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Understanding Economics Advanced Marketing Part 1. Competency 51: Analyze Evolving Economic Systems Competency 52: Describe Impact of Global Marketing on Business in America. Analyzing Evolving Economic Systems. Knowledge Required to Conduct Analysis: - PowerPoint PPT Presentation
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UNDERSTANDING ECONOMICSADVANCED MARKETING
PART 1
Competency 51: Analyze Evolving Economic Systems
Competency 52: Describe Impact of Global Marketing on Business in America
Analyzing Evolving Economic Systems
Knowledge Required to Conduct Analysis: Understanding of the types of economic
systems Advantages and disadvantages of each
type Understand definition of global marketing Understand impact of economic
interdependence among nations resulting from evolving economies
Three Basic Economic Questions
What to produce?
How to produce?
For Whom to produce?
Factors of Production Land- natural resources
Labor- available work force; education level (skilled/unskilled)
Capital- money, infrastructure, equipment/production facilities
Entrepreneurship-creativity; inventiveness
Types of Economic Systems
Market Economy Mixed Economy Command Economy Custom-based Economy
Economic systems are developed by each nation based on resources of the country and how the nation wants to
answer three basic questions in how to use those limited resources
Market Economy
The market (consumers and businesses) answers the three basic economic questions:
What will be Produced- through purchases in marketplace
How products will be Produced- businesses decide this; competition spurs businesses to be efficient and produce to be price competitive
For Whom to produce- produce for whoever has money to purchaseIn a Pure Market Economy There is No Government Intervention
Command EconomyGovernment answers the basic economic
questions:What will be Produced- one person; dictator of group of government officials based on what they believe is
importantHow products produced- government owns all property and therefor controls how goods and
services producedFor Whom to produce- government decides this; in
principle wealth is shared equally to meet basic needs
The individual/companies have no input
Traditional EconomyTraditions and rituals answer
the three basic economic questions:What will be Produced- based on the traditions-
no choice in what to produce Ex: farming community that has farmed for generationsHow products produced- bound by tradition-
uses practices from generationsFor Whom to produce- Tradition regulates who
buys and sells and where and how exchange takes place
Cultural and religious practices passed down from one generation to another is basis for decisions
Mixed Economy No economy is purely traditional, market,
or command Every economy has influences that make
it somewhat mixed Meaningful classification of economic
systems is made based on how much a government interferes with free market
Three political philosophies shape world economies: Capitalism, Socialism, and Communism
Capitalism Marketplace competition Private ownership of business Embraces principles of free enterprise (Private
ownership, Risk, Profit, and Competition) Government is concerned about people and
cares for those who cannot care for themselves
Number of social services does not match that of a socialist country
Communisim
Government controls factors of production
No private ownership of property or capital
Theory is that goods owned in common (by government representing the community as a whole) are available to all as needed and that society is classless
Socialism Originally referred to a system on its way to the communist
ideal of a classless society Most socialist countries today have democratic political
institutions Differ in capitalist nations in the increased amount of
government involvement in the economy Main goal is to meet basic needs for all and to provide
employment for many
Characteristics include: more social services for everyone; free or low cost medical care; high taxes for business and individuals to pay for this. Government runs key industries
Free Enterprise
Used interchangeably with terms capitalism and market economy
Type of system in United States Four characteristics:
Private Ownership of Property & Business
RiskProfitCompetition
Checkpoint!Economic Basics and Types of Economies Divide in to groups of 2-3 people per
group Using the Internet, conduct basic
research and complete the Comparing Types of Economies assignment.
Each member of the group must turn in this assignment separately, however, students will share laptops and collaborate in completing the activity.
Due end of class. 50 PointsComparing Types of Economies
Terms and Things to Know Economy Market Economy Command Economy Mixed Economy Traditional Economy Factors of Production 3 Economic Questions
Socialism Communism Capitalism Free Enterprise Characteristics of
Free Enterprise
Quiz Next Class- 50 Points
Economies in Transition Changing from centrally planned (government)
economy to market economy Undergo economic liberalization (market forces
set prices rather than government) Socialist countries moving towards
privatization with selling off of state-run businesses to help balance their budgets
Developing countries that are mostly poor with little industrialization trying to become more prosperous and develop infrastructure and improve education levels of their work force
What is Global Marketing? Marketing on world-wide scale Exporting Franchising Provide valuable products, solutions and
services to customers locally, nationally, internationally and worldwide
Impact of Global Marketing on Business
Benefits and Challenges of Global Marketing
Impact of Increasing Competition on American businesses
Resources of U.S. versus those of our foreign competitors
Benefits and Challenges of Global Marketing to American Businesses
BENEFITS CHALLENGES Larger markets-
potential for more markets
Lower costs for production and distribution
New supplier/vendor relationships
Brand prestige
Different strategies for cultural, religious, and language barriers
Increased expenses Loss of domestic
production/jobs Risks
Impact of Increasing Competition on American
Businesses Compete with low cost producers (foreign
production) Mass market retailers (Walmart, Sears,
Target, Costco, Best Buy) ability for volume purchases of low cost foreign products- results in American businesses going out of business
Pricing and Distribution create more difficult environments in which to compete (Internet)
Resources of US Versus Foreign Competitors
Foreign Resources Only Canada and
Australia has similar resource
Low cost producers often have unskilled labor
Resources of US Abundance of
natural resources- land mass and coastlines for shipping
Entrepreneurship and Labor Diversity
Skilled Labor