Chapter 05 - Integrating Global, Regional, and National Markets

GLOBAL MARKETING 9TH EDITION

KEEGANGLOBAL MARKETING
CONTEMPORARY THEORY
PRACTICE AND CASES 1ST EDITION
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CHAPTER 5
INTEGRATING GLOBAL, REGIONAL, AND NATIONAL MARKETS

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

• Be aware of the difference between regional and global trade agreements

• Understand the difference between various types of regional economic blocs.

• Understand the key issues and concepts associated with emerging markets,

especially the BRIC countries.

• Discuss why there is more regional than global trade.

• Make an argument for “fair trade.”

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Chapter 05 - Integrating Global, Regional, and National Markets

• Determine which emerging markets have the most potential and why.

While most consumers are free to choose between locally made and imported products, in

reality, international commerce involves some sort of government intervention to protect

domestic industry. Protectionist policies include tariffs (taxes on imports), quotas (limits

on the quantity of imports), and non-tariff trade barriers such as mandates on the quality

or the content of imported goods. While enforced with little difficulty on a domestic

basis, it is difficult to expand these regulations extraterritorially. Even within the

European Union, member states exhibit signs of protectionism. Yet most economists

agree that trade liberalization contributes to a more positive global economy.

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Chapter 05 - Integrating Global, Regional, and National Markets

Regional trade agreements lower trade barriers among members without having to lower

barriers for non-members. Geographically more limited than multilateral or global

agreements, the regional agreement has become the primary means of international trade

expansion. Free trade blocs such as the North American Free Trade Agreement

(NAFTA) and customs and monetary unions, like the European Union (EU) resulted in

the removal of trade barriers between member countries, and a concentration of trade

within regions rather than globally. These regional blocks significantly influence market

entry choices due to preferential trading terms and potentially reducing the costs of

serving multiple country markets.

While regional economic groups have accelerated international trade flows worldwide,

flows are still concentrated in developed countries, and in particular, in the Triad nations

of the United States, the European Union and China. The U.S. is still the largest exporter

and importer in the world, but may soon lose this distinction to China. China’s newly

dominant presence in world trade has created opportunities for many countries, but also a

staunch new competitor, particularly in industries such as textiles and electronic goods.

This contributes in large part to Asia’s status as the world’s fastest growing economy. It

is likely that global investment will shift from developed nations to the world’s emerging

economies such as those in Asia.

"Single markets" as exemplified by the EU, NAFTA and Mercosur, represent integrated

economies united by harmonized regulatory standards and common levels of social

protection. Firms doing business in these regions must abide regulations established both

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Chapter 05 - Integrating Global, Regional, and National Markets

by the individual country and the economic region. These regional trading blocs exist in

one of three forms: free-trade areas, customs unions and common markets.

Free trade areas eliminate tariffs and other trade barriers between member nations, while

policies toward countries outside the agreement remain unaffected. NAFTA is the most

often cited example of an FTA. While successful in increasing inter-group trade, a

downfall of the arrangement is the potential for diversion. In this scenario, imports

formerly destined for one country within an FTA are diverted to another member with

lesser external tariff rates. The balance of the markets encompassed in the agreement is

then accessed at a lesser cost, enhancing the competitive position of the exporter.

Another well-known FTA is the European Free Trade Area, which includes those

countries that did not opt to join the European Union. Many bi-lateral agreements are

also in existence.

A customs union contains the same provisions as a free-trade area with one major

addition – a common external tariff. This arrangement discourages diversion.

The most advanced form of trade bloc is the common market, which combines the

provisions of a customs union with two additional criteria, the free movement of people

and capital. The largest of the common markets is the European Union. The EU seeks to

further its inter-union ties via the creation of both monetary and political unions. And,

while internal tariff barriers have been eliminated, non-tariff barriers such as production

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Chapter 05 - Integrating Global, Regional, and National Markets

and content specifications still remain between members. An attempt to harmonize

standards is ongoing.

The ultimate objective of the EU…the political union …requires the renunciation of

national sovereignty in favor of the union’s political identity.

While its size and relative success in synthesizing member nations make the EU the most

referenced trade bloc, most major geographic regions have formed blocs with similar

motives, such as ASEAN and Mercosur.

Free trade and fair trade are distinctly different concepts. While free trade refers to the

removal of trade barriers, fair trade addresses the issue of social justice in global

economies by concerning itself with the proffering of fair prices for goods and preserving

human dignity in the workplace. Several NGOs, or non-governmental organizations,

work to promote the fair trade concept. Global marketers should be aware of the growing

importance of these organizations.

Emerging markets have been identified by many economists as the global opportunity of

the future. An emerging market essentially refers to any developing country, identified by

GATT as nations with low standards of living…an obtuse definition at best. Others

assume that emerging markets are those that are transitioning to a free market economy.

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Chapter 05 - Integrating Global, Regional, and National Markets

The CAGE model is relevant to a profile of emerging markets. In addition to the obvious

differences in economic development, large cultural distances exist between emerging

and developed nations. This is certainly evident in the case of corporate social

responsibility. Administrative distances are most prevalent when emerging nations are

unengaged in any type of multilateral grouping. Geographic distances exist both within

countries and regions.

One of the fastest growing groups of emerging economies is comprised of Brazil, Russia,

India and China. These BRIC countries offer high consumer potential and that could

soon overtake the economies of the developed world. BRIC countries are not only major

sources for manufacturing, but are consumers of basic products like food and clothing,

and high technology products as well. The lower average incomes prevalent in emerging

markets may require a repositioning of products targeted to the middle class in developed

nations. Alternately, products may be adapted for sale at lower prices. Yet the sheer

growth of these markets justifies the adaptation of the marketing mix. As the BRIC

countries experience rapid economic growth, other emerging markets such as South

Korea, Taiwan and many Eastern European countries are also developing rapidly.

TEACHING TIPS & CLASS DISCUSSION SUGGESTIONS

1. Have students pair off and prepare for a debate. At issue: are American security

interests best served by retaining domestic control over security related products and

services, or rather, by expending taxpayer funds in the most cost-efficient manner?

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Chapter 05 - Integrating Global, Regional, and National Markets

2. Wal-Mart is often criticized for the amount of imported Chinese goods it retails.

The large volume of imports is perceived to have a negative impact on the U.S. economy,

resulting in higher unemployment and lower wages. Take a poll of students, ideally

using clickers, Twitter or Survey Monkey so that responses can remain anonymous. The

single question? If prices at Wal-Mart were 30% higher tomorrow than they were today

as a result of a new ‘buy American’ strategy, would you be as likely to shop there?

The results may vary, but generally students will respond in the negative. This provides

an exciting foundation for class discussion regarding the real benefits and disadvantages

of imports for the consumer.

3. The concept illustrated by Figure 5.5, An Example of Trade Diversion, can be

made more relevant to students by providing them with different hypothetical revenues

for the manufacturer. Students are then able to compare and contrast the pre-and post

diversionary revenue stream that is derived under the higher and lower tariff levels. This

also sharpens their ability to apply simple math reasoning skills to global trade scenarios.

4. The differences between various forms of political integration can often confuse

students who are being introduced to the concept for the first time; variations can seem

subtle and unremarkable. Ask, “Why is the European Union not yet considered a fully

integrated economic and monetary union? Which European Union nation(s) have not yet

adopted the Euro, and why? What challenges are the nations of the EU currently facing

with regard to the economic crisis currently afflicting several of their countries?”

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Chapter 05 - Integrating Global, Regional, and National Markets

5. Individually or as a class, have students visit the nearest grocery store and identify

5 products which are marketed as ‘fair trade’ products. Most likely merchandising areas

will include coffee, tea, chocolates, rices and other grains, flowers and gift merchandise.

Students should comment on how they recognized the product(s) as ‘fair trade’ products?

Do they notice any difference in price between fair trade and ‘non-fair’ trade items in the

same category? And, now that they’ve identified fair trade options, would they be more

likely to select them for future purchase?

INTERNET EXERCISES

1. Complete online research on NAFTA. Summarize the agreement’s economic

impact, both positive and negative, on all three participating nations. Remember to

address not just trade-related impacts, but also secondary consequences to such factors as

employment, trade diversion, immigration and productivity. Students should be sure to

cite all of their online resources.

2. Visit the Fair Trade USA site at Fair Trade USA | Every Purchase Matters. View

the trailer of the movie, “Black Gold,” and read the accompanying article. Then consider

these questions from the Fair Trade perspective:

What does "commodity coffee" mean for producers and for consumers?

What obligation, if any, should large coffee companies have to help small farmers?

Is fair trade the answer, or is it unrealistic for the Ethiopian economy to continue to

depend so heavily on coffee?

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Chapter 05 - Integrating Global, Regional, and National Markets

Why do you think efforts to help Africa have focused more on providing aid than

increasing or improving trade?

Do you plan to change your coffee-buying or drinking habits? If so, how?

3. Emerging markets such as those encompassed by the BRIC nations, and more

recently the BRICI designates which also include Indonesia, are considered hotbeds of

market potential for anything and everything digital. However, the opportunities for

digital products and services vary based upon the stage of internet and digital device

availability. Research the BRICI nations’ potential for digital products online, comparing

and contrasting the products and services most likely to succeed in each. Start by visiting

the Boston Consulting Group website at

http://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-59401.

ANSWERS TO DISCUSSION QUESTIONS

1. Look up export statistics for your State. Are there exports to emerging markets? If

so, what is the proportion of exports compared to developed countries.

Student responses will vary.

2. Do you agree that there is little difference between emerging markets and

developing countries? Why or why not?

Student responses will vary but these are the important points that should be surfaced:

• Measures of national income in emerging markets are lower than those of

developed countries, although market potential is often as substantial.

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Chapter 05 - Integrating Global, Regional, and National Markets

• Emerging markets are considered to be transitioning from a dictatorship to a free

market-oriented economy. This is not the case with all developing nations. The

implication is that emerging countries are more likely to experience rapid economic

growth and support from organizations such as the World Bank and the IMF.

• It can be said that while all emerging markets are also developing countries, not

all developing countries are emerging markets

3. You are asked by the owner of a medium sized firm manufacturing digital alarm

clocks. He thinks there is a market for his product in the BRIC countries. How would you

advise him on what to look for first?

The consultant should look for quantified market potential indicators. These include

market size and growth rate, market intensity and consumption capacity, commercial

infrastructure, economic freedom, market receptivity and country risk.

Several of the factors noted above, while part of an index, speak to more qualitative

issues such as cultural fit of the product and the firm (market receptivity), commercial

infrastructure (channel partner availability and skill set).

ADDITIONAL RESOURCES

Europa: Gateway to the European Union http://europa.eu/about-eu/facts-

figures/index_en.htm

BBC News World Radio and Television BBC News - World Radio and TV

http://www.bbc.co.uk/news/world_radio_and_tv/

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Chapter 05 - Integrating Global, Regional, and National Markets

NAFTA Secretariat Website http://www.nafta-sec-alena.org/en/view.aspx

Mercosur Website with Google Translator

http://translate.google.com/translate?hl=en&sl=es&u=http://www.mercosur.int/&ei=Qb

W1Tt_HB7OjsQKZne3ZAw&sa=X&oi=translate&ct=result&resnum=1&ved=0CC4Q7g

EwAA&prev=/search%3Fq%3Dmercosur%26hl%3Den%26rls%3Dcom.microsoft:en-

us:IE-

SearchBox%26rlz%3D1I7GGLL_en%26biw%3D942%26bih%3D486%26prmd%3Dimv

ns

The Official Website of the Association of Southeast Asian Nations The Official Website

of the Association of Southeast Asian Nations

http://www.aseansec.org/

Fair Trade USA Fair Trade USA | Every Purchase Matters http://fairtradeusa.org/

Marcos Aguiar, Vladislav Boutenko, David Michael, Vaishali Rastogi, Arvind

Subramanian and Yvonne Zhou, “The Internet’s New Billion Digital Consumers in

Brazil, Russia, India, China and Indonesia” The Boston Consulting Group Review,

September, 2010.

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The Project Gutenberg eBook of The American
Red Cross Bulletin (Vol. IV, No. 2, April 1909)
 This ebook is for the use of anyone anywhere in the United
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eBook.

Title: The American Red Cross Bulletin (Vol. IV, No. 2, April
1909)

Author: American National Red Cross

Release date: November 8, 2023 [eBook #72072]

Language: English

Original publication: Washington, D.C: The American Red

Cross, 1909

Credits: hekula03 and the Online Distributed Proofreading Team

at https://www.pgdp.net (This book was produced from
images made available by the HathiTrust Digital
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*** START OF THE PROJECT GUTENBERG EBOOK THE

AMERICAN RED CROSS BULLETIN (VOL. IV, NO. 2, APRIL 1909)
***
 The American Red Cross
Bulletin (Vol. IV, No. 2)

VOL. IV. APRIL, 1909. No. 2.

AMERICAN
RED CROSS
BULLETIN

NATIONAL HEADQUARTERS
WASHINGTON D C

Yearly Subscription, 50 cents. Single Copy, 15 cents.

(Issued Quarterly.)
 ADVANCED SPECIALTIES FOR
SICKROOM AND HOSPITAL.
“MEINECKE”
TRADE MARK

SIMPLEX
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PAPER SPUTUM CUP
With Hinged Cardboard Cover which Closes Automatically
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TO BE BURNED WITH CONTENTS
PATENTED OCT. 29, ’07
PAPER CUP CUP IN HOLDER WITH COVER RAISED
WIRE HOLDER
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Best Paper Sputum Cup on the Market
SIX REASONS WHY
1.—It is already folded into shape for immediate use.
2.—Each Cup has a cardboard cover, attached with a paper hinge,
and both Cup and cover are burned after being in use a day.
3.—The cover is easily and quickly raised, and closes automatically.
4.—The Cup having no flanges, allows free entrance of sputum.
5.—It is made of heavy manila, waterproof paper, which, being light
in color, facilitates ready examination of the sputum.
6.—It has a neat wire holder, which is easily kept clean.
RETAIL PRICES
NO. 1 PACKAGE 10 paper Cups, with covers and one Wire Holder,
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 NO. 2 PACKAGE 10 paper Cups, with covers, but without the
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Some prefer to use a new Holder with every ten Cups, but one Holder will do for a
hundred or more.
PRICE OF HOLDER, IF SOLD SEPARATELY, 10c. EACH
Special Prices Made to Hospitals and Sanatoriums
Sent by Mail, Prepaid, upon Receipt of Price.
MEINECKE & COMPANY
48-50 Park Place New York
THE AMERICAN RED CROSS
Officers
President,
HON. WILLIAM H. TAFT.
Vice-President,
ROBERT W. de FOREST.
Treasurer,
HON. CHAS. D. NORTON.
Counselor,
HON. LLOYD W. BOWERS.
Secretary,
CHARLES L. MAGEE.
Chairman of Central Committee,
MAJOR-GENERAL GEO. W. DAVIS, U. S. A. (Ret.)
National Director,
ERNEST P. BICKNELL.

Board of Consultation
BRIGADIER-GENERAL GEORGE H. TORNEY,
Surgeon-General, U. S. Army.
REAR ADMIRAL PRESLEY M. RIXEY,
Surgeon-General, U. S. Navy.
SURGEON-GENERAL WALTER WYMAN,
U. S. Public Health and Marine Hospital Service.
 Central Committee 1908-1909
Major-General George W. Davis, U. S. A. (ret.), Chairman.
Brigadier-General George H. Torney, Surgeon-General, U. S.
Army, War Department, Washington, D. C.
Hon. Huntington Wilson, Assistant Secretary of State, Department
of State, Washington, D. C.
Hon. Charles D. Norton, Assistant Secretary of the Treasury, U.
S. Treasury Dept., Washington, D. C.
Medical Director John C. Wise, U. S. N., Navy Department,
Washington, D. C.
Hon. Lloyd W. Bowers, Solicitor-General, Department of Justice,
Washington, D. C.
President Benjamin Ide Wheeler, University of California.
Mr. John M. Glenn, 105 East 22d street, New York, N. Y.
Miss Mabel T. Boardman, Washington, D. C.
Hon. James R. Garfield, Secretary of the Interior, Washington, D.
C.
Hon. A. C. Kaufman, Charleston, S. C.
Hon. H. Kirke Porter, 1600 I street, Washington, D. C.
Mr. John C. Pegram, Providence, R. I.
General Charles Bird, U. S. A., Wilmington, Del.
Col. William Cary Sanger, Sangerfield, N. Y.
Judge Lambert Tree, 70 La Salle street, Chicago, Ill.
Hon. James Tanner, Washington, D. C.
Mr. W. W. Farnam, New Haven, Conn.
Note—Attention is invited to the recent changes in the Officers
and Central Committee members.
 The President of the United States has appointed Hon. Huntington
Wilson, Hon. Charles D. Norton, Brigadier General George H. Torney
and Hon. Lloyd W. Bowers members of the Central Committee to
represent the Departments of State, Treasury, War and Justice,
respectively. The Executive Committee has elected Hon. Charles D.
Norton Treasurer and Hon. Lloyd W. Bowers Counselor to fill the
vacancies caused by the resignations of the former Treasurer and
Counselor.
 CONTENTS
PAGE
Preface 5
The Sicilian and Calabrian Earthquake 7
Contributions to the Italian Red Cross 9
The American Red Cross Orphanage 11
Houses for Italy 16
Early Days of Relief (illustrated) 19
By W. Bayard Cutting, Jr.
Red Cross Relief Ship Bayern (illustrated) 43
By Lieut.-Commander Reginald R. Belknap, U.
S. A.
Other Measures of American Red Cross Relief 58
Italian Relief Notes (illustrated) 59
American Red Cross Receipts by States 64
How New York Raised Funds for Italy 66
Origin of the Christmas Stamp (illustrated) 69
Funds Raised through Sale of Red Cross
Christmas Stamps, 1908 (illustrated) 75
Competition for 1909 Christmas Stamp Design 82
South China Flood Relief (illustrated) 83
An Inspiration (illustrated) 89
By Nellie Olmsted Lincoln.
The Story of the Red Cross (with Portrait) 92
Rules for the Prevention of Railroad Accidents 95
Notes 96
Entered at the Post Office, Washington, D. C., as second-class matter.

Messina—View Showing Destruction Along Water Front.

(By courtesy of the New York World.)

His Excellency, Lloyd C. Griscom, American Ambassador at Rome.
 WILLIAM H. TAFT
Copyright, Harris-Ewing, ’08.

PREFACE
The April Bulletin appears with a new cover, on the front page of
which is a symbolical figure representing the Red Cross—a strong,
womanly form, with arms outstretched over the victims of battle and
disaster. What it means to any community devastated by some
terrible calamity, and what it means to the sick and wounded in time
of war to know that a great, strong, sympathetic organization stands
ready and prepared to bring them instant help, only those who have
taken part in active relief work can fully understand, but everyone
can have some realization of the uplift and encouragements the Red
Cross can bring in the terrible days of suffering and depression that
follow disaster.
Something of what our American Red Cross has been able to do
in Italy for the victims of the most terrible catastrophe of modern
times is told in this Bulletin. We are glad to have been able to give
our sympathy practical form, and let the deeds of our Red Cross
prove the solidarity of international brotherhood.
The report of the Red Cross Christmas Stamp is given in this
number, showing how this little stamp of good cheer has
accomplished a very good and widespread mission.
 MISS MABEL T. BOARDMAN
Copyright, Clinedinst, ’08.

From China has come a report of the relief work, after the flood,
near Canton, last year, with illustrations forwarded by the American
Vice-Consul there.
A report of the Red Cross work at the time of the Inauguration will
be given in the July Bulletin.
 Our people give so liberally when disaster arouses their sympathy,
but may we not hope that the time will soon come when, by gifts and
legacies to its Endowment Fund, our American Red Cross may be
possessed of such a certain income that it can “continue and carry
on a system of national and international relief in time of peace, and
apply the same in mitigating the sufferings caused by pestilence,
famine, fire, floods and other great national calamities, and to devise
and carry on measures for preventing the same.” according to its
charter, and have always funds on hand with which to render first aid
when disasters occur, without having to wait until contributions are
received.
The patriotic men and women of other countries have given
millions of dollars in small and large donations and legacies to the
permanent funds of their Red Cross societies. Will not our men and
women show an equally patriotic and humane spirit by doing the
same for the American Red Cross?