THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control’s and restricts a company’s activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country’s borders that much of the conflict in international business arises. Nations can and do abridge specific aspects of their sovereign rights in order to coexist with other countries. Like the European Union, North American Free Trade Agreement (NAFTA) are examples of nations voluntarily agreeing to give up some of their sovereign rights in order to participate with member nations for common, mutually beneficial goals. For example the “pajama game” discussed in global perspective is not unusual for multinational corporations. The pajama caper was a controversy arose over a US embargo forbidding US businesses to trade with Cuba. Wal-Mart was selling Cuban made pajamas in Canadian market. When Wal-Mart officials in US came to know about this, they ordered all offending Cuban pajama’s as it was against US law. Canada was incensed with the obtrusion of US law on Canadian citizens. The Canadian citizen’s felt that they should be able to buy Cuban-made pajama’s if they wanted to. Wal-Mart was caught between a Canada-US foreign policy feud. Wal-Mart Canada was breaking US law if it continued to sell pajamas, and was subject to a million-dollar fine and possible imprisonment. However, if it did pull out pajamas from Canadian market it was subject to 1.2 million dollar fine under Canadian law. The ideal political climate for a multinational firm is stable, friendly environment. Unfortunately, that is never really the case, it’s not always friendly and stable. Since foreign businesses are judged by standards as variable as there are nations, the friendliness and stability of the government in each country must be assessed as an ongoing business practice. STABILITY OF GOVERNMENT POLICIES The most important of the political conditions that concern an international business is the stability or instability of the prevailing government policies. Political parties may change or get reelected but the main concern for MNCs is the continuity of the set rules or code of behavior regardless of the party in power. A change in the government does not always mean change in the level of political risks. In Italy the political parties have changed 50 times since the end of World War II but the business continues to go on as usual inspite of the political turmoil. In comparison is India, where the government has changed 51 times since 1945 but however much of the government policies remain hostile to foreign investments. Conversely, radical changes in policies toward foreign business can occur in the most stable of the governments. Some of the African countries are among the unstable with seemingly unending civil wars, boundary disputes and oppressive military regimes. Like one of the region with the greatest number of questions concerning long-term stability is Hong Kong as since China has gained control, the official message is that nothing will change and thus everything is seemingly going smoothly but the political analysts say that it is too early to say how will the business climate change, if it will. If there is potential for profit and if given permission to operate within a country, MNCs can function under any type of government as long as there is some long-term predictability and stability. POLITICAL PARTIES Particularly important to the marketer is the knowledge of all philosophies of all major political parties within a country, since anyone might become dominant and alter prevailing attitudes. In those countries where there are two strong political parties where usually one succeeds the other, it is important to know the direction each of the parties is likely to take. Changes in direction a country may take toward trade and related issues are caused not only by political parties but also by politically strong interest groups and factions within different political parties, which cooperate to affect trade policies. NATIONALISM Economic nationalism that exists to some degree in all countries is another factor that affects international environment. Nationalism is intense feelings of national pride and unity, an awakening of nation’s people to take pride in their own country. This pride can take an anti-foreign business bias. One of the central aims of economic nationalism is the preservation of national economic anatomy where national interest and security are more important than international considerations. POLITICAL RISKS OF GLOBAL BUSINESS CONFISCATION, EXPROPRIATION AND DOMESTICATION The most severe political risk is confiscation, which is seizing of company’s assets without payment. Less severe is however, expropriation, which requires reimbursement, for the government seized investment. A third type of risk is domestication, which occurs when host country takes steps to transfer foreign investments to national control and ownership through series of government decrees. A change in the government’s attitudes, policies, economic plans and philosophies toward the role of foreign investment is the reason behind the decision to confiscate, expropriate or domesticate existing foreign assets. ECONOMIC RISKS International companies are often faced with many economic risks most of which arise without any prior warning. Economic risks are an important and a recurring part of political environment that a few companies can avoid. ? Exchange controls stems from shortage of foreign exchange held by the country. When this happens, controls may be placed upon all movements of capital or selectively against most politically vulnerable companies. Exchange controls are extended to cover products by applying a system of multiple exchange rates to regulate trade. ? Local-content laws- companies often require a portion of any product sold in a country to have a local content. ? Import restrictions- selective restrictions on import of certain raw materials, machines and spare parts are common strategies used to force foreign companies to purchase more materials within host country creating markets for local products. ? Tax controls- taxes are a classified risk when used as a means of controlling’ foreign investments. They are often raised without warning and in violation of formal agreements. ? Price controls- essential products that command considerable public interest are often subject to price controls. ASSESSING POLITICAL VULNERABILITY Some products are more politically vulnerable than others, in that they receive more government attention. This special attention may result in positive or negative actions towards the company. Unfortunately there are no absolute guidelines for marketer’s to follow whether the product will receive government attention or not. POLITICALLY SENSITIVE PRODUCTS. There are some generalizations that help to identify the tendency for products to be politically sensitive. Products that have an effect upon the environment exchange rates, national and economic security, and the welfare of the people are more apt to be politically sensitive. For products judged non essential the risk would be greater, but for those thought to be making an important contribution, encouragement and special considerations could be available. FORECASTING POLITICAL RISKS A number of firms are employing systematic methods of measuring political risk. Political risk assessment can: ? Help managers decide if risk insurance is needed ? Devise and intelligence network and an early warning system ? Help managers develop a contingency plan ? Build a database of past political events for use by corporate management ? Interpret the data gathered and getting forewarnings about political and economic situations REDUCING POLITICAL VULNERABILTY Even though the company cannot directly control or alter the political environment, there are measures with which it can lessen the susceptibility of a specific business venture. GOOD CORPORATE CITIZENSHIP A company can reduce its political vulnerability by being a corporate citizen and remembering: – 1. It is a guest in the country and should act accordingly 2. The profits are not it’s solely, the local employees and the economy of the nation should also benefit. 3. It is not wise to try and win over new customers by totally Americanizing them. 4. A fluency in the local language helps making sales and cementing good public relationships. 5. It should train its executives to act appropriately in the foreign environment. STRATEGIES TO LESSEN POLITICAL RISKS MNCs can use other strategies to minimize political risks and vulnerability. They are: – ? Joint ventures ? Expanding the investment base ? Marketing and distribution ? Licensing ? Planned domestication ? Political payoffs GOVERNMENT ENCOURAGEMENT OF GLOBAL BUSINESS FOREIGN GOVERNMENT ENCOURAGEMENT Governments also encourage foreign investment. The most important reason to encourage investment is to accelerate the development of an economy. An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry. US GOVENRMENT ENCOURAEMENT The US government is motivated for economic as well as political reasons to encourage American firms to seek opportunities in the countries worldwide. It seeks to create a favorable climate for overseas business by providing the assistance by providing the assistance that helps minimize some of the troublesome politically motivated financial risks of doing business abroad.
___________________
Другие работы по теме:
Better School Environment Essay Research Paper In
Better School Environment Essay, Research Paper In order to create a safer school environment through positive peer pressure, you have to have at least two variables. That way, in case one doesn?t work, you can always resort to the second, or even third method if needed. The first way could be to have a popular club dedicated to promote nonviolence, and the other way could be to always discuss having a safer school environment with the students.
Education Of Behaviorist Essay Research Paper The
Education Of Behaviorist Essay, Research Paper The environment around us controls who we are, what we do, and how we act. The individual may have a slight control of what they do but the over looking factor in them is the environment they are put in. We learn what to do and how to change our behavior due to what the environment puts forth.
Cadillac Essay Research Paper IntroductionNow that we
Cadillac Essay, Research Paper Introduction Now that we have looked at the Cadillac Escalade?s environment and target markets, lets look at the marketing mix to show what cadillac does to influence the demand of the Escalade.
Marketing Essay Research Paper FOREWORDThe first time
Marketing Essay, Research Paper FOREWORD The first time I visited an IKEA-store was in Elisabeth, New Yersey, The U.S. The year was 1995 and I still rember the joy and excitement when I entered the building. It was huge and it
American Education A Disgrace Essay Research Paper
America?s educational infrastructure is the embodiment of all social programs plagued with fundamental flaws. All one must do to come to this concise conclusion is to view the many aspects of America and its international federalism. After all, education is the platform for success on all levels.
Land Mines Essay Research Paper Land mines
Land Mines Essay, Research Paper Land mines greatly contribute to the danger of international security because they are used as military weapons. Because land mines have caused great destruction there has been an effort from international and non-governmental organizations to ban mines and clear areas infected with them.
Environmental Scanning Essay Research Paper This paper
Environmental Scanning Essay, Research Paper This paper will discuss environmental scanning, marketing procedures, and describe how the environment affects marketing in relation to the automobile detailing business.
Baby Foods Essay Research Paper Baby foods
Baby Foods Essay, Research Paper Baby foods are basically sold through supermarket, grocery stores, mass merchandisers, and some of direct marketing.? Opportunities:The demand in baby food industry is constant. Except United States, there are good opportunities in international markets like European, Asia and South America.
Basic Marketing Essay Research Paper MarketingAccording to
Basic Marketing Essay, Research Paper Marketing According to the American Heritage Dictionary, marketing defined is the act or process of buying and selling in a market, but what are some of the strategies that successful corporations use to gain an advantage over their competition? Successful companies invest up front to develop an advertising and promotions plan, which clearly outlines the goals and strategies of the organization.
Internationalization Models Essay Research Paper A STAGES
Internationalization Models Essay, Research Paper A- STAGES (UPPSALA) INTERNATIONALIZATION MODEL The Model Characteristics: 1- the export development process has a sequential nature -successive stages represent higher degrees of international involvement/commitment;
Societal Marketing Concept Essay Research Paper The
Societal Marketing Concept Essay, Research Paper The societal marketing concept holds that the organisation should concentrate on the needs and wants of their customers, and then deliver the desired satisfactions more effectively and efficiently than competitors, in a way that maintains or improves the consumer’s and the society’s well-being.
Prairie Essay Research Paper PRAIRIE An ecoysystem
Prairie Essay, Research Paper PRAIRIE An ecoysystem is all the biotic and abiotic components of an environment. The prairie is located in North America. The tempaturevaries greatly and the environment doesn’t get enough rainfall to support trees.
EBusinessKmartIncl Biblio Essay Research Paper Marketing
E-Business/Kmart(Incl. Biblio) Essay, Research Paper Marketing businesses, products and services has become much more complex with the introduction of the internet. In this paper I will attempt to describe the effect of e-business on marketing strategies today, as well as describe the e-business marketing strategies utilized by Kmart, Inc.
Modernization Vs Dependency Essay Research Paper MODERNIZATION
Modernization Vs. Dependency Essay, Research Paper MODERNIZATION VS. DEPENDENCY The modernization perspective is behavioral or microsociological the primary focus is on individuals or aggregates of individuals, their values, attitudes, and beliefs. The dependency perspective, by contrast, is structural or macrosociological its focus is on the mode of production, patterns of international trade, political and economic linkages between elites in peripheral and central countries, group and class alliances and conflicts, and so on. (Valenzuela & Valenzuela, 1978)
Pesticides Essay Research Paper Pesticides include insecticides
Pesticides Essay, Research Paper Pesticides include insecticides, herbicides and fungicides, which kill insects, weeds, and are harmful to humans. They often have direct or indirect effects on other living things. Synthetic pesticides are chemical compounds; some are more toxic than others. Synthetic pesticides can release compounds that are more toxic than the original pesticides when they break down in the environment.
Intewrnationl Day Essay Research Paper International DayInternational
Intewrnationl Day Essay, Research Paper International Day International Day was a day where the students from foreign country’s get to share there pride in there country and culture and that’s exactly what they did. This international day was the first one I’ve ever attended and I will attend them from now on.
Government Essay Research Paper 2 We know
Government Essay, Research Paper 2. We know that the fundamental difference between ancient political science and modern political science has to do with the relationship of the individual to the state. For Aristotle, a person was an inherently political animal. For modern political philosophers (social contract theorists), individual rights existed prior to the formation of government.
Jane Eyre Essay Research Paper Jane Eyre 2
Jane Eyre Essay, Research Paper Jane Eyre of Charlotte Bronte?s Jane Eyre, develops drastically within the first few chapters of the novel. Her environment was a major influential factor in Jane?s development.
International Law Essay Research Paper MA IN
International Law Essay, Research Paper M.A. IN INTERNATIONAL AND COMPARITIVE LEGAL STUDIES A world that is fast becoming an even smaller place involves an immense amount of changes in terms of policies, outlook and perspectives. This change affects every individual in every country in some manner or the other
Campaign Finance Reform Essay Research Paper Campaign
Campaign Finance Reform Essay, Research Paper Campaign Finance Reform: Soft Money One of the key issues facing this year?s Presidential Campaign is campaign finance reform. More specifically, whether or not to ban soft
Political Change Essay Research Paper Political ChangeIn
Political Change Essay, Research Paper Political Change In the French and Russian Revolutions, could political change have occurred without bloodshed and the use of force? In the French and Russian Revolutions, there was a lot of force and bloodshed used. Can political change occur without the use of bloodshed and force?
Classroom Management Essay Research Paper Philosophy Of
Classroom Management Essay, Research Paper Philosophy Of Classroom Management I believe that a good classroom management system is essential for any teacher who wishes to have a productive learning environment in their classroom. It is my goal to have a well managed classroom. I want to establish a productive working environment that allows student involvement and cooperation in all classroom activities.
Sport Marketing As a Part of Promotion
Anton Bichan K. P. Pilova, research supervisor O. D. Shvets, language adviser National Mining University, Dnipropetrovsk Sport Marketing As a Part of Promotion
Implementing Relationship Marketing Essay Research Paper Implementing
Implementing Relationship Marketing Essay, Research Paper Implementing Relationship Marketing Many family businesses now a day are being over-run by large corporations that have more money and manpower. This is the case in the business I’m going to talk about. The business is called “The Book Barn”; a family owned and operated business that has been selling books in the Boston area for the last 50 years.
Marketing Initiative Essay Research Paper Marketing InitiativeMarketing
Marketing Initiative Essay, Research Paper Marketing Initiative Marketing Initiative is an act or step taken in advertising, packing, and/or selling designed to gain and/or maintain customers. It is created to help transfer goods for the producer to the consumer. I recently read an article about the Clear Channel Outdoor company and their launch of a new Hispanic marketing initiative.
International Students Essay Research Paper International Students
International Students Essay, Research Paper International Students on Campus There are many International students that attend East Texas University. There are Hispanics, Russians, and Chinese that attend this institution. I talked to Mario and he said that East Texas really helps the International students in many ways.
Internet Marketing Essay Research Paper Internet Marketing
Internet Marketing Essay, Research Paper Internet Marketing and Associated Topics Computers and the Internet are becoming faster and capable of new and exciting things every day. Through this evolution, businesses have begun to reach out to consumers in new, unprecedented ways. With the amazing growth of users of the Internet, and the enormous growth that is expected to continue, businesses are aware that there is tremendous potential to provide and promote products and services in previously inconceivable ways.
International Relations Realism Essay Research Paper In
International Relations: Realism Essay, Research Paper In the discipline of International Relations realism, which developed as a reaction to idealism during the Cold War, has become the dominant school of thought . Realism makes power the currency of international politics. Realist argue that by accumulating power states can ensure the security of the population within the state.
Asian Crisis Essay Research Paper The continuing
Asian Crisis Essay, Research Paper The continuing Asian economic crisis that began in mid-1997 ranks as Asia’s second biggest event since World War II. The crisis suddenly halted the region’s unprecedented three decades of rapid economic growth.
Globalization Essay Research Paper Globalization is the
Globalization Essay, Research Paper Globalization is ?the integration of states through increasing contact, communication and trade to create a holistic, single global system in which the process of change increasingly binds people together in a common fate. ? Some economists recognize globalization as being in the best interest of all states, while others believe that increasingly liberated trade and global economic interaction is detrimental in many ways.
Marketing Plan Essay Research Paper 5 MarketProduct
Marketing Plan Essay, Research Paper 5. Market-Product Focus This section explains the seven-year marketing and product objectives for the town of Berks, Pennsylvania and the target markets and points of difference.