global marketing 5

7/29/2019 Global Marketing 5

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Legal, andegu a oryEnvironments

Global MarketingChapter 5

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The global marketer must comply witheach nations laws and regulations withres ect to the cross-border movement ofservices, people, money, and know-how

change frequently or are ambiguous andcan hamper the companys activities

2011 Pearson Education, Inc.

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Made up of governmental institutions,

,and people use to wield power

importance of the government and legal

Issues for foreign investors include the ,

political risk, taxes, equity dilution, andex ro riation


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the independence of every other sovereign

state and the courts in one countr will not

sit in judgment on the acts of government

.


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Risk of change in political

government policy thatwould adversel affect acompanys ability tooperate effectively andpro a y

When perceived political,have a difficult timeattracting foreign direct


5-5investment

Some examples of political risk include:

Social unrest

Politicall -motivated violence

Transparency

Social conditions (population density and wealthdistribution)

Corruption, nepotism r me

Labor costs


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High taxation can lead to black marketgrowt an cross- or er s opp ng

Cor orate taxation

Companies attempt to limit tax liability by


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Expropriation governmental action

to dispossess a foreign company orinvestor

Compensation should be provided in

manner

compensation is provided


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Nationalization a government takescontrol of some or all of the enterprisesin an entire industr

Acceptable according to international

satisfies public purpose includes compensation


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Creeping expropriation limits economic

May include: m s on repa r a on o pro s, v en s, or roya es

Technical assistance fees

Quotas for hiring local nationals

Discriminatory tariff and nontariff barriers

Discriminator laws on atents and trademarks


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The rules and principles that nation-

states consider binding amongthemselves

Disputes between nations are issues of

World Court or International Court of

Justice (ICJ) Judicial arm of the United Nations


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.

The Napoleonic Code of

rew on eRoman legal systeman s e as s orcontinental Europeanaw to ay; co e aw salso known as civil law

US law is rooted inEnglish common law


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Common Law Civil Law

Disputes are decidedby reliance on the

Legal system reflectsthe structural concepts

judicial decisions

Com anies are le all

Roman Empire

Companies are formed

incorporated by state

authority

by contract between

two or more parties Co e aw is use in

only a few areas; theUS Uniform

the actions of thecompany


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Commercial Code

Legal system in many Middle Eastern countries S aria a compre ensive co e governing

Muslim conduct in all areas of life, includingus ness

Koran Holy Book; like code law

Hadith like common law

, ,Muhammad


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Get expert legal help

Prevent conflicts

Protect intellectualproper y

Protect licenses and

trade secretsAvoid bribery


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Refers to a courts authority to rule on

nations borders or to exercise power over

Employees of foreign companies should

subject to jurisdiction of host-country courts

demonstrated that the company is doingbusiness in the state the court sits


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Intellectual property must be registered ineac country w ere us ness s con ucte

Patent: gives an inventor exclusive right to make,use, an se an nven on or a spec e per o otime

, , ,emblem used to distinguish it from competingroducts

Copyright: establishes ownership of a written,recorded, erformed, or filmed creative work


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Counterfeitin unauthorized co inand production of a product

product name differs slightly from awe - nown ran

Pirac unauthorized ublication orreproduction of copyrighted work


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In the US re istration is with theFederal Patent Office

n urope, app can s use e uropeanPatent Office or register country-by-country

will cover 27 countries


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Governed by the Madrid Agreement andt e Ma ri Protoco

Allows trademark owners to seekprotection in as many as 74 countries with

a single application and fee


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International Convention for the Protection of

Paris Convention

Facilitates multi-country patent registration,ensures that once a com an files it has a ri htof priority in other countries for one year from

that date atent ooperat on reaty

European Patent Convention


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U.S. Companies Receiving theMost Patents, 2009


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Laws are designed to combat restrictive businessractices and to encoura e com etition

Enforced by FTC in the US, Fair Trade Commissionin Japan, European Commission in European

n on The Sherman Act of 1890 prohibits certain

,limiting production, allocating markets, or anyother scheme desi ned to limit or avoid

competition; law applies to US companies outsideUS borders and to foreign companies operating in


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t e


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Licensing is a contractual agreement in

patents, trademarks, trade secrets,,

return for royalty payments or other forms ofcom ensation

Important considerations

What assets ma be licensed How to price assets

he rights granted


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Trade secrets are confidential information or

not in the public domain and for which stepshave been taken to kee it secret

To prevent disclosure, use confidentialitycontracts

The Uniform Trade Secrets Act has been

ado ted b most US states TRIPS, Trade-Related Aspects of Intellectual

Pro ert Ri hts si ned b members of GATT


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Foreign Corrupt Practices Act Requires publicly held companies to institute

interna accounting contro s t at wou recor atransactions Makes it a crime for a US cor oration to bribe an

official of a foreign government or political partyto obtain or retain business

ro s paymen s o r par es w en ere sreason to believe it may be channeled to foreignofficials

Omnibus Trade and Competitiveness ActAllows for grease payments to cut red tape; i.e.,


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,permits


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Litigation Formal arbitration

Settle disputes outside of court

Groups agree to abide by panels decision

1958 United Nations Convention on theRecognition and Enforcement of Foreign

Arbitral Awards New York Convention Most important treaty regarding international

arbitration signed by 107 countries


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Agencies, both governmental and non-governmental,

that enforce laws or set guidelines for conductingus ness

Marketing activities affected by international and,

Increase in business legislation to protect:1. Companies - unfair competition (protect home

industries)

2. Consumers - unfair business practices. oc e y - un r e us ness e av or


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Growth of special interest groups:

Consumerist movement - strengthen rightsand powers of buyerse.g., rue n eres cos o oan

basic ingredients in product ersona a a - cus om ze pro uc s - pr vacy

issues - public policy issue- -

complaints


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Ethics vary around the world What is acce table in one countr ma be considered

unethical in another To do the right thing and generate publicity, companies

can ta e an act ve approac on et ca ssues

Asian officials - rife Bribes aid - smallest of clearances

Survey - Chinese most willing to pay bribes Asian governments to clean up LT economic dividends


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