Case Analysis
Ensar67
chapter_4-political_and_regulatory_climate_1.ppt4
Political and Regulatory Climate
Learning Objectives
- List and explain the political motivations behind government actions that promote or restrict international marketing. Identify pressure groups that affect international marketing.
- Discuss specific government actions salient to international marketing, such as boycotts and takeovers.
- List and compare the four basic legal traditions that marketers encounter worldwide.
- Cite examples illustrating how national laws can vary and change.
- Differentiate between the steps involved in managing political risk and those involved in planning for regulatory change.
Chapter Overview
- Host country political climate
- Host government actions
- Home country political forces
- Legal environments
- National regulatory environments
- Managing political risk
- Global marketing and terrorism
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- Self-preservation
- Security
- Prosperity
- Prestige
- Ideology
- Cultural identity
Political Motivations of Host Countries
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Host Country Actions
- Government subsidies
- Ownership restrictions
- Operating conditions
Work permits
Local content requirements
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Takeovers
- Takeovers = Host-government actions that result in a firm’s loss of ownership or direct control
- An expropriation is a formal seizure of an operation
- A confiscation is an expropriation without compensation
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Home Country Actions
- Guided by the same six interests as host countries
U.S. embargo of Cuba
U.S. anti-Arab boycott legislation
- Often home countries seek multilateral actions to increase their bargaining power
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Legal Evolution
- Product liability
- Bankruptcy
- Regulating cyberspace
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Human Nature Orientation (HNO)
- Positive HNO – assume people can be trusted to obey the rules
- Negative HNO – assume people cannot be trusted to obey the rules
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Attitudes Toward Rules
- Attitudes toward rules are affected by two criteria:
Level of power distance
Type of human nature orientation
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Managing Regulatory Change
Alter
Bargain to get government to change regulations
Avoid
Move to bypass the impact of the regulation
Accede
Comply
Ally
Avoid some risks by seeking strategic alliances
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Political Risk
Political risk is the possibility that an unexpected and drastic change due to political forces will result in adverse circumstance for business operations
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Regulatory Change Versus Political Risk
- Regulatory Change
More moderate and predictable changes in the business environment
- Political risk
More unexpected and drastic changes
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Managing Political Risk
- Fighting the battle on two fronts:
Perfect intelligence systems to avoid being caught unaware when changes disrupt operations
Develop risk-reducing strategies that help limit their exposure, or the losses they would sustain, should a sudden change occur
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Terrorism Affects
International Marketing
- Starbucks pulled out of Israel because they feared a terrorist attack
- GE criticized by a senator for taking “blood money” from a state that supports terrorism (Iran)
- Global tourism and education are affected
Americans spend more on domestic and nearby tourism; less spent on overseas tourism. Fewer Middle Easterners are visiting America.
Tighter visa controls in America have created an opportunity for non-U.S. countries to increase their share of international students
- Governments and companies spend lots of money to protect infrastructure, plant, equipment, and people
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