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.
GLOBAL MARKETING MANAGEMENT Seventh Edition MASAAKI KOTABKE | KRISTIAAN HELSEN Chapter PowerPoint Political and Legal Environment Chapter Overview Political Environment—Individual Governments Political Environment—Social Pressures and Political Risk Terrorism and the World Economy International Agreements International Law and Local Legal Environment Issues Transcending National Boundaries Chapter Copyright © 2017 John Wiley & Sons, Inc Introduction • International marketers should be aware that the economic interests of their companies can differ widely from those of the countries in which they 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 Chapter Copyright © 2017 John Wiley & Sons, Inc 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 Chapter Copyright © 2017 John Wiley & Sons, Inc Political Environment—Individual Governments • Structure of Government – Ideology • Communism • Capitalism • Socialism – Political Parties • Single-party-dominant country • Dual-party system • Multiple-party system • 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 Chapter Copyright © 2017 John Wiley & Sons, Inc Political Environment—Individual Governments - Incentives and Government Programs Government Procurement Trade Laws Embargoes and Sanctions Tariff and Nontariff Barriers (Exhibit 5-1) Export License Requirements Investment Regulations (ownership and financial controls) - Macroeconomic Policies (governments’ monetary and fiscal policies such as the cost of capital, level of economic growth, rates of inflation and international exchange rates) Copyright © 2017 John Wiley & Sons, Chapter Inc Exhibit 5-1: Tariff and Nontariff Barriers Chapter Copyright © 2017 John Wiley & Sons, Inc 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 – – – – – Chapter Expropriation Confiscation Nationalization Domestication Policy/Phase-Out Policy Countertrade (See Exhibits 5-2 and 5-3.) Copyright © 2017 John Wiley & Sons, Inc Exhibit 5-2: Government Policy Areas and Instruments Chapter Copyright © 2017 John Wiley & Sons, Inc Exhibit 5-3: Country Risk Assessment Criteria Chapter Copyright © 2017 John Wiley & Sons, Inc 10 Exhibit 5-4: Examples of Country Risk Ratings Ranked by Composite Overall Rating, Jan 2015 Continued Chapter Copyright © 2017 John Wiley & Sons, Inc 13 Exhibit 5-4: Examples of Country Risk Ratings Ranked by Composite Overall Rating, Jan 2015 Chapter Copyright © 2017 John Wiley & Sons, Inc 14 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 Chapter Copyright © 2017 John Wiley & Sons, Inc 15 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 Copyright © 2017 John Wiley & Sons, a 5multilateral export control agreement on Chapter 16 Inc 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 Chapter Copyright © 2017 John Wiley & Sons, Inc 17 Exhibit 5-6: Legal Issues Facing the Company Chapter Copyright © 2017 John Wiley & Sons, Inc 18 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 • Criminal Law • Civil Law Commercial Law Chapter Copyright â 2017 John Wiley & Sons, Inc 19 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 Chapter Copyright © 2017 John Wiley & Sons, Inc 20 Exhibit 5-7: The Number of Lawyers per 100,000 Residents Chapter Copyright © 2017 John Wiley & Sons, Inc 21 Issues Transcending National Boundaries • ISO 9000 certification has become an essential marketing tool for firms • ISO 14000 is based on the principle of selfregulation, 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) Chapter Copyright © 2017 John Wiley & Sons, Inc 22 Issues Transcending National Boundaries – Copyright – The Digital Millennium Copyright Act (DMCA) – Trademark (prior-use, first-to-use & first-to-file principles) – Trade Secret • International Treaties for Intellectual Property Protection – Paris Convention – Patent Cooperation Treaty (PCT) – Patent Law Treaty (PLT) (See Exhibit 5-8.) Chapter Copyright © 2017 John Wiley & Sons, Inc 23 Exhibit 5-8: Top 60 Countries in Ratings for the Level of Intellectual Property Protection Chapter Copyright © 2017 John Wiley & Sons, Inc 24 Issues Transcending National Boundaries – – – – European Patent Convention Berne Convention WIPO Copyright Treaty Anticounterfeiting Trade Agreement (ACTA) • Antitrust Laws of the United States – – – – – Chapter 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 Copyright © 2017 John Wiley & Sons, Inc 25 Issues Transcending National Boundaries • 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 Chapter Copyright © 2017 John Wiley & Sons, Inc 26 Issues Transcending National Boundaries – The FCPA does not prohibit so-called facilitating or grease payments – Small payments to lower-level officials are allowed to expedite the process – FCPA does not prohibit bribery payments to nongovernmental personnel Chapter Copyright © 2017 John Wiley & Sons, Inc 27 ... – – – Chapter Expropriation Confiscation Nationalization Domestication Policy/Phase-Out Policy Countertrade (See Exhibits 5- 2 and 5- 3.) Copyright © 2017 John Wiley & Sons, Inc Exhibit 5- 2: Government... Areas and Instruments Chapter Copyright © 2017 John Wiley & Sons, Inc Exhibit 5- 3: Country Risk Assessment Criteria Chapter Copyright © 2017 John Wiley & Sons, Inc 10 Exhibit 5- 4: Examples of Country... Rating, Jan 20 15 Continued Chapter Copyright © 2017 John Wiley & Sons, Inc 11 Exhibit 5- 4: Examples of Country Risk Ratings Ranked by Composite Overall Rating, Jan 20 15 Continued Chapter Copyright