Chapter 5 The Political and Legal Environment

1. Chapter 5 The Political and Legal Environment

2. Introduction • While deciding upon a firm’s international marketing activities the manager needs to concentrate on three areas:

3. 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

4. Home-Country Political and Legal Environment • Governments may attempt to aid and protect the international marketing efforts of companies through ____________activities

5. Home-Country Political and Legal Environment • Gray market goods are • Areas of governmental activities which are of major concern to the international marketer are:

6. Home-Country Political and Legal Environment • Embargoes and sanctions: • Reasons for the impositions are varied, ranging from human rights to nuclear nonproliferation to terrorism

7. 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

8. Home-Country Political and Legal Environment • Export control

9. 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

10. 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

11. Home-Country Political and Legal Environment • Availability of high-technology products • Import controls

12. Home-Country Political and Legal Environment • Tariffs: • Voluntary restraint agreements: • Quota systems:

13. Home-Country Political and Legal Environment • Problems faced while administering import controls:

14. Home-Country Political and Legal Environment • They do not to work as intended • Regulation of international business behavior • Boycotts:

15. Home-Country Political and Legal Environment • Antitrust measures – • Bribery and corruption –

16. Host-Country Political and Legal Environment • Political risk: • Major types of political risk

17. Host-Country Political and Legal Environment • Government policies to combat political risks include: • Expropriation: • Confiscation:

18. Host-Country Political and Legal Environment • Domestication: Whereby the government: • Effects of domestication include:

19. Host-Country Political and Legal Environment • Common risks faced by most businesses operating abroad:

20. Host-Country Political and Legal Environment • Legal differences and restraints • Two major legal systems popular worldwide are:

21. Host-Country Political and Legal Environment • Antidumping laws – • Require export and import licensing • Laws may be designed to protect domestic industries and reduce imports

22. Host-Country Political and Legal Environment • Dealing with the intricacies of national politics:

23. Host-Country Political and Legal Environment • Develop coalitions or constituencies to motivate legislators and politicians to consider and implement change through:

24. International Relationships • International politics • If bilateral political relations between countries improve, business can benefit

25. International Relationships • International law • No enforceable body of international law exists • Firms are restricted by both home- and host-country laws

26. 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

27. 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 –

28. International Relationships • Chill effect: • Physical damage inflicted by terrorism disrupts power supply, communication, transport and other forms of infrastructure

29. International Relationships • Key side effect of terrorism

30. Ethical Issues • The ethical obligations faced by multinational enterprises include: • Corporate governance and responsibility • Corporate governance:

31. Ethical Issues • Its key elements include: • Intellectual property:

32. 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:

33. 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

34. 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