Transcript GLOBAL MARKETING MANAGEMENT by MASAAKE KOTABE

Global Marketing Management
Masaaki Kotabe & Kristiaan Helsen
Third Edition
John Wiley & Sons, Inc., 2004
Chapter 5
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Chapter 5
Political and Legal Environment
Chapter 5
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Chapter Overview
1. Political Environment---Individual
Governments
2. Political Environment---Social Pressures
and Political Risk
3. Terrorism and the World Economy
4. International Agreements
5. International Law and Local Legal
Environment
6. Issues Transcending National
Boundaries
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Introduction
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International marketers should be aware that the
economic interests of their companies can differ
widely from those of the countries in which they
do 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.
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1. Political Environment - Individual
Governments
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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.
Home Country vs. Host Country.
Structure of Government:
– Ideology
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1. Political Environment - Individual
Governments (contd.)
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Communism
Capitalism
Socialism
Political Parties
» Single-party-dominant country
» Dual-party system
» Multi-party system
Government Policies and Regulations: It is the
role of government to promote a country’s
interests in the international arena for various
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Management, Third Edition, 2004
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1. Political Environment - Individual
Governments (contd.)
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reasons and objectives such as: national security,
developing new industries, and protecting
declining industries.
Incentives and Government Programs
Government Procurement
Trade Laws
Tariff and Nontariff Barriers (see Exhibit 5-1)
Embargoes and Sanctions
Export License Requirements
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1. Political Environment - Individual
Governments (contd.)
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Investment Regulations (ownership & financial
controls)
Macroeconomic Policies (governments’ monetary
& fiscal policies such as the cost of capital, level
of economic growth, rates of inflation &
international exchange rates)
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Management, Third Edition, 2004
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2. Political Environment - Social
Pressures and Political Risk
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Social Pressures and Special Interests
Managing the Political Environment:
– Expropriation
– Confiscation
– Nationalization
– Domestication Policy/Phase-Out Policy
– Countertrade
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Management, Third Edition, 2004
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3. Terrorism and the World Economy
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According to an IMF study, the September 11,
2001 terrorist attacks in New York and
Washington D.C. resulted in major losses for the
U.S. economy.
The short-term lost economic output was
estimated as $47 billion.
The stock market lost $1.7 trillion. In addition,
125,000 workers were laid off for 30 days.
Terrorist activities disrupt international movement
of supplies and merchandise and financial flows.
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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4. International Agreements
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G7 (Group of Seven) is an economic policy
coordination group made up of political leaders
from Canada, England, France, Germany, Italy,
Japan, and the United States.
G8 (Group of Eight) consists of G7 and Russia.
COCOM (The Coordinating Committee for
Multilateral Controls) was founded in 1949 to stop
the flow of Western technology to the former
Soviet Union; members countries include
Australia, Japan and the NATO countries except
Iceland.
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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5. International Law and
Local Legal Environment
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International Law (the law of nations) comes from
three main sources:
– Customs
– International treaties
– Court decisions
Local Legal Systems and Laws
– Business Practices and the Legal Systems
» Issues of green marketing
– Regulations on E-Commerce
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Management, Third Edition, 2004
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5. International Law and
Local Legal Environments (contd.)
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– Types of Legal Systems:
» Common Law
» Code (written) Law
» Islamic Law
» Socialist Laws
» Civil Law
» Commercial Law
Cultural Values and Legal Systems:
– Japan’s population of lawyers is low.
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Management, Third Edition, 2004
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5. International Law and
Local Legal Environment (contd.)
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– 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 system.
Planning Ahead
Arbitration and Enforcement
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6. Issues Transcending National
Boundaries
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ISO 9000 certification has become an essential
marketing tool for firms.
ISO 14000 is based on the principle of self –
regulation, thereby minimizing surveillance and
sanctions.
Intellectual Property Protection:
– TRIPs (Trade-Related Aspects of Intellectual
Property Rights)
– Patent (first-to-file & first-to-invent principles)
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6. Issues Transcending National
Boundaries (contd.)
– Copyright
» The Digital Millennium Copyright Act
(DMCA)
– Trademark (prior-use, first-to-use & first-to-file
principles)
– Trade Secret
– Paris Convention
– Patent Cooperation Treaty
– Patent Law Treaty
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6. Issues Transcending National
Boundaries (contd.)
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– European Patent Convention
– Berne Convention
Antitrust Laws of the United States:
– The Sherman Act
– The Clayton Act
– Extraterritorial application of U.S. antitrust
laws
– Export Trading Company (ETC) Act of 1982
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6. Issues Transcending National
Boundaries (contd.)
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Antitrust Laws of the European Union:
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.
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6. Issues Transcending National
Boundaries (contd.)
– 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.
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Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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Copyright © John Wiley & Sons, Inc. 2004
Chapter 5
Kotabe & Helsen's Global Marketing
Management, Third Edition, 2004
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