Lecture Global marketing management (7th edition): Chapter 5 - Masaaki Kotabe, Kristiaan Helsen

Chapter political and legal environment. In this chapter, the following content will be discussed: The importance of culture to an international marketer, definition and origins of culture, the elements of culture, the impact of cultural change and cultural borrowing, strategies of planned and unplanned change.

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MARKETING

MANAGEMENT

Seventh Edition MASAAKI KOTABKE | KRISTIAAN HELSEN

Chapter 5 PowerPoint

Political and Legal

Environment

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Chapter Overview

1 Political Environment—Individual Governments

2 Political Environment—Social Pressures and

Political Risk

3 Terrorism and the World Economy

4 International Agreements

5 International Law and Local Legal Environment

6 Issues Transcending National Boundaries

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• International marketers should be aware that the

economic interests of their companies can differ

widely from those of the countries in which they do business

• International marketers must abide by various

international agreements, treaties, and laws

• Political and legal climates are inherently related

and inseparable because laws are generally a

manifestation of a country’s political processes

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1 Political Environment—Individual

Governments

• Government affects almost every aspect of business life in a country

• National politics affect business environment

directly, through changes in policies, regulations,

and laws

• The political stability and mood in a country affect

the actions a government will take

• Home Country versus Host Country

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• Government Policies and Regulations

It is the role of government to promote a country’s interests in the international arena for various reasons and objectives, such as:

national security, developing new industries, and protecting

declining industries.

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- Embargoes and Sanctions

- Tariff and Nontariff Barriers (Exhibit 5-1)

- Export License Requirements

- Investment Regulations (ownership and financial

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2 Political Environment—Social Pressures

and Political Risk

• Social Pressures and Special Interests

Foreign companies also have to consider social

factors as part of the political environment of host countries, e.g., feelings of nationalistic interest

• Managing the Political Environment

– Expropriation

– Confiscation

– Nationalization

– Domestication Policy/Phase-Out Policy

– Countertrade (See Exhibits 5-2 and 5-3.)

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Exhibit 5-2: Government Policy Areas

and Instruments

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Exhibit 5-3: Country Risk Assessment

Criteria

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Exhibit 5-4: Examples of Country Risk

Ratings Ranked by Composite Overall

Rating, Jan 2015

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3 Terrorism and the World Economy

• According to an IMF study, the September 11, 2001 terrorist attacks in New York and Washington D.C resulted in a direct loss of $21.4 billion

• The short-term lost economic output was estimated

as $47 billion

• The stock market lost $1.7 trillion

• Terrorist activities and military skirmishes disrupt

international movement of supplies and

merchandise as well as international financial flow and tourism

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4 International Agreements

• Group of Seven (G7) is an economic policy

coordination group made up of political leaders from Canada, England, France, Germany, Italy, Japan, and the United States

• Group of Eight (G8) consists of G7 and Russia

• Group of Twenty (G20) expanded G8 in 1999 to

bring industrialized and developing economies

together to promote economic growth and

international financial stability in the global economy

at the ministerial level

• Wassenaar Arrangement was founded in 1995 as

a multilateral export control agreement on

conventional arms and dual-use goods and

technologies

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5 International Law and Local Legal Environment

• International Law, or “the law of nations,” may be defined as a body of rules that is binding on states and other international persons in their mutual

relations It comes from three main sources:

– Customs

– International treaties

– Court decisions

• Local Legal Systems and Laws

– Business Practices and the Legal System

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Exhibit 5-6: Legal Issues Facing the

Company

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5 International Law and Local Legal Environments

– Regulations on E-Commerce

• Privacy Issues – Types of Legal Systems

• Common Law

• Code (written) Law

• Islamic Law (Sharia) – Examples of Different Laws

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5 International Law and Local Legal Environments

– Cultural Values and Legal Systems

• Japan’s population of lawyers is low as legal confrontations are very rare.

• In the U.S., emphasis is on explicit contracts and a reliance on the legal system is high.

• In China, relationships (guanxi) and verbal contracts

are important.

• In Brazil, Jeitinho is used to find solutions outside the

legal contract on a case-by-case basis.

• Jurisdiction

– Planning Ahead

– Arbitration and Enforcement

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Exhibit 5-7: The Number of Lawyers

per 100,000 Residents

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6 Issues Transcending National Boundaries

• ISO 9000 certification has become an essential

marketing tool for firms

• ISO 14000 is based on the principle of

self-regulation, thereby minimizing surveillance and

sanctions by the EPA and its state-level

counterparts

• Intellectual Property Protection

– TRIPS (Trade-Related Aspects of Intellectual Property Rights)

– Patent (“first-to-file” and “first-to-invent” principles)

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– Copyright

– The Digital Millennium Copyright Act (DMCA)

– Trademark (prior-use, first-to-use & first-to-file

– Patent Cooperation Treaty (PCT)

– Patent Law Treaty (PLT) (See Exhibit 5-8.)

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Exhibit 5-8: Top 60 Countries in Ratings for the Level of Intellectual Property Protection

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– European Patent Convention

– Berne Convention

– WIPO Copyright Treaty

– Anticounterfeiting Trade Agreement (ACTA)

• Antitrust Laws of the United States

– The Sherman Act

– The Clayton Act

– The Robinson-Patman Act

– Extraterritorial application of U.S antitrust laws

– Export Trading Company legislation (ETC Act) of

1982

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• Antitrust Laws of the European Union

• U.S Foreign Corrupt Practices Act (FCPA) of

1977

– The FCPA was designed to prohibit the payment of any money or anything of value to a foreign official, foreign political party, or any candidate for foreign

political office for purposes of obtaining, retaining, or directing business.

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– The FCPA does not prohibit so-called facilitating or

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