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America. The crisis shifted the emphasis from overvalued exchange rates to
undervalued exchanges rates to facilitate export competitiveness. So there
is an unbalanced world trade, that causing all this problems.
Consequences of imbalances
United States consumes about 18% of global GDP. Asia has an export led
economy and the Middle East never stops producing oil, so the nations are
counterbalancing Americas substantial external deficits. They describe how
African nations have largely kept pace with Asia rapid rate of reserve
accumulation. The problem comes with holding excess reserves. Third world
countries apply techniques that are not adequate like covering 3 months
worth of imports, or for short-term debt maturing within a year, and that has
a cost. Countries start losing money because of that because on the interest
rate differential between debt issuance, as well as revaluation. So countries
are dependent on the marketing expertise of its businesses to raise
consumption in LDCs. Reserves, cannot be spent on socially beneficial
domestic programs like education, retirement or healthcare because of the
loss.
Putting marketing to work
To change marketing views toward increasing consumption in emerging
markets call for a shift from short-term to longer-term thinking. This change
will lead to companies aiming for new markets, and toward buyers in the
developing world.
A wrong move from most develop countries will be to reduce the
consumption of overseas good through tariff. This move will create a price
war, which will not bring advantage to anyone. Experts support this idea
because during great depression in the 30s, tariff instead of helping the
economy, shrink even more peoples economy and started a price war.
Protectionism is another solution that can bring more harm than good.
Besides reducing consumption, protectionism can bring retaliation between
countries. A country-giving tariff to foreign products is prone to be imposed
with tariff to their products that sell overseas, leading to an escalade of
prices. When prices increase, people will change into saving more money,
creating a cycle of lowering consumption and shrinking the economy. This
happened to Chine during 2000s. When prices rose due to exchange rates
and increasing of prices, investments were affected and the all economy
reduce, as GDP of those years exhibit.
2. PROBLEM DEFINITION
To implementing a better marketing to developing countries, have not to
focus on just the macroeconomic conditions of each countries, because
marketing is not just about the money countries would spend with a better
marketing. A better marketing also includes cultural factors, language, and
creativity. So, the problem is that they focus more about the macroeconomic
conditions.
3. SWOT Analysis
STRENGTHS
WEAKNESSES
OPPORTUNITIES
Markets have become saturated and profits from targeting the top
are thinning, astute managers recognize the latent possibilities
which lie in marketing to what has been called the bottom of the
pyramid.
THREATS
international marketers may need to faces and the suggested approach for
each challenge as following:
If Consumer priorities change the firm should examine the needs for a
more productive lifestyle and then compare them and adapt them to
the corporate capabilities.