Which Components of the Political Environment Can Affect Marketing? • Political Corruption • Degree of Political Stability – “Continuity of the set of rules or code of behavior and the continuation of the rule of law” • Philosophy of Political Party in Power – Conservative Party in G.B., Republicans in U.S. perceived to be more pro business • Level of Nationalism – “Intense feeling of national pride and unity”
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Which Components of the Political Environment Can Affect Marketing? Political Corruption Degree of Political Stability –“Continuity of the set of rules.
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Which Components of the Political Environment Can Affect Marketing?
• Political Corruption• Degree of Political Stability
– “Continuity of the set of rules or code of behavior and the continuation of the rule of law”
• Philosophy of Political Party in Power– Conservative Party in G.B.,
Republicans in U.S. perceived to be more pro business
• Level of Nationalism– “Intense feeling of national pride
and unity”
Which Components of the Political Environment Can Affect Marketing?
• Government Attitudes towards privatization
• Impact of Political and Social activists
• Political Repression
Example of Way to Measure Political Environment Competitiveness Based on
World Competitiveness Yearbook
• FACTORS– National Debt
• E.g. Central government domestic debt
– Government Expenditures
• E.g. Government employment
– Fiscal Policies
• E.g. Collected Total Tax Revenues
– State Efficiency
• Government Economic Policies
• Political System
– State Involvement• Government Subsidies
• Price Controls
– Justice and Security• Serious Crime
• Security
• World Competitiveness Yearbook - World Economic Forum– Ranking of 59 countries on 250
criteria on their ability to attract foreign investment and to sustain the competitiveness of its firms, i.e. Is it a good country to do business?
– Rankings based • 2/3rd statistical data• 1/3rd on Survey of 3000 Business
Assignment 1 Political (3)Go to World Bank Governance Indicators
provides ranking of 209 countries and territories on six dimensions of governance. The analysis is conducted bi-annually. The paper is based on the years from 1996 to 2004. http://globaledge.msu.edu/ibrd/offsite.asp?URL=http%3A%2F%2Fwww%2Eworldbank%2Eorg%2Fwbi%2Fgovernance%2Fpubs%2Fgovmatters4%2Ehtml&ResourceCategoryID=44&CategoryTitleText=Research%3A+Rankings&ResourceLinkText=World+Bank%3A+Governance+Indicators&GRPage=GR%5FRankings%2Easp&ResourceCategoryDataID=3076
Click on Governance Indicators Data set Click on Interactive Governance Indicators
Or Go to Deloitte Country Guides http://www.deloittecountryguides.com/index.asp
Or Go to http://globaledge.msu.edu/ibrd/CountryList.asp
Click on CountryClick on Country commercial GuideClick on Political and Economic Environment
• Governance can be broadly defined as the set of traditions and institutions by which authority in a country is exercised. This includes (1) the process by which governments are selected, monitored and replaced, (2) the capacity of the government to effectively formulate and implement sound policies, and (3) the respect of citizens and the state for the institutions that govern economic and social interactions among them.
What are the 6 dimensions of the Governance Indicators?
• Voice and Accountability includes in it a number of indicators measuring various aspects of the political process, civil liberties, political and human rights, measuring the extent to which citizens of a country are able to participate in the selection of governments.
• Political Stability and Absence of Violence combines several indicators which measure perceptions of the likelihood that the government in power will be destabilized or overthrown by possibly unconstitutional and/or violent means, including domestic violence and terrorism.
• Government Effectiveness combines responses on the quality of public service provision, the quality of the bureaucracy, the competence of civil servants, the independence of the civil service from political pressures, and the credibility of the government's commitment to policies.
• Regulatory Quality instead focuses more on the policies themselves, including measures of the incidence of market-unfriendly policies such as price controls or inadequate bank supervision, as well as perceptions of the burdens imposed by excessive regulation in areas such as foreign trade and business development.
• Rule of Law includes several indicators which measure the extent to which agents have confidence in and abide by the rules of society. These include perceptions of the incidence of crime, the effectiveness and predictability of the judiciary, and the enforceability of contracts.
• Finally, Control of Corruption is a measure of the extent of corruption, conventionally defined as the exercise of public power for private gain. It is based on scores of variables from polls of experts and surveys.
For Example
Click on Governance Indicators Data set
Click on Interactive Governance Indicators
Information on Current Political Climate from Country Commercial Guide
• Country Watch Data Base (Cal Poly Library)– Click on Country– Click on Political Conditions– Click on Investment Climate
• Expropriation & Compensation• Dispute Settlement• Protection of Property Rights• Political Violence• International Investment
Agreements• Corruption and Crime
Sample Politics and Graft Information
• Politics and Graft Transparency International rates Uruguay as having a 4.4 Corruption Perceptions Index (CPI), which means that it ranks 42nd out of the 99 countries surveyed, which is about the same level of corruption as Italy, the Czech Republic, and Mongolia.
The current Uruguayan government came into power on a platform promising the eradication of corruption in government. As the international watchdog group. Transparency International notes, that task is not an easy one. As they note in a recent report:
"Typically, the main activities in need of reform are those that involve discretion, including the issuance of licenses, permits, quantitative import restrictions (quotas), passports, customs and border-crossing documentation, and banking licenses; the implementation of price controls; the blocking of entry to new firms and investors and the provision of monopoly power; the awarding of public procurement contracts; the granting of subsidies, soft credits, tax exemptions, and inflated pensions and the allowing of tax evasion; the imposition of foreign-exchange controls resulting in multiple exchange rates, the overinvoicing of imports, and the flight of capital; the allocation of real estate, grain storage facilities, telecommunications, and power infrastructure; the discretionary application of socially desirable regulations such as those that apply to public health and the environment; and the maintenance of obscure or secret budgetary accounts as well as other "leakages" from the budget to private accounts."
Which Elements of the International Legal Environment Can Affect
Marketing?
• International Laws – Rules that countries agree to abide by regarding– Trade– Protection of property, e.g. copyrights,
patents
• Host-country Laws – Laws of the different countries where the company operates
• Home-country laws – Laws of the home country that follow the company all over the world , e.g. corruption laws, antitrust laws
Host-country Commercial Laws
• Marketing– Regulations on distribution channel
relationships, e.g. mergers, exclusive dealings
– Pricing, e.g. price fixing, price discrimination– Promotion, e.g.
• Deceptive• Advertising to Children• Comparison Advertising• Bait Advertising• Endorsements