Page 57 - International Marketing

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BRILLIANT'S International Marketing Environment 59

There is an evolving pattern of government directed economic reforms,
lowering of restrictions on foreign investment and increasing privatization of
state owned monopolies, in these emerging markets. Such markets often
have dual economy. There is demarcation between wealthy urban
professional class and a poorer rural population. Income distribution is much
more skewed between the ‘haves’ and “havenots” than developed countries.
High economic growth is often accompanied by high inflation. Poland,
Brazil, Mexico and China, all have suffered from high rates of inflation
recently. It tends to be a more persistent problem in the developing world
than the developed world. Due to high inflationary environment, lesser
developed countries are suffering from high levels of external debt.
(iii) Less Developed Countries (LDC’s): This group includes
underdeveloped countries and developing countries. The main features
are a low GDP, per capita income, a limited amount of manufacturing
activity and a very poor and fragmented infrastructure. The transportation,
communication, education, healthcare and other infrastructure are very
weak. The public sector is also slow moving and bureaucratic.
Generally, the LDC’s are heavily dependant on one product and one are
trading partner. In many LDC’s this product is the main export earner.
Amongst 28 LDC’s seven receive over 1/2 and nine receive between 25 and
50% of their export earnings from the main export commodity. In addition, 3
quarters of LDC's depend on their main trading partner for more than 1 quarter
of their export revenue. This risk is posed to the LDC by changing patterns of
supply and demand which are great. Falling prices of the commodity can
result in great decreases in earning for the whole country.
Countries such as Columbia (coffee), Cuba (Sugar), Ghana, (Cocoa),
Mali (cotton) are examples of dependence upon agriculture. Gabon (Oil),
Jamaica (base metal ores), Mauritania (iron ore), Nigeria (Oil) are few
examples of reliance on the extraction of minerals.
The other problem faced by LDCs is economic circumstances. Some
countries are small with few national resources which makes difficult to
start the process of substantial development. Poor health and education
standards need money on a large scale. At the same time, there are
demands for public expenditure on transport, communication and water
control systems.
Currency risks
World currency movements, simulated by worldwide trading and foreign
exchange dealing is important aspect in international environment. In
addition to this, different markets, customer demands, competitive actions