Chapter 6 Notes
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This 7 page Class Notes was uploaded by Victoria Andreski on Sunday October 16, 2016. The Class Notes belongs to MKT 4270 at Clemson University taught by Dr. Roger Gomes in Summer 2015. Since its upload, it has received 8 views. For similar materials see International Marketing in Marketing at Clemson University.
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Date Created: 10/16/16
MKT 4270 Chapter 6 10/16/16 12:05 PM The Political Environment: A Critical Concern US naval maneuvers in South China Sea risk clash with Beijing • China expresses concern about reports that the US is preparing to send warships around the disputed Spratly islands Political tensions between countries can impact company sales and even non-profit organizations • Washington angered the Russian government last year by introducing the so-called Magnitsky Act, a law imposing sanctions against Russian officials suspected of human rights abuses o Russia halts US adoptions o Russian bans beef and port imports over what it says is a failure by the US safety watchdog Political risks of global business • Confiscation (worst case) o Take your business; land, buildings, customers, files, etc. o They can do this b/c they’re a sovereign country-they can make their own laws o The most severe political risk o Seizing of a company’s assets without payment • Expropriation o The government seizes an investment, but some reimbursement for the assets is made o Often the expropriated investment is nationalized to become a government run entity • Domestication o The government mandates local ownership and greater national involvement in a foreign company’s management Nationalization of Industry • Venezuela—from 2002 to 2012, the Chavez government has taken over 1,168 foreign and domestic countries • Cuba—the US embargo was actually triggered by American assets that Castro seized in the process of nationalizing the Cuban economy o The largest uncompensated taking of American property by a foreign government in history • Nationalization can happen for a lot of reasons including war, so that the people benefit, so that the leaders benefit Venezuelan workers confront government (WSJ) • After the country’s Socialist government nationalized their industry, union workers now have to deal with the government Sovereignty of Nations • Sovereign state—independent and free from all external control o Enjoys full legal equality w/ other states o Govern own territory o Select its own political, economic, and social systems o Has power to enter into agreements w/ other nations • Sovereignty—both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own citizens Sanctions impact Russian trade with the West (VIDEO) • President Putin in Russia o Bans US food/imports • Used to be known as ”The Motherland” • West has enforced economic sanctions o Affects the lives of the Russian people—gives them a bad view of us o Doesn’t stop Putin • Their answer to the US sanctions: o T-shirts with pictures of Putin kicking Obama in the face o They aren’t happy with us • The need Russians to make Russian goods o Even though they may take a hit b/c of not allowing US goods into Russia, it gives the domestic businesses in Russia a chance to get started and get a foot in the door o Example: Freedom Team § Russian clothes brand § Manufacturing is becoming more popular in Russia § Historically Russians put more value on foreign brands than they do Russian-made goods o Russia was wearing a dress that said Putin all over it § The brand of choice for Russians is their president Russia mulls seizing foreign assets over sanctions threat Unfair Trade Practice (VIDEO) • China—senate considers a bill to punish China over currency valuation • Chinese say bill is expedient and shallow Mexico hands out free TVs to the poor in massive giveaway • Many say giveaway was used for political reasons • $1.6 billion program • Occurred during a federal election • Corrupt way of how bidding occurred Political Parties • Be knowledgeable about the philosophies of all major political parties and their attitudes towards trade How multinational corporations (MNC’s) can lessen political vulnerability • Relations between governments and MNCs are generally positive if the investment: o Improves the balance of payments by increasing exports or reducing imports through import substitution o Uses locally produced resources o Transfers capital, technology, and/or skills o Creates jobs o Makes tax contributions • MNCs can use the following strategies to minimize political vulnerability and risk: o Joint ventures o Expanding the investment base o Licensing o Planned domestication o Political bargaining o Political payoffs Polish retailer LPP says it may halt expansion in Russia, Ukraine • Businesses hate not being able to plan • We can do business if it’s predictable and stable North Korea (video) • What people on the street think • The people were pretty angry at us What is taught in schools (VIDEO) • Ann Frank’s Diary • North Korea getting permission to use Ann Frank’s diary • They end up disrespecting Ann Frank b/c she hid o She hid in Amsterdam during the war • What interviewed North Korean children said in interview: o She had a hatred for America o Americans enjoy war; it excites them; it’s part of their nature o There’s war in the world still because the cruel Americans want war • There are people who are actively hating us when we don’t even think about them at all Angry dictator (VIDEO) • Venezuela President Chavaz seized over 1,000 companies • Calls President Bush ignorant and a donkey • Calls him a coward and says he better not invade Venezuela o Calls him: Coward, assassin, genocist, alcoholic, drunk, immoral, worst ever, menace • Tried to get the country’s mind of own country’s problems and put the blame on other countries Philippines President insults President Obama • Philippine leader to end drills with US that “China does not want” • Don’t want to be seen as too connected with the US • Rodrigo Duterte calls Obama a “son of a whore” (video) • Insults can impact the business with another country What the world thinks of the US (VIDEO) • Man from Cuba says that we participate in war and is in violation of human rights • Afghanistan—US keeps people poor so they can be dominant • Bethlehem—US is suffocating them • Cuba—US tries to keep other countries “under their yoke” • Beijing—impressed by the US’s innovation • A lot of countries pay attention to what goes on in the US—our politics, elections, etc. Exchange students’ view of the US • Before coming to US o Felt like US were the policemen of the world o Cocky, arrogant, stupid o Too much influence for the US in Spain—media • After o The American people are ok; it’s there government no one likes o Government, religion, and the media control everyone’s lives in the US—you say you’re a free country, but there are o many rules—you can’t go to a bar or buy alcohol on Sundays because of religion o You hear only about the US in the news—what about the rest of the world? o BUT it is an easy, simple system the American people follow—everything is easily accessible and open 24/7 o Hardest thing is eating habits o Least favorite things are US government and the power of religion trying to control civilian life o US is not the same as shown in the movies o US food tastes horrible Sovereignty reduced by WTO membership—forced to open markets • Thailand was forced to accept US cigarettes into their market in order to avoid sanctions Political and social activists • Most entertaining protest technique was pioneered by French farmers who like to throw their food. They tossed tomatoes at McDonald’s and have also thrown lamb chops at their own trade ministers • Taiwan fishermen protested the Japanese fishing fleets’ presence in their waters by throwing fish International marketers want market stability • Don’t like volatility • Main political causes of international market instability: o Changes in political parties during elections can have major effects on trade conditions o Nationalism o Animosity targeted toward specific countries o Trade disputes themselves Forms of Government • Circa 500 BC—Ancient Greeks considered 3 fundamental forms of government o Rule by 1 (monarchy)à Congo, Sudan, Libya, Myanmar § Absolute monarchs—Oman Sultan Qabus ibn Sa’id, Saudi Arabia King Salman, Swaziland King Mswati III o Rule by few (aristocracy) o Rule by many (democracy)àUSA, United Kingdom 10/16/16 12:05 PM 10/16/16 12:05 PM
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