International Marketing Notes

INDIAN INSTI. OF PLANNING & MANAGEMENT AHMEDABAD. SATURDAY, 20 th SEPTEMBER,2 0 0 8 IM-3 * Political & International Legal Environment INTERNATIONAL MARKETING

Dr. PRADIP DESAI B.E. ,M.B.A. (I.I.F.T.), LL.B., Ph.D.(Management-U.S.A.),CMC CERTIFIED MANAGEMENT CONSULTANT ( C.M.C.) CHAIRMAN & C.E.O.

MOUN MARKETING CONSULTANTS { EXPORTS -MARKETING-IMPORTS -PROJECT-MGMT. CONSULTANTS}

804, ‘SHILP’ COMPLEX ,

TEL :0 7 9 -6 6 3 1 0 7 4 0 / 3 0 0 7 1 0 3 0

OPP.STATE BANK OF INDIA ,

MOBILE

: 9 8 2 5 0 -1 1 2 0 0

NAVARANGPURA, C.G.ROAD,

TELEFAX

: 91- 7 9 - 2 6 4 6 7 1 7 1

AHMEDABAD -38 00 09

RES.

: 66 3 1 0 730 /2646 3218

E-MAIL: info @ mouncorp. co.in * WEBSITE: www. mouncorp. co.in/mounconsult.com/

POLITICAL ENVIRONMENT • Politics is the art of promising people things they never asked or aspired but dangling a carrot in front of them to create favourable vote bank. • In 20th century Foreign Trade followed the Foreign rule-21stcentury follows Foreign relations • East India co. came as Intnl.traders & stayed on to rule India for centuries. • Not–so friendly countries USA-CHINA are now biggest trading partners of India.

Political Environment .. cont. • Upto 1990 world was devided in 3 economic criterion/ philosophies : • FreeMarketEconomies:Usa/w.Europe/Japan • Centrally Planned “: USSR/China/E.Europe • Mixed Economy:India/Iraq/ARE(Egypt) 5 year Plan:Large projects-Steel,Oil sector, Radio/TV/Telecommunicaton in govt.Sector & also huge Pvt.sector has developed.

Politics & Foreign BusinessProblems facing MNCs •

Sources of Political Problems | Political Sovereignty *Political Conflict(Civil War) (authority ) ---------|---------Direct Effect(violence)*IndirctEffect(PolicyChange) ---------|---------Need to take corrective action*Divert PublicOpinion | FIGHT Syndrome * Flight syndrome

Political Turmoil-Definitions • P.Sovereignty:Country’s desire to assert its authorityover foreign business thro’ various sanctions e.g.coca-cola/IBM in India-1990 • P.Conflict:Turmoil/Internal war/Conspiracy * Turmoil:Instant upheaval or mass scale opposition to existing rule e.g.Shah of Iran * Internal war(civil):Organised &large scale violence @ govt. e.g. N.vietnam’s action @ S.vietnam * Conspiracy: Instant/planned act of violence @ persson in power e.g. Assassination of President Anwar Sadat ofEgypt /Indira Gandhi,1984-P.M.

POLITICAL INTERVANTIONS • Expropriation: Official seizure of Foreign Property/funds in host country e.g.Iran/USA • Exporpriation is recognised by internatioanl law as s right of sovereign states provided firms are given fair compensation at market value • Domestication: Gradual transfer of ownership to nationals or higher mgmt.post to be held only by nationals * Nationalisation: Public sector banks in INDIA by Mrs.Indira Gandhi

Other forms of P.InterventionsTRADE BARRIERS • Exchange Control:Luxury goods not allowed for Imports due to Balance of Trade • Import Restrictions:To protect domestic industries Import Licence for the products • Market Control:Arab boycott of cos.doing business with Israel cos. • Tax control:Higher taxes on foreign cos. • Price control Mecha.(PSM):Petrol/diesel/kerosene • Labour Restrictions:Strong labour union-no layoff

Factors of Political Risk Assessment ( PRA) • • • • • • • • •

Type of govt.-dictator/democracy/king ruled Stability of govt.-high/medium/low Economic mgmt.:sound/so-so/weak/worst Change in govt.policy:Frequent/stable/so-so F.Investment policy:Encouraging/restrictive F.relations :Friendly/enemy/need based F.Personnel:Welcome/Hated/Tolerated Pvt//Public sector :Encouraged/discouraged Fair/honest administration:time taken for permits

International LEGAL ENVIRONMENT • Law is what it does: Punishes the culprit when crime is proved beyond doubt but allows scot-free even at an iota of doubt about crime having commited by culprit. • CommonLaw:Procedure&Practice Established in thePast&recognised overtime e.g.U.K.& Britsh empire countries,Australia.India,Egypt etc. • Code LAW:Detailed rules for all eventualities. 1 st Developed by Romans followed by Italy,France,Germany,Mexico & switzerland

Laws affecting MNCs • Host country laws:MRTP( Monopoly & Restrictive Trade Practices law) • Indian cos.law: Dept. of co.affairs • Anti-Dumping Law(ADL):When a foreigncountry sells at much below domestic/Other markets THEN Anti-dumping duty can be imposed. • Export-Import licencing:All have to comply with. • Foreign Direct Investment(FDI/FII): Ownership/ managerial control/employee policy must comply. • Anti-Trust USA laws: Applicable to U.S.MNCs abroad • USA Foreign Corrupt PRACTICES ACT(FCPA),1977 • International Arbitration Laws/Indian Arbitration Act

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