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MGCR 382 (35)
John Saba (3)
Chapter 1

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Department
Management Core
Course
MGCR 382
Professor
John Saba
Semester
Summer

Description
Marketplaces of Western Europe The countries of Western Europe make up 2 part of the triad, and are among the most prosperous countries European Union member countries 27 countries  Reduced barriers to trade and investment among themselves to achieve prosperity  They are democracies politically with mixed economies  Eurozone (17 EU members has replaced their currency with a common currency, the euro) Other countries in Western Europe Iceland, Norway, Switzerland, Andorra, Monaco, Liechtenstein  Are considered rich by the world bank and are mixed economies, and constitute the European Free Trade Area (EFTA) Germany Largest EU economy A leading exporter of machinery, vehicles, chemicals, household equipment  Benefits from highly skilled labor force Germany rates the highest scores for business sophistication. Germany runs tight operations, boasting strong international distribution, and the world’s 3td most sophisticated production lines Germany’s challenges  Significant demographic challenges, (low fertility rate, declining net immigration pressure the country’s welfare system)  The modernization and integration of the formerly communist Eastern Germany continues to be a costly long-term process Germany’s medium-term recovery prospects are clouded by the Eurozone crisis, tighter credit markets, rising public debt France Politically strong and leading proponent of increased political economic and military union within EU France is a modern economy transition from much government ownership and intervention, to more reliance on market forces The government has partially or fully privatized many large firms  But it still maintains strong presence in some sectors particularly power, public transport, defense industries France suffers from chronic annual trade deficits. France’s leaders remain to a mixed economy United Kingdom UK, has opposed and been a counterweight to France, arguing for: freer markets and trade (not protectionism) and power at the national (not supranational) UK is freer than France and Germany according to the Index of Economic Freedom  The most problematic factors for doing business in UK are: tax rates, access to financing, inefficient government bureaucracy and tax regulating In terms of competitiveness : Germany > UK > France  Switzerland is the most competitive country in the world due to its ability to look to the future and remain in the cutting edge (world’s most readily available financial services that helps businesses borrow money to R&D) In 2002, 12 Euro countries replaced their currency with the Euro PIGS (Portugal, Ireland, Greece, Spain) and Finland, France, Belgium, Netherlands, Austria, Germany) Newest EU members : Estonia, Latvia, Lithuania, Bulgaria, Czech Republic, Slovakia, Hungary, Poland, Romania, Slovenia (Estonia, Czech Republic, Slovenia are already achieving high income status)  Due to the breaking down of the Soviet Union’s regional trading system, the Soviet satellite systems o Had to adjust to the loss of guaranteed export markets o Had to restructure their economic, political and legal systems from centrally planned communist systems to decentralized mixed systems Markets of Eastern Europe 1991  Economic and political reforms caused the USSR to collapse, its 15 soviet republics declared independence as the Newly Independent States (NIS) 1992  12 of the NIS formed the Commonwealth of Independent States (CIS) – a forum to discuss issues of mutual concern Russia is the most important of the CIS countries, with the largest land mass. It is a transitional/emerging economy  It has become a mixed and globally integrated economy (with difficulty) o Russia has benefited from the increase prices of oil and raw materials (solid GDP growth rate – annual rate of 5.9% since 2000)  Real disposable incomes have doubled and a middle class has emerged o Privatization of most industry in 1990s due to economic reforms  Except in energy and defense-related sectors  The rapid privatization process turned over major state owned firms to politically connected “oligarchy” and left equity ownership highly concentrated  Limitations of Russian market sector  Protection of property rights  Heavy state interference in private sector Russian industry is divided in 2 main sectors  Globally competitive commodity producers  Less competitive heavy industries (dependent on Russian domestic market) Challenges  Corruption, crime/theft, inefficient government bureaucracy, (long term challenges) shrinking workforce, poor infrastructure in need of large capital investment Marketplaces of Asia Home to 50% of the world’s population, produces 25% of the world’s GDP (its share of production is rapidly rising), source of high and low quality products/skilled and unskilled labor Asia is a major recipient of FDI and a major supplier of investment  Successful Asian firms provide competitive pressure to North American and European forms to improve their operations  East Asia has 7 of the top 20 firms Japan GDP annual growth
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