Transcript International Marketing

INTERNATIONAL MARKETING 6e
Chapter 6
The International Political and
Legal Environment
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The Political and Legal Environment
 Home
country political and legal environment
• The Environmental Superfund
• Intellectual property rights
• Gray markets
 Embargoes
and sanctions
• “…government actions to distort
the free flow of trade in goods,
services, or ideas for
adversarial and political
purposes”
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Export Controls
 U.S.
export control systems
• Export Administration Act (Commerce Department)
• Munitions Control Act (State Department)
• Determinants for export controls
– National security, foreign policy, short supply, nuclear
nonproliferation
 Critical
commodities list
• Sensitive to national security
• Controlled for other purposes
 No
License Required (NLR)
 Export license
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U.S. Export Control System
Decision Steps in the Export
Licensing Process
Should a Given Product
be Exported?
To a Given Country?
To a Given End User?
For A Particular End Use?
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Export Control Problems and Conflicts
 Determining
what constitutes military-use,
civilian-use, and dual-use products.
 Implementing controls on physical goods and
knowledge and technology transfers.
 Monitoring access to deemed exports by
foreign nationals.
 Recognizing nationalistic
desires to protect
economic interests.
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Import Controls
 Tariffs
 Voluntary
restraint agreements
 Quota systems
 Administrative problems
• Monetary and social costs to consumers while
benefiting protected groups.
• Downstream change in the composition of imports
to circumvent narrowly defined protectionist
measures.
• The failure of protected firms become more
efficient and competitive.
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International Business Behavior Regulation
 Regulating
international business behavior
• Home countries may implement special laws and
regulations to ensure that the international
business behavior of firms headquartered within
them is conducted within moral and ethical
boundaries considered appropriate.
 Boycotts
• Instances where a firm or person
refuses to do business with another
firm or person for social, economic
or political reasons.
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6-8
International Business Behavior Regulation
 Antitrust
Laws
• Focus on firms engaged in competitive activities
that restrict or impede competition.
 Corruption
• Where firms have obtained contracts or other
competitive benefits through bribes and illegal
payments and not through performance.
• The Foreign Corrupt Practices Act in 1977
• In 1995 the Organization of American States
(OAS) condemned bribery.
• The 1998 Trade Act
• The WTO put bribery rules on its agenda
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Political Action and Risk
 Political
risk
• A lack of consistency and stability in governmental
and social institutions
 Types
of political risk
• Ownership risk (property and life)
• Operating risk (ongoing operations interference)
• Transfer Risk (in shifting funds between countries)
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Typical Forms of Host Country Controls
 Expropriation
• Taking of private property with compensation
 Confiscation
• Taking of private property without compensation
 More
•
•
•
•
•
•
subtle forms of control
Domestication
Local-content
Exchange controls
“Overinvestment”
Tax policies
Price controls
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 See
Albaum file for slide on Political Risk!
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Coping with Political Risk and Controls
 Minimizing
Risk
• Insure against risk
• Create a structured operating environment
• Develop an “Early Warning” risk-monitoring
system.
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Legal Differences and Restraints
 The
two major legal systems
• Common law
– Based on tradition and less
dependent on statutes and
codes than on precedent
and custom.
• Code law
– Based on a comprehensive
set of written statutes that spell
out legal rules explicitly.
 Antidumping
laws
• Laws which prohibit below-cost sales of imported
goods in local markets.
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The Influencing of Politics and Laws
 Options
for dealing with politics and laws
• Ignore prevailing rules and
expect to get away with it.
• Provide input and resolve
problem areas through
multilateral negotiations.
• Develop linkages and
lobby contacts to get
the laws changed.
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The International Environment
 International
Politics
• Political relations and conflicts between countries
can have a profound impact on firms trying to do
business internationally.
• If relations between countries improve, business
can benefit.
 International
Law
• No enforceable body of international law exists.
Firms are subject to home and host-country laws.
• Areas of cooperation among nations
– bilateral treaties guaranteeing fair treatment
– patent and trademark protection
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