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

Political and Legal Environment Chapter 5 Political and Legal Environment Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 Introduction 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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

1. 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 vs. Host Country. Structure of Government: Ideology Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

1. Political Environment - Individual Governments (contd.) 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

1. Political Environment - Individual Governments (contd.) 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

1. Political Environment - Individual Governments (contd.) 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) Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

2. Political Environment - Social Pressures and Political Risk Social Pressures and Special Interests Managing the Political Environment: Expropriation Confiscation Nationalization Domestication Policy/Phase-Out Policy Countertrade Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

3. 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 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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

4. International Agreements 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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

5. International Law and Local Legal Environment 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

5. International Law and Local Legal Environments (contd.) 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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

5. International Law and Local Legal Environment (contd.) 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

6. Issues Transcending National Boundaries 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) Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

6. Issues Transcending National Boundaries (contd.) 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 Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

6. Issues Transcending National Boundaries (contd.) 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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

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. Chapter 5 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

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