Lnternational marketing. The political and legal environment. (Chapter 2)

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Lnternational marketing. The political and legal environment. (Chapter 2)

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2. The political environment The legal environment
3. CASE
4. A.Political Environment Political environment is defined as the state, government, institutions and laws together with the
5. Government affects almost every aspect of business life in a country. National politics affect business environment
6. The political environment in international business consists of a set of political factors and government activities
7. The political environment in which the firm operates (or plan to operate) will have a significant
8. a foreign company operates in a host country at the discretion of the government concerned, the
9. Political factors 1. Type of government Republicanism a country without a king or queen, usually governed
10. CASE
11. 2. Party system One-party system China. Viet Nam. North Korea... Two party system US.UK. Canada... Multipartism
12. CASE Republican VS Democratic
13. In the United States. the sense of two party system describes an arrangement in which all
14. Republican Party: Founded in 1854. There have been 18 Republican presidents, the first being Abraham Lincoln.
15. Democratic Party : Founded around 1828. It has elected 15 presidents. The first was Andrew Jackson,
17. 3. Economic policy of the government Economic policy refers to the actions that governments take in
18. Trade policy is a collection of rules and regulations which pertain to trade. Every nation has
19. Some governments attempt to protect their local industries with trade policy which place a heavy burdan
20. Also. governments may impose regulations that aren't primarily promulgated as barriers to trade but have the
21. CASE 1 Carbon Tariff
22. A carbon tariff is a tax imposed on imported goods from countries that do not curb
23. CASE 2
24. CASE 3
25. More than 30 countries refuse to allow Chinese mooncakes sent through the mail to pass their
26. On the other hand.some nations eschew trade barriers .promoting free trade in which domestic producers are
27. 4. Political stability Once a country is stable, more investment opportunities will be realised, thus attracting
28. CASE 1
29. CASE 2
30. CASE 3
31. 5. Political relations between home and host countries Political relations often determine the relative risk of
32. CASE 1
35. CASE 2
36. Let’s have a talk...
37. Firms operating internationally face major challenges in conforming to different laws, regulations and legal systems in
38. Domestic laws govern marketing within a country, e.g. the physical attributes of a product will be
39. The implications of law on marketing operations are legion: Product decisions - physical, chemical, safety, performance,
40. Distribution - contracts for agents and distribution, physical distribution, insurance Promotion - advertising codes of practice,
41. what taxation schemes will be faced abroad?
42. CASE 1
43. The controversy arose over a US embargo forbidding US business to trade with Cuba and concerned
44. Canada was incensed at the intrusion of US law on Canadian citizens. The Canadians felt they
45. Wal-Mart Canada would be breaking US law if it continued to sell the pajamas, and it
46. After discussion with Canadian authorities, Wal-Mart resumed selling the pajamas. Canada was upset with the United
47. The situation illustrates the reality of the legal environment and international marketing companies are subject to
48. CASE 2 Google has closed its Chinese-language search engine Google.cn
49. International Law It defined as that body of rules which regulates relationships between countries or other
50. The principal sources of international law are treaties and conventions. These are created when several countries
51. a) FCN (Friendship, Commerce and Navigation) b) IMF and GATT c) UNCITRAL (UN) international trade law
52. CASE
53. The World Trade Organization (WTO) is the only global international organization dealing with the rules of
54. The WTO is a rules-based, member-driven organization — all decisions are made by the member governments,
55. Cut living costs and raise living standards Settle disputes and reduce trade tensions Stimulate economic growth
56. More trade, more traded goods and services and more trading countries — they bring benefits but
57. The fact that the disputes are based on WTO agreements means that there is a basis
59. on September .2009. the United States International Trade Commission had recommended additional tariffs 35-30-25 percent over
60. CASE Haier bought Sanyo's washing machine and refrigerator operations in Japan and home appliance businesses in
61. What to do? Do research before go abroad Respect other countries’ political system and obey the
62. Summary The political environment: Type of government. Party system. Economic policy of the government. Political stability.Political
63. Reference Global agricultural marketing management . http://www.fao.org/docrep/W5973E/W5973E00.htm 国际税收朱青人民大学出版社 http://www.wto.org/index.htm
65. Скачать презентацию

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The political environment
The legal environment

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CASE

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A.Political Environment
Political environment is defined as the state, government, institutions

and laws together with the public and private stakeholders who operate and influence that system.
Companies will pay attention to the political environment to see how government actions will influence their company.

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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.

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The political environment in international business consists of a set of

political factors and government activities in a foreign market that can either facilitate or hinder a business' ability to conduct business activities in the foreign market.
There is often a high degree of uncertainty when conducting business in a foreign country and this risk is often referred to as political risk.

Home country VS Host country

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The political environment in which the firm operates (or plan to

operate) will have a significant impact on a company's international marketing activities.
Changes in government often result in changes in policy and attitudes towards foreign business.

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a foreign company operates in a host country at the discretion

of the government concerned, the government can either encourage foreign activities by offering attractive opportunities for investment and trade, or discourage its activities by imposing restrictions such as import quotas, etc.
An exporter that is continuously aware of shifts in government attitude, will be able to adapt export marketing strategies accordingly.

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Political factors
1. Type of government
Republicanism
a country without a king

or queen, usually governed by elected representatives of the people and a president.
Constitutional monarchy
It is a form of government in which a monarch acts as head of state within the guidelines of a constitution, whether it be a written, uncodified,
or blended constitution.

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CASE

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2. Party system
One-party system
China. Viet Nam. North Korea...
Two party

system
US.UK. Canada...
Multipartism
France. Argentina

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CASE
Republican VS Democratic

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In the United States. the sense of two party system describes

an arrangement in which all or nearly all elected officials only belong to one of the two major parties

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Republican Party:
Founded in 1854. There have been 18 Republican presidents,

the first being Abraham Lincoln. and the most recent being George W. Bush

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Democratic Party :
Founded around 1828. It has elected 15 presidents.

The first was Andrew Jackson, the most recent is the current president, Barack Obama.

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3. Economic policy of the government
Economic policy refers to the

actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.

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Trade policy is a collection of rules and regulations which pertain

to trade. Every nation has some form of trade policy in place, with public officials formulating the policy which they think would be most appropriate for their country.
The purpose of trade policy is to help the nation’s international trade run more smoothly.

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Some governments attempt to protect their local industries with trade policy

which place a heavy burdan on importers.
eg. Trade barrier is simply anything that makes it harder for a company to export products to a foreign country.Formal trade barriers include tariffs and product quotas that limits the number of products imported into the country.

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Also. governments may impose regulations that aren't primarily promulgated as barriers

to trade but have the same effect.
eg.specific product standards and health and safety standards that businesses will be required to meet before the products can be sold.

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CASE 1
Carbon Tariff

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A carbon tariff is a tax imposed on imported goods from

countries that do not curb their emissions of greenhouse gases.
Chinese officials and analysts said the US move was another kind of "trade protectionism". they are using it as a means to pressure developing countries.

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CASE 2

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CASE 3

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More than 30 countries refuse to allow Chinese mooncakes sent

through the mail to pass their borders, essentially banning the delicacy which symbolizes the Mid-Autumn Festival celebrated by the Chinese globally.
Those countries have strict inspection standards for imported food, especially for stuffed baked goods like mooncakes.

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On the other hand.some nations eschew trade barriers .promoting free trade

in which domestic producers are given no special treatment .and international producers are free to bring in their products.
Besides. If the country has entered into a trade agreement with another country, conducting business in that country will usually be easier and less risky because the trade agreement will provide some predictability and protection.

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4. Political stability
Once a country is stable, more investment opportunities

will be realised, thus attracting more and more investors. This will reflect positively and directly on local businesses, as citizens will be able to have full confidence in them.
Some countries are not politically stable and are subject to civil unrest and even violence. Civil unrest can make conducting business very risky, including the possible loss of property and life.

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CASE 1

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CASE 2

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CASE 3

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5. Political relations between home and host countries
Political relations often

determine the relative risk of entering a foreign country. Obviously, good relations will reduce risk and encourage trade by private companies, but circumstances can change rapidly.
Host and home country relations may be strained, affecting business affairs .

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CASE 1

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CASE 2

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Let’s have a talk...

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Firms operating internationally face major challenges in conforming to different

laws, regulations and legal systems in different countries.
The domestic laws of your home country
The domestic laws of each of your foreign markets
International law in general

B.The legal environment

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Domestic laws govern marketing within a country, e.g. the physical attributes

of a product will be influenced by laws (designed to protect consumers) relating to the purity, safety or performance of the product.
Domestic laws might also constrain marketers in the areas of product packaging, marking and labelling, and contracts with agents. Most countries also have certain laws regulating advertising, e.g. Britain does not permit any cigarette or liquor advertising on TV.

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The implications of law on marketing operations
are legion:
Product decisions -

physical, chemical, safety, performance, packaging, labelling, warranty
Pricing decisions - price controls, resale price maintenance, price freezes, value added systems and taxation

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Distribution - contracts for agents and distribution, physical distribution, insurance
Promotion

- advertising codes of practice, product restriction, sales promotion
Market research - collection, storage and transmission of data

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what taxation schemes will be faced abroad?

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CASE 1

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The controversy arose over a US embargo forbidding US business

to trade with Cuba and concerned whether or not the embargo could be enforced in Canada. Wal-Mart was selling Cuban made pajamas in Canada. When Wal-Mart officials in the United States became aware of the origin of manufacture, they issued an order to remove all the offending pajamas because it is against US law (the Helms Burton Act) for a US company or any of its foreign subsidiaries to trade with Cuba.

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Canada was incensed at the intrusion of US law on

Canadian citizens. The Canadians felt they should have the choice of buying Cuban made pajamas.
Wal-Mart was thus caught in the middle of conflicting laws in Canada and the United States and Canada – US foreign policy feud over the extra territoriality of US law.

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Wal-Mart Canada would be breaking US law if it continued to

sell the pajamas, and it would be subject to a million dollar fine and possible imprisonment of its managers.
However, if the company pulled the pajamas out of Canadian stores as the home office ordered, it would be subject to a $ 1.2 million fins under Canadian law.

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After discussion with Canadian authorities, Wal-Mart resumed selling the pajamas.
Canada

was upset with the United States for attempting to impose its laws on Canadian companies (Wal-Mart Canada is a subsidiary of Wal-Mart US) while the United States says that Wal-Mart was violating its laws in not abiding by the boycott with Cuba.

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The situation illustrates the reality of the legal environment and international

marketing companies are subject to both home country laws and host country laws when doing business in another country.
The federal government finally settled with Wal-Mart in 2003 and the pajama caper was finally closed.

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CASE 2
Google has closed its Chinese-language
search engine Google.cn

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International Law
It defined as that body of rules which regulates

relationships between countries or other international legal persons. There is neither an 'international parliament' empowered to create international law; nor an 'international police force' to enforce it.

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The principal sources of international law are treaties and conventions. These

are created when several countries reach agreement on a certain matter and bind themselves to it by authorising their representatives to sign a document embodying that agreement.
Essentially, they have entered into a contract that obliges them to do something or to refrain from doing something. Failure to comply is the equivalent of breach of contract.

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a) FCN (Friendship, Commerce and Navigation)
b) IMF and GATT
c) UNCITRAL

(UN) international trade law commission
d) ISO (International Standards Organisation)
e) IATA (International Air Transport Authority)

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CASE

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The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nations.
At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
159 members on 2 March 2013

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The WTO is a rules-based, member-driven organization — all decisions are

made by the member governments, and the rules are the outcome of negotiations among members.
It deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

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Cut living costs and raise living standards
Settle disputes and reduce

trade tensions
Stimulate economic growth and employment
Cut the cost of doing business internationally
Encourage good governance
Help countries develop
Give the weak a stronger voice
Support the environment and health
Contribute to peace and stability
Be effective without hitting the headlines

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More trade, more traded goods and services and more trading countries

— they bring benefits but they can also increase the potential for friction. The WTO’s system deals with these in two ways.
One is by talking: countries negotiate rules that are acceptable to all. The other is by settling disputes about whether countries are playing by those agreed rules.

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The fact that the disputes are based on WTO agreements

means that there is a basis for judging who is right or wrong. Once the judgement has been made, the agreements provide the focus for any further actions that need to be taken.

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on September .2009. the United States International Trade Commission had recommended

additional tariffs 35-30-25 percent over three years.
China announced a WTO challenge to the tires safeguard decision within days.

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CASE
Haier bought Sanyo's washing machine and refrigerator operations in

Japan and home appliance businesses in four other countries in Southeast Asia

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What to do?
Do research before go abroad
Respect other

countries’ political system and obey the rules
Keep Flexible
Connection with home country

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Summary
The political environment: Type of government. Party system. Economic policy of

the government. Political stability.Political relations between home and host countries
The legal environment: The domestic laws of your home country.The domestic laws of each of your foreign markets.International law in general

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