Marketing Strategy and Competitive Positioning pdf ebook

Figure 3.1 
PEST 
analysis of the 
macro-environment
Political
Economic
Social
Legal
Technological

---

60
CHAPTER 3 THE CHANGING MARKET ENVIRONMENT
Figure 3.2 
Global 
activity downturn
Source: International 
Monetary Fund (April 
2019).
7
Industrial production
1. World trade, industrial production, and manufacturing PMI
(deviations from 50 for manufacturing PMI) 
World trade volumes
Manufacturing PMI: new orders
6
5
4
3
2
1
2015
16
17
18
Feb.
19
0
–1
Figure 3.3 
The economic 
and political 
environment
Economic growth
rates and the
business cycle
Employment and
unemployment
National and
supranational
governments
Internationalisation
and globalisation
Regional trade and
trading areas
Taxation and
fiscal policy
Interest rates,
consumer and
business
confidence
The European Single Market and its enlargement
January 1992 saw the realisation of the dream of many Europeans with the creation of the 
European Single Market. The Single Market of over 320 million consumers was created to 
allow the free flow of products and services, people and capital between the member states. 
As such, it was intended to improve economic performance by lowering costs of trading 
across national borders within the European Union (EU), and to encourage economies of 
scale of operation rivalling the US internal market. By January 2002, a single European cur-
rency, the euro, had been introduced into the euro-zone (all but a handful of the EU member 
states), further facilitating trade and exchange across the old political borders.
However, it also had its problems. With economies in the zone operating at different 
speeds, and facing different levels of public sector debt but without the freedom to set 

---

61
THE SOCIAL AND CULTURAL ENVIRONMENT
separate exchange or interest rates, difficulties began to emerge. In early 2010 the Greek 
economy (within the euro-zone) caused particular concern, followed by Spain and Portugal, 
as debt levels rose and the countries’ credit ratings were lowered, casting a doubt on the 
survival of the euro-zone. 
In October 2002, a referendum in the Irish Republic paved the way for the enlargement 
of the European Union through the accession of ten new states in May 2004: the three 
Baltic states of Latvia, Lithuania and Estonia, plus Hungary, Poland, the Czech Repub-
lic, Slovakia, Cyprus, Malta and Slovenia. That enlargement had significant implications 
for many organisations, both commercial and non-commercial, as Europe expanded. The 
population of the European Union rose by around 20 per cent, while GDP rose by only 5 
per cent ( Fishburn and Green, 2002 ). Significant differences in labour costs, for example, 
were likely to raise questions of location for many firms. Hourly labour costs ranged from 
€3.70 to €40.10 across the 28 EU member states in 2013, for example. 
More significantly, in June 2016, the UK voted to leave the European Union and as of 
May 2019 was still in the process of deciding how to leave the block. This decision has had 
a major impact on the short-term economic prospects of both the UK and the EU, and has 
been accompanied by a growing resentment of globalisation and the rise of populist parties.