Lecture International marketing: Strategy and theory - Chapter 5: Legal environment

The purpose of this chapter is to discuss the impact of the legal environment on business decisions and to explain how the legal and political dimensions are interdependent. The chapter examines how countries’ varying laws and interpretations affect imports, exports, and the marketing mix.

Chapter 5

Legal Environment

Chapter Outline

 Multiplicity of Legal Environments

 Legal Systems

 Jurisdiction and Extraterritoriality

 Legal Form of Organization

 Branch vs Subsidiary

 Litigation vs Arbitration

Chapter Outline

 Bribery

- Legal Dimension

- Ethical Dimension

 Intellectual Property

- Categories of Intellectual Property

- Legal Rights and Requirements

Legal Systems

 Common law system

– Relying on precedents and conventions

– E.g., USA, UK, Canada, India

 Statute law system

– Code or civil law system

– Main rules of law embodied in legislative codes

– Japan and most continental European countries

Jurisdiction

 territorial range of authority

 a court's legal power to hear a case

Extraterritoriality

 a country's or court's application of national laws beyond its border

– E.g., USA and Foreign Corrupt Practices Act

– E.g., Belgium’s universal jurisdiction

How to Settle Commercial Disputes

 Negotiation

 Arbitration

 Litigation

Bribery: Legal Dimension

 Foreign Corrupt Practices Act (FCPA)

 OECD Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions

Foreign Corrupt Practices Act

(FCPA)

 Bribery is "the use of interstate commerce to offer, pay, promise to pay, or authorize giving anything of value to influence an act or decision by a foreign government, politician, or political party to assist in obtaining,

retaining, or directing business to any person."

 Types of Payment

- Permissible: expediting payments to low-level officials who exercise only "ministerial" or "clerical" functions

- Illegal: payments to an official exercising discretionary authority

Bribery: Ethical Dimension

 Morality as a function of culture

 Corporate strategies

– Codes of conduct

– Sensitization of ethics in managers through training and education

– Ethics audit

Transparency International

 Corruption Perceptions Index (CPI)

 Bribe Payers Index (BPI)

Intellectual Property

"creations of the mind: inventions, literary and artistic

works, and symbols, names, images, and designs used

in commerce"

 Trademark

 Copyright

 Patent

 Trade Secret

Intellectual Property

- symbol, word, or thing used to identify a product made or marketed by a particular firm

- protection given to an author or artist for literary, musical, dramatic, and artistic works

- invention of a scientific or technical nature

- know-how that is kept secret within a particular business

- e.g., manufacturing methods, formulas, plans