Bryan T.

Baguisa
MBA 113-International Marketing Environment

Completing our profile of the key dimensions of the macro-business environment, this chapter
presents the general perspectives and specific tools managers use to analyze economic systems. All along,
it identifies frameworks to integrate otherwise complicated and confusing interpretations. Managers study
economic environments to estimate how market trends and government policy influence the performance
of their companies. A country’s economic policies are a leading indicator of a government’s goals and its
planned use of economic tools and market reforms.

Countries have different levels of economic development, performance, and potential. For instance, gross
world output more than quintupled between 1970 and 2012, growing from $12 to $69 trillion. Thus,
globalization seemingly expanded the economy for all. In relative terms, though, many countries prospered,
some more than others, and a few not at all. Why? Different reasons explained different performances in
different countries. Hence, dissimilar economic processes require anticipating new situations. Estimating
the attractiveness of a country as a place to do business and, once there, making prudent investment and
operational decisions depends on how well managers understand, anticipate, and adapt to the peculiarities
of its economic environment.

Economic and Political Changes Alter Market Circumstances, Although the pace varies from country to
country, economic environments continually change. Since the 1980s, companies came to enjoy
opportunities as nations adopted the principles of capitalism and practices of free markets. In the West, the
global financial crisis has reset the game, triggering market reforms and tighter regulation. In the East, it
has endorsed growing government manipulation of market activities to achieve political goals. In both
worlds, changing economic policies reveal government ambitions and spotlight implications for economic
freedom. Executives worldwide must determine if events are isolated or signal the start of a trend.
Consequently, managers study changes, both big and small, both here and there, that shape economic
environments. And, in the back of their minds, managers realize that steps taken in another country may
differ from those taken in this country. Moving from good to great performance hinges on distinguishing
common trends from unique events.
Globalization connects countries. Choice in one has consequence in others, like in the Philippines when the
president chose to grow closer to China and seemly cut ties with U.S. So companies monitor changes in
these countries where improving macro trends or revised policies open markets or strengthen competitors.

Greater competition for scarce resources raises the prices of commodities but lowers the costs of
manufactured goods; more people are working worldwide but poverty is increasing; growing political
control of economic processes improves efficiencies in the East but lessens them in the West; and recycling
massive foreign exchange reserves means capital is too cheap here, too expensive there. The rise of
emerging economies distorts traditional economic indicators.

Economics is vital to citizens, policymakers, and institutions. The apparent triumph of free markets over
government controlled economies had led many countries to launch bold liberalization programs. In the
Philippines when rice prices went up the government reenact the rice tarrification law which aims to lift the
quantitative restriction (QR) on rice imports and replace it with a general tariff to import rice so that the
prices of palay/rice drop. Now 2019, because of that law that enables the government to import rice, an
oversupply ensues. Hence, the palay drops in a plummeting price. Hence, a fuller understanding of
economic transitions and market evolution helps citizens, policymakers, and institutions make better
decisions so that problems like these wi/ll not happened.

• System Complexity The complexity of even the simplest economic system defies straightforward
classification. Stipulating indicators that definitively represent a country’s economic performance and
potential is difficult. Certainly, managers consult an ever expanding set of indicators. The challenge is
identifying those that matter, mapping them onto a market, and monitoring their performance.

• Market Dynamism Often, market changes make today’s valid measures invalid tomorrow. In the
wake of the global financial crisis, some indicators that worked in 2007 were flawed by 2009 and remained
dubious in 2013. On a larger scale, analysis anchored in the market fundamentalism of the West poorly fits
the state-sponsored capitalism at play in the East. Challenges arise in determining how to adjust trusted
market analytics for new circumstances.
• Market Interdependence Just as no one is an island, no country is isolated. The consequence of
connections is an integrated system in which actions in one market influence outcomes in others.
Interdependencies complicate interpretations. Adjusting analysis for actions and reactions across a broad
scope of markets is difficult.

• Data Overload Managers are flooded with more information, raw knowledge, and clever insights
than ever before. Rather than improving market analysis, increasing data streams from workplace chats,
mail, email, websites, voicemails, instant messaging, telephone and cellphone calls, memos, and onward
complicates interpretation. If unchecked, analysis paralysis confounds decision-making.

Determining which countries warrant investment is not easy. It’s very difficult to assess the potential of a
country because any type of assessment relies on behavioral assumptions as well as more scientific
principles. There are some 208 discrete economic environments in the world today. Managers need to
narrow them down and identify exactly which countries offer the greatest potential return for the least risk.