Global Marketing 4

Bab 4
Political, Legal and Regulatory Environment

The political environment :
► Any company doing business outside its home country should carefully study the political culture in the target country and analyze relevant issues arising from political environment.
► Sovereignty can be defined as supreme (highest) and independent political authority.. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided.
► Many government in the development countries exercise control over the nations’ economic development by passing protectionist laws and regulations.
Their objective is to encourage economic development by protecting emerging or strategic industries.
Sample:
Suharto established a national cars program that granted tax breaks and tariff privileges to a company established in South Korea by his youngest son.
► Political Risk, is the risk of a chance in political environment or government policy that would adversely affect a company’s ability to operate effectively and profitably.
Business people need to stay apprised of the formation and evolution of political parties.
Valuables sources include The Economist, Financial Times, BERI (business environment risk intelligence) specialized in political report on individual country market. PRS group focuses more directly on government action and economic function.
► Taxes, government rely on tax revenues to generate funds for social services, the military and others expenditures. Unfortunately, government taxation policies on the sales of goods and service frequently motivates companies and individuals to profit by not paying taxes.
► Seizure (attack) of Assets, the ultimate threat a government can posed toward a company is seizing assets. Expropriation (take away something belonging to somebody) refer to governmental action to dispossess (divest) a foreign company or investor. Compensation is generally provided. If is not provided, the action is referred to as confiscation (taking away).
► Nationalization is generally broader in scope ; its occurs when the government take control of some or all of the enterprises in a particular industry.
In 1959, Castro government nationalized property belonging to American sugar producers in retaliation for new quotas on sugar. Castro offered compensation on Cuban government bonds.
In the mid 1970s, J&J and other foreign investors in India had to submit to government regulations to retain majority equity position in company already established.

Legal Environment :
► International Law, may be defined as the rules and principles that nation states consider binding upon themselves. International law pertains to property, trade, immigration, and other area that have traditionally been under the jurisdiction of individual nation
► Common Law, is law developed by judges through decisions of courts and similar tribunals (called case law), rather than through legislative statutes or executive action, and to corresponding legal systems that rely on precedential case law.
► Islamic Law, the code is derived from two sources. First is Koran, the holly book and second is the Hadith . In particular Hadith spell out the product and practices the the haram (forbidden)

IMPORTANT BUSINESS ISSUES :
► Jurisdiction, company personnel working abroad should understand the extent to which they are subject to the jurisdiction of host-country courts.
>>>>Kodak vs Fuji in japan.
Intellectual property; patents, trademarks, and copyrights
► Patent and trademarks that are protected in one country are not necessarily protected in another country where business is conducted.

Patent is a formal legal document that gives an investor an exclusive rights to make, use, and sell an invention for a specified period of time.
► Trademarks, is defined as distinctive mark, motto, device, or emblem that a manufacturer affixes to a particular product to differentiate it from goods produced by other manufacturers.
► Copyrights, establishes ownership of a written, recorded, performed or filmed creative works
► Antitrust, are designed to combat restrictive business practices and to encourage competition. The law are enforced by agencies as The US Federal Trade Commission, Japan’s Fair Trade

Commission and European Trade Commission :
► These laws provide remedies for businesses and consumers from the effects of monopolization and conspiracy, fixed prices, boycotts, refusals to deal, divided markets, etc.

The historic goal of the antitrust laws is to protect economic freedom and opportunity by promoting competition in the marketplace. Free competition benefits consumers through lower prices, better quality, and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anticompetitive restraints.
► Licensing, is a contractual agreement in which a licensor allows a licensee to use patents, trademarks, trade secret, technology or other intangible
assets in return on royalty
payment.

The Regalutory Environment :
► The regulatory environment of global marketing consists a variety of governmental and non governmental agency that enforce laws or set guidelines for conducting business. These agency address a wide range of marketing issues, including price control, labeling, food and drugs regulation, employment condition, advertising and competitive practices