Political Environment

Political and LegalPolitical and Legal Environment

Dr. David Stewarta d Ste a t

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Political EnvironmentPolitical Environment

Major Players: j y1. Home Govt2 . Host Govt3. International Agencies

WTO, World Bank, IMF

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IssuesIssues

Govts conform to international agreements, treaties g ,and laws.Political and legal climates related:

because laws are derived from a country’s political processes.

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Political Environment - Home G tGovernmentsGovernment affects many aspects of business life in a y pcountry.

taxationNational politics affect business environment directlyNational politics affect business environment directly, through changes in policies, regulations, and laws.

Operating conditionsTh liti l t bilit d d i t ff t thThe political stability and mood in a country affect the actions a government will take.

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Home Governments: ActionsHome Governments: Actions

Incentives and Government ProgramsgGovernment ProcurementTrade Laws

Tariff and Nontariff Barriers Embargoes and SanctionsExport License RequirementsExport License Requirements

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Home Governments: ActionsHome Governments: Actions

Investment Regulations (ownership & financial g ( pcontrols)Macroeconomic Policies (governments’ monetary & fi l li i h th t f it l l l ffiscal policies such as the cost of capital, level of economic growth, rates of inflation & international exchange rates)

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Social Pressures and Political RiskSocial Pressures and Political Risk

Social Pressures and Special InterestspLobby groupsenvironmentalists

Managing the Political Environment:Managing the Political Environment:Expropriation/ConfiscationNationalizationDomestication Policy/Phase-Out PolicyCountertrade

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International AgreementsInternational Agreements

G7 (Group of Seven)( p )economic policy coordination group Canada, UK, France, Germany, Italy, Japan, and the United States.United States.

G8 (Group of Eight) - G7 and Russia.COCOM (The Coordinating Committee for M ltil t l C t l )Multilateral Controls)

founded in 1949stop the flow of Western technology to the former Soviet Union; includes Australia, Japan and the NATO countries except Iceland.

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International Law and L l L l E i tLocal Legal EnvironmentInternational Law (the law of nations) comes from three ( )main sources:

Customs (WCO)I t ti l t ti (WTO)International treaties (WTO)Court decisions:

Ruling on fishing limitsg g

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International Law and Local Legal Environment (contd )Local Legal Environment (contd.)

Local Legal Systems and Lawsg yBusiness Practices and the Legal Systems

Issues of green marketing; deceptive adsRegulations on E CommerceRegulations on E-Commerce

Local Legal Systems and Laws:In Canada emphasis on explicit contracts and aIn Canada, emphasis on explicit contracts and a reliance on the legal system is high.In China, relationships (guanxi) and verbal contracts are importantare important.

Planning Ahead:Whose jurisdiction

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Arbitration and Enforcement

Issues Transcending National B d iBoundariesISO 9000 certification has become an essential marketing tool.

EUISO 14000 i b d th i i l f lf l tiISO 14000 is based on the principle of self –regulation, thereby minimizing surveillance and sanctions.Intellectual Property Protection:Intellectual Property Protection:

Patent (first-to-file & first-to-invent principles)Copyright

The Digital Millennium Copyright Act (DMCA)Trademark (prior-use, first-to-use & first-to-file principles)

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Issues Transcending National B d i ( td )Boundaries (contd.)

Paris ConventionPatent Cooperation TreatyPatent Law TreatyEuropean Patent ConventionEuropean Patent ConventionBerne Convention

Antitrust Laws of the United States:Originally domestic oriented

Exclusive sales territories/price discriminationExtended to foreign enterprisesg p

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Impact on Marketing MixImpact on Marketing Mix

1. Product :product liability;

product safety;environmental regulationspackaging/labelling

2. Price :high inflation → price controlsVAT ---- hidden or separate.

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Impact on Marketing Mix (contd )Impact on Marketing Mix (contd.)3. Place :

tying contracts are illegal in Canada,but not so in many countries.

exclusive sales territories illegal in N Aexclusive sales territories illegal in N.A.

4. Promotion :D i / i l diDeceptive/misleading Fraudulent advertisingNudity !!!yChildren

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