Reference no: EM131422119

Read Chapter 2. Respond to each question fully, using proper grammar and spelling. Submit as a Word Document:

1. Explain the difference between market capitalism, centrally planned capitalism, centrally planned socialism, and market socialism. Give an example of a country that illustrates each type of system.

2. The seven criteria for describing a nation’s economy introduced at the beginning of this chapter can be combined in a number of different ways. For example, the United States can be characterized as follows:

Type of economy: Advanced industrial state

Type of government: Democracy with a multi-party system

Trade and capital flows: Incomplete free trade and part of trading bloc

The commanding heights: Mix of state and private ownership

Services provided by the state and funded through taxes: Pensions and education but not health care

Institutions: Transparency, standards, corruption is absent, a free press and strong courts

Markets: Free market system characterized by high risk/high reward entrepreneurial dynamism

Use the seven criteria found on pp. 42-43 to develop a profile of one of the BRIC nations, or any other country that interests you. What implications does this profile have for marketing opportunities in the country?

3. Why are Brazil, Russia, India, and China (BRIC) highlighted in this chapter? Identify the current stage of economic development for each BRIC nation.

4. Turn to the Index of Economic Freedom (Table 2-3) and identify where the BRIC nations are ranked. What does the result tell you in terms of the relevance of the index to global marketers?

5. The Heritage Foundation’s Index of Economic Freedom is not the only ranking that assesses countries in terms of successful economic policies. For example, the World Economic Forum (WEF; www. weformum.org) publishes an annual Global Competitiveness Report; in the 2010-2011 report, the United States ranks in sixth place according to the WEF’s metrics. By contrast, Sweden is in third place. According to the Index of Economic Freedom’ rankings the United States and Sweden are in sixth and twenty-sixth place, respectively. Why are the rankings so different? What criteria does each index consider?

6. When the first edition of this textbook was published in 1996, the World Bank defined “low-income country” as one with per capita income of less than $501. In 2003, when the third edition of Global Marketing appeared, “low income” was defined as $785 or less in per capita income. As shown in Table 2-4 of this chapter, $995 is the current “low income” threshold. The other stages of development have been revised in a similar manner. How do you explain the upward trend in the definition of income categories during the past 15 years?

7. A manufacturer of satellite dishes is assessing the world market potential for his products. He asks you if he should consider developing countries as potential markets. How would you advise him?

8. A friend is distressed to learn that America's merchandise trade deficit hit a record $646 billion in 2010. You want to cheer your friend up by demonstrating that the trade picture is not as bleak as it sounds. What do you say?