International Marketing Term Paper

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International Marketing Comparison of Spain and Czech Republic

This paper is written out in the form of a comparison between the two countries of Spain and Czech Republic. In all the sub-heads, the situation in Spain is first discussed and that is followed by the relevant description about the Czech Republic. In all reasonableness, Spain has been a poor country with low employment, and this is being solved with temporary employment of the citizens. The unemployment was as high as 20%, and this certainly does not give much hope for a new product. The unemployment problem has been somewhat controlled, but this has led to a very high temporary employment, and these people are very poorly paid, and this also does not give much hope for purchases. Comparatively, the Czech Republic has been a country with a stronger economy due to the developments of the country over the last fifteen years. It is also a country with a history of industrialization which Spain is not. The atmosphere in the two countries are not similar with Spain being full of people with an autocratic bent of mind, and Czech Republic being full of people who are uncertain of the future.

As a country, Spain has been independent for a long time, whereas the Czechs have been free for only 50 years out of the last 1000. Thus there are a lot of cultural and economic differences. The similarity is in the fact that both are going to be a part of the European Community shortly and thus subject to the same or very similar sets of laws. Thus in terms of the legal position there will be little difference, but more than the letter of the law there is a difference in the understanding of the law by citizens, and in this aspect, Spain is clearly a superior country. The other aspect is the view to countries outside the home, and in this there is a clear indication that the people in Spain, in spite of their internal differences, would like to be well connected to the outside world. Regarding the Czechs, this attitude is uncertain as most of the time it is only the outsiders who have come to their country. The appeal of the Internet is thus expected to be higher in Spain than in the Czech Republic, at least during the next ten years or so.

Introduction

The point to be noted is that these countries have different backgrounds in the sense that Spain has been a country in Western Europe with less of communist influence as compared to the Czech Republic. Yet, the general rule in Spain was also the autocratic rule of Gen. Franco for a long time. In economic terms, the countries were not materially different, but Czech Republic has a better history of engineering and technical background. The problem with the Czech Republic has been that it has ad very little of independence for a long time, and this has kept in the mind of people a lot of uncertainty about the future.

1. Country analysis

Economic/competitive environment

In Spain there has been slow growth of the economy and the growth was around 2% in 2002. The difficulty with the country is high inflation and this is higher than the rest of the Euro area. The activity has been better from the second half of 2003, and this has led to the lowering of increase in unemployment and expected high growth in GDP. The growth of inflation in the country can be stopped only through reforms in the structure of the country, and fiscal policies were not expected to be of much use. Another required method for growth was the required changes to the system of bargaining for wages and this can be achieved only when the rigidity in the wage structure is reduced.

The consumption at the public level is increasing, but the growth in demand of the domestic consumers was slow at 2% during the second half of 2002. The only sector where growth was steady was in the area of constructions, but the investment in equipments was dropping for three quarters, but started on a recovery in the second half of 2003. There was a rapid growth in exports in the third quarter of 2002, yet the increased foreign demand did not make much difference to the total economy, as the imports also grew at a very fast rate. The growth in terms of GDP was only around 2% during 2002. Employment which was growing fast earlier also did not grow very fast, and the unemployment rate was high at 11.

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5%. The growth in terms of wages was relatively stable and the total growth in wages was around 3%, and this is not a real growth, since there was a high inflation.

The situation may change at the end of 2003, when the wages will be revised as per many wage-inflation agreements. The budget had forecast a growth of 3% for 2003, and also included a cut in personal income tax, and the total rate was to result in a loss of revenue of around half a percent point. This in practice may be considered to be a neutral financial position. Totally the GDP is expected to have a better growth of 2% in 2003, and the growth in 2004 is expected to be over 3%. The labor force is growing rapidly in the country and the unemployment rate is on the rise, but due to the total financial picture, the inflation should be falling to around 2.5% by the end of 2004. In the meantime, there is a continuous worry about the continuing inflation as it is reducing the competitiveness of the country. (Developments in individual OECD countries: Spain)

Though Spain has been one of the first to be in the European community, the Czech Republic has shown interest in being one of the members and through the result of the Nice summit that was held in December 2000, the citizens of Czech Republic should a part of the electorate for the elections to the European Parliament in 2004, June. The growth of the economy in the country has also been high and nearly 70% of the exports of the country are directed to the European Union, and that too mainly Germany. Those economies had not been doing so well, but the growth rate of the Czech economy has been quite high at around 3.6% for quite a long time now, from 1996. This rate of growth is higher than the average of the European Union countries. There has also been quite a high export of goods and the growth has been at 13.3% per annum in 2001 and the imports have grown by 11.6%.

The total economic situation slowed down during the second half of that year, and again the reasons for that are well-known. In spite of a troublesome international situation, the country has progressed well and there are expectations that the country will do even better in the coming years. The total aim of the country is now concentrated on the attempt to become a member of the European Union. This country had to adopt and implement the legislations that were required for the purpose. There were also the methods to be adopted for the same and the changes of standards and procedures, etc. If the country is able to become a member of the Union, it is expected to help the country conduct business in a more transparent manner and also bring in a suitable environment for investment. This is expected to help the country to attract foreign investment. The country needs foreign investment to enable it to speed up the development of the economy and then catch up with the position that other countries of the European Union are now in. (Exclusive Interview)

Socio-cultural environment

Spain has been a poor country for a long time, but at the end of the twentieth century, Spain had a period of rapid growth. For four years from 1997, the country's economy grew at a very high annual rate of growth of 4%. At the same time, the unemployment rate also fell from a higher than 20% figure to less than 14%. These made the IMF say in its report of July 2000, "Decisive management of macroeconomic policies, together with structural reforms and wage moderation, has contributed to an unprecedented combination of strong output and employment growth with price stability." Along with this there was also praise for the labor market reforms that were instituted by the Prime Minister Jose Maria Azner and his party as the steps in the right direction.

The steps taken were to reduce the changes in the laws during 1994 and 1997 which loosened restrictions on temporary and part-time employment contracts. These helped by reduction of the labor costs of the firms. This has made the businesses in Spain to use temporary and part time employees on a large scale. This has helped them….....

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