Page 57 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes 2. Gross Domestic Product: Measures the value of production that occurs within a country’s
borders without regard to whether the production is done by domestic or foreign factors of
production.
3. Per Capita GNP: Low-income ($725 or less), Mozambique ($80)
Middle-income ($726-$8,955) Colombia ((2,140) High-Income ($8,956 or more)

Example: Luxemburg (45,360)
Japan (40,940)
U.S. (28,020)
Low- and middle-income countries is where the vast majority of the world’s population
lives
North-South Dialogue
4. Relative Importance of High-income Countries: They represent only 21% of the number
of economies and 15.2% of the population, but they generate 79.5% of the world’s GNP.
5. Relative Importance of Middle-income Countries: They represent 28.1% of the world’s
population, 15.6% of its GNP, and represent 48.3% of the total countries.
6. Relative Importance of Low-income Countries: Account for 30.6% of the number of
economies in the world, 56.7% of the population, but only 4.9% of the GNP.
7. Purchasing Power Parity (PPP): The basic idea is to identify the number of units of a
country’s currency required to buy the same amounts of goods and services in the domestic
economy as one dollar would buy in the U.S. Thus, even though per capita GNP is the
primary measure of wealth in a country, purchasing power GNP is an alternative way
to measure wealth that is more indicative of the purchasing power of a country’s
currency.
8. Structure of Production: Percentage of GDP generated by agriculture, industry,
manufacturing, and services.
The key is to note that as income rises, the percentage of GDP devoted to agriculture
falls, and the percentage devoted to services rises.
Other Indicators

Quality of Life: Life expectancy, educational standards, individual purchasing power, health,
sanitation, and treatment of women are some factors indicating quality of life.
Social and cultural aspects of a society form its very nature. As “culture” is the essence of a
society, this unit will concentrate on a discussion of it only. Of all the so called “environmental
uncontrollables”, culture, or at least the study of it, is one of the most difficult to comprehend,
take account of and harness to advantage. This is particularly so when the product or service is
“culture bound”. Such products and services include those which are generally indigenous by
nature and/or of relatively small value and very common. This is particularly true of foodstuffs.
Sadza in Zimbabwe, a staple food made from maize meal, would not go down well in Beverley
Hills, California. Neither would Middle Eastern sheep’s eyes menus. Products of a more technical
nature, like computers, on the other hand, have a universal appeal.
!

Caution Culture is a broad phenomenon which tends to affect the position of any products
or services prevailing in the market.

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