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Chapter 5 The Political and Legal Environment. Introduction. While deciding upon a firm’s international marketing activities the manager needs to concentrate on three areas: . Home-Country Political and Legal Environment.

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chapter 5 the political and legal environment
Chapter 5

The Political and Legal Environment

introduction
Introduction
  • While deciding upon a firm’s international marketing activities the manager needs to concentrate on three areas:
home country political and legal environment
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
home country political and legal environment1
Home-Country Political and Legal Environment
  • Governments may attempt to aid and protect the international marketing efforts of companies through ____________activities
home country political and legal environment2
Home-Country Political and Legal Environment
  • Gray market goods are
  • Areas of governmental activities which are of major concern to the international marketer are:
home country political and legal environment3
Home-Country Political and Legal Environment
  • Embargoes and sanctions:
  • Reasons for the impositions are varied, ranging from human rights to nuclear nonproliferation to terrorism
home country political and legal environment4
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
home country political and legal environment6
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
home country political and legal environment7
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
home country political and legal environment8
Home-Country Political and Legal Environment
    • Availability of high-technology products
  • Import controls
home country political and legal environment9
Home-Country Political and Legal Environment
  • Tariffs:
  • Voluntary restraint agreements:
  • Quota systems:
home country political and legal environment10
Home-Country Political and Legal Environment
  • Problems faced while administering import controls:
home country political and legal environment11
Home-Country Political and Legal Environment
    • They do not to work as intended
  • Regulation of international business behavior
    • Boycotts:
home country political and legal environment12
Home-Country Political and Legal Environment
  • Antitrust measures –
  • Bribery and corruption –
host country political and legal environment
Host-Country Political and Legal Environment
  • Political risk:
  • Major types of political risk
host country political and legal environment1
Host-Country Political and Legal Environment
  • Government policies to combat political risks include:
    • Expropriation:
    • Confiscation:
host country political and legal environment2
Host-Country Political and Legal Environment
  • Domestication: Whereby the government:
  • Effects of domestication include:
host country political and legal environment3
Host-Country Political and Legal Environment
  • Common risks faced by most businesses operating abroad:
host country political and legal environment4
Host-Country Political and Legal Environment
  • Legal differences and restraints
    • Two major legal systems popular worldwide are:
host country political and legal environment5
Host-Country Political and Legal Environment
  • Antidumping laws –
    • Require export and import licensing
  • Laws may be designed to protect domestic industries and reduce imports
host country political and legal environment6
Host-Country Political and Legal Environment
  • Dealing with the intricacies of national politics:
host country political and legal environment7
Host-Country Political and Legal Environment
  • Develop coalitions or constituencies to motivate legislators and politicians to consider and implement change through:
international relationships
International Relationships
  • International politics
    • If bilateral political relations between countries improve, business can benefit
international relationships1
International Relationships
  • International law
    • No enforceable body of international law exists
    • Firms are restricted by both home- and host-country laws
the international relationships
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
international relationships2
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 –
international relationships3
International Relationships
  • Chill effect:
  • Physical damage inflicted by terrorism disrupts power supply, communication, transport and other forms of infrastructure
international relationships4
International Relationships
  • Key side effect of terrorism
ethical issues
Ethical Issues
  • The ethical obligations faced by multinational enterprises include:
  • Corporate governance and responsibility
    • Corporate governance:
ethical issues1
Ethical Issues
    • Its key elements include:
  • Intellectual property:
ethical issues2
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:
ethical issues3
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
ethical issues4
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