Global Economic Environment

In today’s business world nothing it happens by chance. Thousands years ago we saw, countries adopting strategic alliances in order to overcome possible threats from other countries. Behind the scenes from every alliance, an economic interest is always hidden. Thus scanning and adapting the economic environment will help strategic leaders to adopt the right decisions in order to remain leaders in the business chessboard. We saw giant countries from the recent history to disappear from the chart like USSR.

Keegan (2001) stated that the macro dimensions of the environment are economic, socio and culture, political and legal, and technological. Each is important, but perhaps the single most important characteristic of the global market environment is the economic dimension. With money, all things (well, almost all!) are possible². It is impossible to succeed any organization or country if it does not understand the global economic conditions and indicators. Such conditions and indicators include the Gross Domestic Product, Income per capita, inflation, interest rates, emerging markets, customer preferences, and etc. According to Keegan (2001) maybe the most important factor is the money, but we saw giant corporations with very good liquidity position, with huge stock market capitalization to fail in the business arena, such as Lehmann Brothers, AIG, GM, and many other in all over the world.

We saw from the past that part of the business game is the adoption of strategic alliance between the countries in order to simplify the barriers of trading, and furthermore to gain the competitive advantage over their rival competitors. Such strategic trade alliances are the following: GATT, EU, NAFTA, APEC, ASEAN, FTAA, GCC, etc. The above agreements scope is to promote the trade among their members. It is crucial to indicate the significance of the above agreements because the successful implementation of the agreements will have to ensure significant advantages into the relevant members. For instance, one of the biggest issues pertaining to trade in the Western Hemisphere is the Free Trade Area of the Americas (FTAA). The leader of the above strategic decision was the president of US, Bill Clinton. The Clinton administration was keen to open the region’s fast growing big emerging markets (Keegan, 2001).

It can be concluded that the role of a marketer is crucial to the business success. The systematic gathering of information regarding the economic environment will help marketers to take advantage over their competitors. It is obvious that the economic environment affects the purchasing power of customers, which is an important determinant of the size of the market. Furthermore, the competitive environment consists of all organizations that attempt to serve the same customers. In regard to the above factors, Kotler (2000) stated that market actors must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies. Consequently, an understanding of the economic environment is crucial for an organization to maintain and develop marketing strategies in order to achieve its strategic goals.