International
Marketing
国际市场营销学
School of International Trade,
Shandong University of Finance and Economics
山东财经大学（筹）·国际贸易学院
Chapter 4
The Political & Legal
Environment
of International Marketing
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Chapter Learning Objectives
1. The factors that affect stability.
2. The political risks of global
business.
3. Reducing the effect of political
vulnerability.
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Chapter Learning Objectives
4. The three heritages of today’s
legal systems
5. The four methods of dispute
resolution
6. The legal differences between
countries and how to affect
international marketing plans
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.1 Causes of political instability
Five main political causes of international
market instability：
• Some forms of government seem
to be inherently unstable
• Changes in political parties during
elections can have major effects on
trade conditions
• Nationalism
• Animosity targeted toward specific
countries
• Trade disputes themselves
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.2 Political Risks of Global Business
• Risks of global business include:
1. Severe political risks
2. Economic policy
risks, and
3. Other risks
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Confiscation, Expropriation,
Nationalization and Domestication
Confiscation, the most severe political risk, is the seizing
of a company’s assets without payment
Expropriation is where the government
seizes an investment, but some
reimbursement for the assets is made;
Nationalization refers to the
government seizes an investment and
becomes a government run entity
Domestication occurs when the government mandates
local ownership and greater national involvement in a
foreign company’s management
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Economic Policy Risks
1. Exchange
Controls
2. Local-Content
Laws
3. Import
Restrictions
4. Tax Controls
5. Price Controls
6.Labor Problems
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Other Political Risks
Political Sanctions
Violence, Terrorism
and Wars
Political, Social
Activists and
Nongovernmental
Organizations
Cyberterrorism and
Cybercrime
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.3 Strategies to minimize political vulnerability and risk
1.Jiont Ventures
2. Expanding the
investment base
3. Licensing
4. Planed
Domestication
5. Political Bargaining
6. Political Payoffs
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.4 Bases for Legal Systems
The bases for the majority of the legal systems of
the world include:
(1) Common law, derived from English law and
found in England, the United States, Canada, and
other countries once under English influence
(2) Civil or code law, derived from Roman law
and found in Germany, Japan, France, and in
non-Islamic and non-Marxist countries
(3) Islamic law, derived from the interpretation of
the Koran and found in Pakistan, Iran, Saudi
Arabia, and other Islamic states
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Common Law
The basis for common law is tradition, past
practices, and legal precedents set by the courts
through interpretations of statutes, legal legislation,
and past rulings
Common law seeks “interpretation
through the past decisions of higher
courts which interpret the same
statutes or apply established and
customary principles of law to a
similar set of facts”
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Code Law
Code law is based on an all-inclusive system of
written rules (codes) of law.
Under code law, the legal system is
generally
divided into three separate codes:
(1) Commercial code
(2) Civil code, and
(3) Criminal code
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Islamic Law
The
Koran forms the basis for the Shari’ah
(Islamic law)
It
encompasses religious duties and obligations
and patterns of social and economic behavior for
all individuals
It
includes issues such as property rights,
economic decision making, and types of
economic freedom
The
overriding objective of the Islamic system is
social justice
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Islamic Law
Islamic
law prohibits the payment of interest
Islamic
doctrine advocates risk sharing,
individuals’ rights and duties, property rights, and
the sanctity of contract
Emphasis
placed on the ethical, moral, social, and
religious dimensions to enhance equality and
fairness for the good of society
Prohibits
investment in activities that violate the
Shari’ah, e.g., business dealing with alcohol,
gambling, and casinos
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.5 International Dispute Resolution
International disputes can be resolved by:
Consultation（协商）Dispute
resolution begins
with bilateral consultations.
Consultation
is the first step to resolve any
dispute informally.
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.5 International Dispute Resolution
(also as mediation) （调解）is a
nonbinding agreement between parties to resolve
disputes by asking a third party to mediate
differences
Conciliation
Conciliation
sessions are private and all
conferences between parties and the mediator are
confidential
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
International Dispute Resolution
International disputes can be resolved by:
The
arbitration（仲裁） procedure calls for the
parties involved to select a disinterested and
informed party or parties as referee to determine
the merits of the case and make a judgment that
both parties agree to honor
In
most countries, decisions reached in formal
arbitration are enforceable under the law
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
International Dispute Resolution
Litigation（诉讼）
deals with filing a lawsuit to
settle commercial disputes
Lawsuits should be avoided for many reasons
including
Fear of creating a poor image and damaging public
relations
– Fear of unfair treatment in a foreign court
– Difficulty in collecting a judgment that may
otherwise have been collected in a mutually agreed
settlement through arbitration
– The relatively high cost and time required when
bringing legal action
– Loss of confidentiality
–
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
4.6 Marketing Laws within Countries
All countries have laws regulating
marketing activities
– Promotion
– Product development
– Labeling
– Pricing
– Channels of distribution
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Assignment
 试分析某中国餐馆欲往法国某大城市开设分店连
锁可能面临的政治风险。
 试分析某国产电视机在进入日本市场和美国市场
时所面临的法律环境的差异。
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Chapter Summary
 Vital
to every marketer's assessment of a foreign
market is an appreciation for the political environment
of the country within which he or she plans to operate.
 Government
involvement in business activities abroad,
especially foreign-controlled business, is generally
much greater than business is accustomed to in the
United States.
 The
foreign firm must strive to make its activities
politically acceptable or it may be subjected to a
variety of politically condoned harassment.
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Chapter Summary
 In
addition to the harassment that can be imposed by a
government, the foreign marketer frequently faces the problem
of uncertainty of continuity in government policy.
 As
governments change political philosophies, a marketing firm
accepted under one administration might find its activities
undesirable under another.
 An
unfamiliar or hostile political environment does not
necessarily preclude success for a foreign marketer if the
company becomes a local economic asset and responds
creatively to the issues raised by political and social activists.
The U.S. government may aid American business in its foreign
operations, and if a company is considered vital to achieving
national economic goals, the host country often provides an
umbrella of protection not extended to others.
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics
Key Terms
 nationalism
 Common
law
 confiscation
 Code
 expropriation
 Islamic
 Nationalization
 Marxist-socialist
 domestication
 Conciliation
 localization
 Arbitration
law
law
tenets
 Litigation
山东财经大学（筹）·国际贸易学院
School of International Trade, Shandong University of Finance and Economics