Political and Legal Political and Legal Environment Dr. David Stewart 1
Nov 20, 2014
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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