Description
information about political and legal risks associated with doing business in a different country.
POLITICAL ENVIRONMENT
Global marketing takes place within the political environment of governmental institutions, political parties, and organizations. ? Any company doing business outside its home country should consider the environment of its targeted country. Need to understand the governing party’s toward
?
Sovereignty ? Political risk ? Taxes ? Nationalization
?
SOVEREIGNTY- SUPREME AND INDEPENDENT
POLITICAL AUTHORITY
“Every sovereign state is bound to
respect the independence of every other sovereign state, and the courts in one country will not sit in judgment on the acts of government of another done within its territory” Chief Justice Fuller
SOVEREIGNTY AND ECONOMIC DEVELOPMENT
?
Generally speaking….. ? Governments of developing countries seek to exercise control over economic development by passing laws
?
Objective: to encourage economic development by protecting emerging or strategic industries
?
Nations of advanced economic development seek to constraints on free trade
?
Objectives: promote fair trade, define and preserve nation’s social order
?
European films receive subsidies
HOST COUNTRY POLITICAL ENVIRONMENT
?
Political risk: risk of change in the environment or policy that would adversely affect a company’s ability to operate effectively and profitably. • When perceived political risk is high, a country will have a difficult time attracting foreign direct investment.
•
Israel-Arab Conflict
?
environment poses different types of risk for global marketers.
?
? ?
Ownership, Operating, and Nationalization risks Intellectual Property risks
CAUSES OF POLITICAL RISK
Fundamental cause of political strife is tension between residents’. ? Primarily occurs in lower and lower-middle income countries
?
?
Haiti, Indonesia (free fall of Rupiah to Dollar)
?
When political risk occurs in high income countries, it is generally due to a conflict
?
Northern Ireland (Catholics and Protestants)
TYPES OF POLITICAL RISK
? Ownership risk
?
Endangers firm property through nationalization ? – no compensation ? – some compensation paid
?
In 1960s & 1970s, 1535 firms from 22 countries have been expropriated in 511 separate actions by 76 nations
POLITICAL RISK
? Operating risk
?
with ongoing operations
?
Mandatory labor-benefits legislation, kidnappings, extortion, civil wars, increased taxation
? ?
?
Campaign against goods
US boycott of Cuba Arab boycott of Israel
POLITICAL RISK
?
Transfer and risk
?
Interference with shifting funds/profits into and out of countries
?
In non-convertible currency countries
? ? ?
Corporate taxation: In July 1998, Russian tax collectors seized 89 automobiles They froze assets of J&J in Russia. Claimed J&J owed $19 million in back taxes. Country tax policies can smuggling (i.e., high taxes)
LEGAL SYSTEMS
I. LEGAL ENVIRONMENT & INTERNATIONAL MARKETING
?
Multiple legal systems
?
? ? ?
Common law, Civil (Code) law, Religious (Islamic) Law, and Bureaucratic Law
?
Companies need to conform to legal systems
Determine laws that apply ? of world’s lawyers in the US as against a shortage in S Korea
?
LEGAL ENVIRONMENT & INTERNATIONAL MARKETING
Also, legal systems address both criminal and civil law. ? Civil law addresses enforcement of contracts and other procedural guidelines. ? A subset of civil law is commercial law—business transactions, business contracts.
?
LOOKING AT THE GLOBAL MARKETING ENVIRONMENT
Political-Legal Environment Attitudes toward international buying Government bureaucracy Political stability Monetary regulations Countertrade: barter, compensation, counter purchase
LEGAL POLITICAL FORCES
Product Price Place Personal Selling Promotion
Product
Price
Place
Personal Selling Promotion
doc_934869701.pptx
information about political and legal risks associated with doing business in a different country.
POLITICAL ENVIRONMENT
Global marketing takes place within the political environment of governmental institutions, political parties, and organizations. ? Any company doing business outside its home country should consider the environment of its targeted country. Need to understand the governing party’s toward
?
Sovereignty ? Political risk ? Taxes ? Nationalization
?
SOVEREIGNTY- SUPREME AND INDEPENDENT
POLITICAL AUTHORITY
“Every sovereign state is bound to
respect the independence of every other sovereign state, and the courts in one country will not sit in judgment on the acts of government of another done within its territory” Chief Justice Fuller
SOVEREIGNTY AND ECONOMIC DEVELOPMENT
?
Generally speaking….. ? Governments of developing countries seek to exercise control over economic development by passing laws
?
Objective: to encourage economic development by protecting emerging or strategic industries
?
Nations of advanced economic development seek to constraints on free trade
?
Objectives: promote fair trade, define and preserve nation’s social order
?
European films receive subsidies
HOST COUNTRY POLITICAL ENVIRONMENT
?
Political risk: risk of change in the environment or policy that would adversely affect a company’s ability to operate effectively and profitably. • When perceived political risk is high, a country will have a difficult time attracting foreign direct investment.
•
Israel-Arab Conflict
?
environment poses different types of risk for global marketers.
?
? ?
Ownership, Operating, and Nationalization risks Intellectual Property risks
CAUSES OF POLITICAL RISK
Fundamental cause of political strife is tension between residents’. ? Primarily occurs in lower and lower-middle income countries
?
?
Haiti, Indonesia (free fall of Rupiah to Dollar)
?
When political risk occurs in high income countries, it is generally due to a conflict
?
Northern Ireland (Catholics and Protestants)
TYPES OF POLITICAL RISK
? Ownership risk
?
Endangers firm property through nationalization ? – no compensation ? – some compensation paid
?
In 1960s & 1970s, 1535 firms from 22 countries have been expropriated in 511 separate actions by 76 nations
POLITICAL RISK
? Operating risk
?
with ongoing operations
?
Mandatory labor-benefits legislation, kidnappings, extortion, civil wars, increased taxation
? ?
?
Campaign against goods
US boycott of Cuba Arab boycott of Israel
POLITICAL RISK
?
Transfer and risk
?
Interference with shifting funds/profits into and out of countries
?
In non-convertible currency countries
? ? ?
Corporate taxation: In July 1998, Russian tax collectors seized 89 automobiles They froze assets of J&J in Russia. Claimed J&J owed $19 million in back taxes. Country tax policies can smuggling (i.e., high taxes)
LEGAL SYSTEMS
I. LEGAL ENVIRONMENT & INTERNATIONAL MARKETING
?
Multiple legal systems
?
? ? ?
Common law, Civil (Code) law, Religious (Islamic) Law, and Bureaucratic Law
?
Companies need to conform to legal systems
Determine laws that apply ? of world’s lawyers in the US as against a shortage in S Korea
?
LEGAL ENVIRONMENT & INTERNATIONAL MARKETING
Also, legal systems address both criminal and civil law. ? Civil law addresses enforcement of contracts and other procedural guidelines. ? A subset of civil law is commercial law—business transactions, business contracts.
?
LOOKING AT THE GLOBAL MARKETING ENVIRONMENT
Political-Legal Environment Attitudes toward international buying Government bureaucracy Political stability Monetary regulations Countertrade: barter, compensation, counter purchase
LEGAL POLITICAL FORCES
Product Price Place Personal Selling Promotion
Product
Price
Place
Personal Selling Promotion
doc_934869701.pptx