PART 2
The Global Marketing Environment

CHAPTER

2

The Global Economic Environment

Case 2-1 The Global Economic Crisis

I

n his 1997 book One World, Ready or Not, William Greider described the United States as “the buyer of last resort.” Greider explained that, for many years, the United States was the only nation that was willing to absorb production surpluses exported by companies in Europe, Asia, and Latin America. Greider asked: “Who will buy the surpluses when the United States cannot?” The conventional wisdom has long held that strong spending by consumers in other nations would keep the world economy humming. However, by 2008, Greider’s question was taking on a new urgency and the conventional wisdom was being

tested. An economic crisis that had its roots in lax subprime mortgage lending practices began to spread around the globe. In the United States, where the crisis began, economic misery was widespread: The housing market collapsed, real estate values plummeted, credit tightened, and job growth slowed (see Exhibit 2-1). As the price of oil passed the $100 per barrel benchmark, the average price of a gallon of gasoline rose to $4. American consumers were, indeed, less willing and less able to buy. However, the crisis was not confined to the United States alone. Consumer-goods exporters in Asia, which

Exhibit 2-1: The bursting of the global real estate bubble was only one aspect of the worst recession in decades. The ripple effects from the economic turmoil were felt around the world. In 2007, just before the onset of the crisis, Mexico’s Cemex SAB acquired an Australian company, Rinker Materials, for $15.3 billion. Unfortunately, one of Rinker’s primary sources of revenue was the United States housing market. With that market collapsing, Cemex chief Lorenzo Zambrano was forced to sell assets and cut spending in an effort to trim his