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The Political, Legal, and Regulatory Environments of Global Marketing Chapter 5.

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Presentation on theme: "The Political, Legal, and Regulatory Environments of Global Marketing Chapter 5."— Presentation transcript:

1 The Political, Legal, and Regulatory Environments of Global Marketing Chapter 5

2 The Political Environment Political Culture Nations-States and Sovereignty Political Risk –Causes of Political Risk –Expressions and Symptoms Taxes Seizure of Assets

3 Nations-States and Sovereignty Sovereignty –Two context A country’s stage of development The political and economic system in place in the country Economies of Individual Nations –Industrialized –Newly industrialized –Developed Elements of market and nonmarket systems –Political power –Global phenomenon Privatization –Ex. Mexico

4 Political Risk What is Political risk? Causes of Political Risk –Tension between the residents’ and goals and conditions –Countries and political risk Expressions and Symptoms of Political Risk –Expression Ex. Indonesia –Symptoms Threat of civil disorder or ethnic conflict Currency depreciation

5 Taxes Governments –Tax revenues VAT taxes –Value-added tax –Effect of VAT tax Corporate Taxation –High level of political risk effect

6 Seizure of Assets Expropriation –Confiscation –Government Nationalization Creeping expropriation –limitations

7 The Legal Environment International Law –The rules and principles that nation-states consider binding upon themselves –Organizations Contributions Public international law –Disputes arising between nations are issues of public international law –Sources

8 Common Law versus Civil Law Private international law –The body of law that applies to disputes arising from commercial transactions between companies of different nations Civil law country –One in which the legal system reflects the structural concepts and principals of the Roman Empire in the sixth century Common Law countries –Many disputes are decided by the reliance on the authority of past judicial decisions Islamic law –Is a comprehensive code governing Muslim conduct in all areas of life, including business

9 Sidestepping Legal Problems: Important Business Issues Jurisdiction –Refers to a court’s authority to rule on particular types of controversies arising outside of a nation’s borders or to exercise power over individuals or entities from different countries. Intellectual Property –Patents –Trademarks –Copyrights –Piracy –Counterfeiting

10 Antitrust and Cartel Antitrust laws in the United States and other countries Sherman Act of 1890 –Prohibits certain restrictive business practices, including fixing prices, limited production, allocating markets, or any other schemes designed to limit or avoid competition. Cartel –A group of separate companies that collectively sets prices, controls output, or takes other actions to maximize profits.

11 Licensing and Trade Secrets Licensing –A contractual agreement in which a licensor allows a licensee to use patents, trademarks, trade secret, technology, or other intangible assets in return for royalty payments or other forms of compensation. Trade Secrets –Are confidential information or knowledge that has commercial value and is not in the public domain, and for which steps have been taken to keep it secret

12 Bribery and Corruption: Legal and Ethical Issues Bribery –The corrupt business practice of demanding or offering some type of consideration, typically cash payment, when negotiating a cross border deal Foreign Corrupt Practice Act –A legacy of the Watergate scandal during Richard Nixon’s presidency

13 Conflict Resolution, Dispute Settlement, and Litigation Conflict Resolution –Discovery The process of obtaining evidence to prove claims and determining which evidence may be admissible in which countries under which condition Alternatives to Litigation for Dispute Settlements –Arbitration A negotiation process that the two parties have, by prior agreements, committed themselves to using.

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