1. Welcome to class of International Government Relations Dr
Welcome to class of International Government Relations Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg Canada

6. Govt. Can Impose Nontariff Barrier
WTO identifies 600 such barriers
Quota
Antidumping accusations
Countervailing duty by law
Labeling restrictions
Licensing mandatory
Product standards  health and safety
Custom inspection procedure  host’ll do it
Government procurement regulations
TRIM  Trade Related Investment Measure
WTO: DSB Dispute Settlement Board

7. So Form Govt. Relations Governments take actions It impacts MNCs
Regulate
Taxation
Expenditure
Privatize
Consultation
It impacts MNCs
Govt. actions  threats and opportunities for MNCs

8. Government Actions: Threats and Opportunities
↑ costs
↓ ROI
Competitive disadvantage
↑ competition
Co-opt
Regulation
Taxation
Expenditure
Privatization
Consultation
Control competition
Competitive advantage
Subsidies, grants, customer
Level playing field
Influence policy
Given threats, MNCs need to formulate political strategy in both host and home countries  relations

9. Political Strategy – Elements
Formulation
Objectives (form IJV, buy govt. assets, get permit, influence MPs to have favorable legislations)
Issues (current or emerging)
Stakeholders (allies, opponents, targets)
Position/Case (“public interest”)
Implementation
Timing
Techniques
Direct (negotiate, litigate)
Indirect (advocacy advertising, political contributions)
Vehicles (association coalition, Government Relations department, consultants)
Style (confrontation or conciliation  depends on objective)

10. Objectives: MNCs, SoE, Govt

11. MNCs Strategic approach to Govt. Policy
MNC Can NOT influence Govt
MNC Can influence Govt 1
“Government Policy as lever for global competitiveness” approach
base/cluster concept 3
Firm specific characteristics in MNC government interaction
Use of strategic trade policy arguments to obtain government favors. 2
“Good corporate citizen” approach
Government policy not viewed as a major determinant of international competitiveness 4
Influenced through lobbying,
i.e., a proactive strategy
To achieve
Benefits of
integration
MNC’s objectives in Business – Govt.
Interactions
To achieve
Benefits of
National
Responsiveness
Strategy: Choose one (say 4); determine who has the bargaining power: Govt or MNC

12. Bargaining Power Governments may discriminate
Due to differing characteristics of subsidiaries
Force MNCs to have IJV, impose taxes, fix prices
Or they can give MNCs 100% foreign ownership and financial support!
Sources of Bargaining power for host country
Growing capability to replace the MNC’s products
Control access to raw materials, labor and capital
Sources of Bargaining power for MNC
Global structure, Vertical integration
MNCs avoid dealing with govts  unstable
Globalization has made govt. FDI friendly

13. Govts Create Business Linkages