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Chapter 5 The Political and Legal Environment. Introduction. While deciding upon a firm’s international marketing activities the manager needs to concentrate on three areas: . Home-Country Political and Legal Environment.
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Chapter 5 The Political and Legal Environment
Introduction • While deciding upon a firm’s international marketing activities the manager needs to concentrate on three areas:
Home-Country Political and Legal Environment • Firms are affected by government policies and the legal system, and this has a major impact on a firm’s opportunities abroad
Home-Country Political and Legal Environment • Governments may attempt to aid and protect the international marketing efforts of companies through ____________activities
Home-Country Political and Legal Environment • Gray market goods are • Areas of governmental activities which are of major concern to the international marketer are:
Home-Country Political and Legal Environment • Embargoes and sanctions: • Reasons for the impositions are varied, ranging from human rights to nuclear nonproliferation to terrorism
Home-Country Political and Legal Environment • Unilateral impositions result in shift in trade, and do not produce the desired result • Governments often consider sanctions as being free of cost
Home-Country Political and Legal Environment • Export control
Home-Country Political and Legal Environment • The U.S. export control system is based on the: • The exporter must obtain an __________, which consists of written authorization to send a product abroad
Home-Country Political and Legal Environment • Restricts the flow of materials and helps avoid the proliferation of weapons of mass destruction • Imposes financial controls which inhibit funding for terrorist training
Home-Country Political and Legal Environment • Availability of high-technology products • Import controls
Home-Country Political and Legal Environment • Tariffs: • Voluntary restraint agreements: • Quota systems:
Home-Country Political and Legal Environment • Problems faced while administering import controls:
Home-Country Political and Legal Environment • They do not to work as intended • Regulation of international business behavior • Boycotts:
Home-Country Political and Legal Environment • Antitrust measures – • Bribery and corruption –
Host-Country Political and Legal Environment • Political risk: • Major types of political risk
Host-Country Political and Legal Environment • Government policies to combat political risks include: • Expropriation: • Confiscation:
Host-Country Political and Legal Environment • Domestication: Whereby the government: • Effects of domestication include:
Host-Country Political and Legal Environment • Common risks faced by most businesses operating abroad:
Host-Country Political and Legal Environment • Legal differences and restraints • Two major legal systems popular worldwide are:
Host-Country Political and Legal Environment • Antidumping laws – • Require export and import licensing • Laws may be designed to protect domestic industries and reduce imports
Host-Country Political and Legal Environment • Dealing with the intricacies of national politics:
Host-Country Political and Legal Environment • Develop coalitions or constituencies to motivate legislators and politicians to consider and implement change through:
International Relationships • International politics • If bilateral political relations between countries improve, business can benefit
International Relationships • International law • No enforceable body of international law exists • Firms are restricted by both home- and host-country laws
The International Relationships • In case of a conflict in deciding which country’s law to follow, firms can choose either arbitration or litigation • International terrorism and marketing
International Relationships • Terrorists direct their strikes at business more than any other target • Direct effect of terrorism on business activities are the immediate cost levied on individual firms • Indirect effect of terrorism on business activities –
International Relationships • Chill effect: • Physical damage inflicted by terrorism disrupts power supply, communication, transport and other forms of infrastructure
International Relationships • Key side effect of terrorism
Ethical Issues • The ethical obligations faced by multinational enterprises include: • Corporate governance and responsibility • Corporate governance:
Ethical Issues • Its key elements include: • Intellectual property:
Ethical Issues • Bribery and corruption • The _________________________ was passed in 1977 to disallow U.S. firms to bribe foreign officials for business purposes • Functional lubrication - The “express fee” charged in many countries, which has several characteristics:
Ethical Issues • In the process driven by “individual greed,” the amount depends on the individual official and is for the official’s own personal use • In 1995, the __________________________ officially condemned bribery
Ethical Issues • The ________________________________ in 2009 released a Recommendation for Further Combating Bribery of Foreign Public Officials • The _______________________ was intended to protect investors by improving the accuracy and reliability of corporate