Beruflich Dokumente
Kultur Dokumente
A Critical Concern
Chapter 6
McGraw-Hill/Irwin
Learning Objectives
1What is the sovereignty( RULE,POWER) of nations means
and how it can affect the stability of government policies
2 How different governmental types, political parties,
nationalism, targeted fear/animosity, and trade disputes can
affect the environment for marketing in foreign countries
3 The political risks of global business and the factors that
affect stability
4 The importance of the political system to international
marketing and its effect on foreign investments
5 The impact of political and social activists, violence, and
terrorism on international business
6 How to assess and reduce the effect of political vulnerability
(weakness)
7 How and why governments encourage foreign investment
6-2
Sovereignty of Nations
A sovereign state is independent and free
from all external control
enjoys full legal equality with other states
governs its own territory
selects its own political, economic, and social
systems and
has the power to enter into agreements with
other nations.
Stability of Government
Policies
6-5
Forms of Government
1) Democracy or market
directed government
ideology
2) Communist
governments
3) Theocratic Republic
Islamic Law countries
where political parties
can exist but have
little power
The religious leader
controls government
and all governmental
decisions
6-7
Political Parties
Be knowledgeable about the philosophies
of all major political parties and their
attitudes towards trade
6-8
Nationalism
Nationalism refers to feelings of national pride and unity
Feelings of nationalism are manifested by:
Disaster (e.g. 9/11)
War
Recession
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6-10
Expropriation
Is where the government seizes an investment, but
some reimbursement (repayment ) for the assets is
made; often the expropriated investment is
nationalized to become a government run entity
Domestication
Occurs when the government authorized local
ownership and greater national involvement in a
foreign companys management
6-11
Economic Risks
International firms face a variety of economic risks
Governments can obligate restraints on business activity
to:
Exchange Controls
Local Content Laws
Import Restrictions
Tax Controls
Price Controls
Labor Problems
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6-14
Exhibit 6.2
Source: http://travel.state.gov/travel/cis_pa_tw/tw/tw_1764.html.
6-15
I Love You
Melissa
Slammer
Goner Worm
6-16
6-17
the environment,
exchange rates
national and economic security
public health, e.g., genetically modified (GM)
foods
6-18
Source: From Foreign Policy, Failed States Index, May/June 2011, online.
Copyright 2011 by Foreign Policy. Reproduced with permission of Foreign Policy via Copyright Clearance
Center.
6-20
Joint Ventures
Expanding the Investment Base
Licensing
Planned Domestication ( Government
authorized local ownership )
Political Bargaining (Good buying)
Political Payoffs (Forfeit Payment)
6-22
Government Encouragement
Governments can both encourage and
discourage foreign investment
The key reason to encourage foreign
investment is to accelerate the
countrys economic growth
During the recent economic downturn, the
U.S. government has been particularly
creative in helping promote American
exports
6-23