. 2002. 2 . “EURO”. Three more members joined E.U. inflation rate and agricultural production.P. to be administered by the European Central Bank to be established by 1998. exhibits a heterogeneous group. was sought to be introduced by 1997. The Euro was finally introduced on January 1.

European Economic Area Because of success of E. THE EUROPEAN PARLIAMENT originally had only a consultative role. Slovakia and Czech Republic.C. THE COUNCIL OF MINISTERS is the decision-making body of EC. Norway and Switzerland. five members of EFTA elected to join 12 members of E. EFTA will either dissolve or merge with another group.C. THE EUROPEAN COURT OF JUSTICE is the Supreme Court and is responsible for interpretation or validity of points of EC law. Other European Groups European Free Trade Association (EFTA) was conceived by U. service and capital. and later joined by Slovenia and Romania. but all joined E.C. The EEA is governed by a special Council of Ministers. and has representation of one from each member. advocating a single market with free movement of goods. Liechtenstein. but it can now amend and adopt legislation.K. Central European Free Trade Area Was organized in 1993 by Poland.. 3 . with 7 other members. Hungary. in 1994 to form the EEA.THE EUROPEAN COMMISSION initiates policy and supervises the execution of its laws and policies. subsequently except Iceland.

The Commonwealth of Independent States The CIS is a loose economic and political alliance with open borders. 4 .A. addressing all issues ranging from market access to elimination of tariffs and non-tariff barriers. and Canada was hindered by the existence of tariffs and other trade barriers. The scope was expanded subsequently (1994) to include Mexico to form NAFTA.S. THE AMERICAS North American Free Trade Agreement (NAFTA) Despite being the largest trade partners. Brazil.Economically. trade between U. which were eliminated through establishment of United States-Canada Free Trade Agreement (CFTA). rules of origin. South Cone Free Trade Area (MERCUSOR) Argentina. currency reform and control of military continue to be major bottlenecks. services and capital among members and imposed a common external tariff. CEFTA has been a success because the reduction of tariffs and free trade among the members has been achieved since 1997. Paraguay and Uruguay signed a treaty in 1991 and inaugurated the common market in 1995 to provide free movement of goods. investments etc. customs administration. but differences over economic policy. and they are striving towards a free market economy through mutual cooperation. The 12 members of the CIS share a common history of central planning. but no central government.

except adoption of a common external tariff in 2001. Caribbean Community and Common Market (CARICOM) aims to create a Common Market.Latin American Economic Cooperation Sparked by the success of NAFTA and MERCUSOR. 5 . with Japan as the central power. protectionist economic regimes. ASIAN-PACIFIC RIM Countries in the Asian-Pacific Rim constitute the third Triad. tripledigit inflation and over-regulation. Association of Southeast Asian Nations (ASEAN) was established in 1967 with 9 members with the aim of economic integration and cooperation and reduction of tariff and non-tariff barriers. there is a wave of optimism in Latin America to remove trade barriers. but limited success has been achieved. but the economies of member countries are plagued with tremendous foreign debt. Limited success has been achieved. although some reforms have been carried out to lower tariffs and other trade barriers among members. and with that objective the Latin American Free Trade Association was formed. which has now given rise to: Latin American Integration Association The objective is to establish a Latin American Common Market.

including U. Bhutan. with 18 members. 6 .Most countries of the region having been affected by the Asian financial crisis of 1997-98. but each annual meeting seems to advance it another step towards achievement of that goal. with the addition of China. and Maldives]. led to the creation of ASEAN+3. Asia-Pacific Economic Cooperation (APEC) Formed in 1989. The association of 7 countries in the region was created in 1983 with the objectives of promoting • Economic growth • Social progress • Cultural development.S. South Asian Association for Regional Cooperation (SAARC) [Includes India. Japan and South Korea to the original group of 9. Although not much progress has been made towards achievement of its objectives. bilateral negotiations have resulted in partial reduction of tariffs in certain areas. Sri Lanka. APEC is far from being a free trade area. Nepal. Closer links between Southeast Asia and Northeast Asia are seen as a step towards strengthening Asia’s role in the global economy and creating a global three-bloc configuration. APEC provides a formal structure for major governments of the region. Bangladesh. Pakistan.A. India has also been invited recently as a Special Invitee. and Canada to discuss matters of open trade and economic collaboration for mutual benefits.

Hardly any progress has been made towards achievement of the objectives on account of divergent economies. 2. with a resolve to phase out all tariffs by 2012. AFRICA Two groups exist • The Economic Community of West African States (ECOWAS) – 15 nations. • South African Development Community (SADC) – 14 members.. The global economic power may shift from the traditional industrialized markets to the developing world and its emerging markets. The world is dividing into major trading groups like E. and will provide the markets of the future. 7 . The 15th conference held at Colombo in August 2008 reiterates the resolve of members to work towards achievement of the objectives. geography and political regimes.U. NAFTA and the ASEAN Free Trade Area. Regional Trading Groups and Emerging Markets Two views have been offered: 1. providing a framework for exchange of tariff concessions and promotion of trade and economic cooperation among member countries. cultures. The only achievement has been signing of the SAARC Preferential Trading Arrangement [SAPTA] in the seventh summit in 1993.

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acquisitions and joint ventures.Strategic Implications for Marketing Goals of all regional cooperations are the same to liberalize trade and promote economic development and integration. there are problems of national markets posed by different languages. A major benefit from an integrated Europe is competition at the retail level. ************** 9 . which may spread to other regions as more integration takes place. Reciprocity Reciprocity is an important part of trade policy of multinational groups. Price standardization is one of the major achievements of multinational groups. Market Barriers The initial aim of a multinational market is to protect businesses that operate within its borders. Opportunities While multinationals will get stronger through mergers. cultures and even instability. Marketing Mix Implications Companies are adjusting their marketing mix strategies to reflect unified market patterns. The prospect of Europe as one unified market has many countries concerned in terms of the protectionist policies.

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