International Marketing

5. Distinguish between: (a) free trade area, (b) customs union, (c) common market, (d) eco-nomic and monetary union and (e) political union.

(a) Free trade area: Free trade among members.

(b) Customs union: (a) plus Common external trade policy.

(c) Common market: (b) plus Factor mobility.

(d) Economic and monetary union: (c) plus Harmonization of economic policies.

(e) Political union: (d) + Harmonization of other policies (foreign, social, legal, etc.).

6. Why is the international marketer interested in the age distribution of the population in a market?

If the international marketer is targeting his marketing efforts towards a special age group (e.g. manufactur-er of toys), he is interested in knowing the number of potential consumers (= potential market) in that age group.

7. Describe the ways in which foreign exchange fluctuations affect (a) trade, (b) invest-ments, (c) tourism.

In case of a devaluation of a country’s currency this will have the following effects:

(a) Trade:

The country’s export will be stimulated. Imports will be more expensive, and inflation in the country may rise.

(b) Investments:

If the devaluation reflects some political and economic troubles, the foreign investment in the country will be lower. However, all other things being equal, acquisitions (in local currency) of existing companies in the country can be made at a lower price in, for example, U.S. Dollar.

(c) Tourism:

All other things being equal, the number of foreign