1. 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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

10. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 6. Issues Transcending National Boundaries
ISO 9000 certification has become an essential marketing tool for firms.
ISO 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

18. 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

19. 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

20. 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

21. 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

22. Copyright © John Wiley & Sons, Inc. 2004
Chapter 5
Kotabe & Helsen's Global Marketing Management, Third Edition, 2004