Chapter 7 Notes
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This 8 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 9 views. For similar materials see International Marketing in Marketing at Clemson University.
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Date Created: 10/16/16
MKT 4270 Chapter 7 10/16/16 12:21 PM DuPont employee sentenced to 18 months in federal prison • Employee pled guilty for theft of trade secrets • Provided South Korean company with Kevlar production trade secrets • VIDEO • DuPont paid $275 million after lawsuit—but South Korean company got info about Kevlar production HP Bribery • A US company’s German office using bribes to get Russian contract Walmart Bribery in Mexico • People got fired Laws can be whatever they want for other countries • What we take as standard is not the same for other countries • UAE—where the property owner rather than the photographer owns the image • Example: If we took a picture of the white house, the photo would be ours o Different in other companies o In those places, you have to have permission from the owner • In Cuba, there are 2 prices for things—a price for locals and a price for tourists It’s not just the laws that vary, but legal systems vary too • The foundation of a legal system profoundly affects how the law is written, interpreted, and adjusted Bases for legal systems: • Common Law—comes from England o Based on tradition, past practices and legal precedents set by courts through interpretation of past rulings/statues, etc. o Not all-inclusive o Ownership of intellectual property is determined by use o Agreements may be binding so long as proof of the agreement can be established § If we have a contract and we both have a copy and its signed o Impossibility of performance does not excuse non-compliance w/ the provisions of the contract, unless it was an act of God o Common law countries are codifying commercial law • Civil or code law—comes from Roman law—rules/laws based o Based on an all-inclusive system of written rules (codes) of law. Legal systems is divided into 3 codes: commercial, civil, and criminal o Considered complete, but w/ “catchall provisions” § Some broad interpretations are possible o Based on an all-inclusive ownership is determined by registration o Agreements may not be enforceable unless properly notarized or registered o Acts of God are not necessarily limited to acts of nature but include “unforeseeable human acts” such as labor strikes or riots § Germany, Japan, France, and in non-Islamic and non-Marxist countries • Islamic Law—religious based o Basis is interpretation of the Koran o Defines a complete system that prescribes specific patterns of social and economic behavior for all individuals § Property rights § Economic decision making § Types of economic freedom o Among the unique aspects of Islamic law is the prohibition against the payment of interest § We can’t have leases § For banks (that make loans), you can’t charge interest so they have to be creative o The Islamic system § Places emphasis on the ethical, moral, social, and religious dimensions to enhance equality and fairness for the good society • Marxist-Socialist Tenets—hard-core communist countries o Socialist countries are now more directly involved in trade w/ non-Marxist countries § Necessitated the development a commercial legal system that allowed engagement in active international commerce o Pattern for development caries amount countries § Each has a different background § Development of market-driven economies at different stages o Premise is that law is strictly subordinate to prevailing economic conditions § Fundamental propositions as private ownership, contracts, due process, and other legal mechanisms have had to be developed Even though a country’s laws may be based on the doctrine of one of the 4 legal systems, its individualism interpretation may vary significantly Protection of Intellectual Property Rights • Intellectual property (IP) refers to creations of the mind o Inventions, literary and artistic works, and symbols, names, images, and designs used in commerce o Copyrights, patents, trademarks, industrial designs, geographic indications, trade secrets • Companies spend millions of dollars establishing a brand name or trademarks to symbolize quality and design and to entice customers • Millions are spent on research to develop products, processes, designs, and formulas Counterfeiting & Piracy • Lost sales from the unauthorized use of US patents, trademarks, and copyrights o Amount to more than $100 billion annually • The piracy industry has grown so sophisticated o Many counterfeit goods are indistinguishable from original o Some counterfeits are made by the same subcontractors that the brand owner uses • Counterfeit pharmaceuticals o 2% of the $327 billion worth of drugs sold each year • For Asian gangs, fake goods as profitable as drugs o If you get caught for counterfeits, the consequences are much less than dealing with drugs o 4 categories of dominate seizures: CDs, DVDs, watches and footwear, tobacco products; and textiles • Counterfeit Goods (VIDEO) o Billion dollar industry o Would be the world’s biggest industry if it were acknowledged o Deliberately produced to represent well-known brands o Companies spend millions of dollars to reverse affects or try to prevent counterfeiting o Knock off—same product but without the brand on it • Counterfeit Parts (VIDEO) o Scrap being resold as new o Leads to potential failures in products made due to scraps being used o Substandard counterfeit parts and even scrap is sold as new—aircraft, electronics, military being affected o Knowingly selling these items as new when they know they’re not in “new condition” o A lot coming from China o The counterfeits that you can’t tell that they have a shorter life span (things not easily measured) are what are scary/cause issues • Fake goods find a social platform (WSJ) o 25% of the 180 luxury or fashion ads reviewed were likely for counterfeit goods § Linked to entities in Russia or Mainland China • Dyson vs. Samsung vacuums o Dyson sues Samsung for “cynical rip off” • How close is too close to someone’s trademark? o McDonald’s—some people add an extra arc to the sign o Pizza Hutt—some put Pizza Huuh o People slightly change the name or symbol so it’s not exactly the same • Chinese car and truck manufacturers often copy designs from well known international brands. If they are just sold in China there is not much that can be done to stop them o Examples: § Took front end of Pontiac and back end of a Lexus to make a car § Cars look very similar on the outside § Even the logos o Chinese Cars in Russia (VIDEO) § Smart cars and BMWs § New models face copyright and safety disputes ú Crash test from cheaper cars—dummy had to be pulled out piece by piece ú They say that their cars are intended for drivers who only drive safely o Counterfeiting—Music and movies (VIDEO) § Some of China’s biggest counterfeiting plants (owned by the government) was shut down § Thousands of stores selling counterfeit stores § Chinese pirates more movies than anywhere else § Beijing finally cracked down but only closed some of the pirating plants • Are these ads legal? o German Ford ad for sportka car § Would probably be illegal in the US § Caused an uproar ú Shows the car’s sunroof taking cat’s head off ú Hood hitting pigeon of car after bird poops on car Green Marketing • Green marketing laws: o Focus on environmentally friendly products o Focus on product packaging and its effect on solid waste management o *Responsibility for product from production – sale - through end of consumer scrap • Reverse logistics o Example: When tires are worn out people should return products to Michelin for them to get rid of the product so they don’t end up piled up in waste yards § Companies should build into their cost the amount it takes to recycle the tires • Toxic waste and hard drive security (VIDEO) o The way people recycle computers is against international law o People in poor countries are exposed to terrible toxins b/c rich countries dumping their electronic waste o Electronic waste is rising each year o Computer waste is hazardous o Contain lead o Even recycle places you may take your computers to, don’t actual recycle them—they distribute the economic waste—they arrange it to be loaded in shipping containers and is sent to poorer countries o Hackers can look at hard drives of these recycled computers and get these files and use it for scams § It’s not just people doing this but also institutions and universities who are exposed § Can get all information about you on these recycled hard drives § Found some from NASA and Homeland Security—were able to view multi-million dollar projects § People should smash their hard drives before recycling them International Dispute Resolution • 1 step in any dispute is to try and resolve the issue informally • sit down with buyer and work it out with them so that both of you are satisfied o sometimes you will take a hit o must make a decision of what is in the best interest of the long-term value of your company • Conciliation (mediation) o Non-binding agreement between parties to resolve disputes by asking a 3 rd party to mediate differences o Discussion between parties and mediator are confidential and statements made by either party may not be used in future litigation or arbitration o It is NOT legally binding • Arbitration o Parties select a disinterested and informed party as a reference to determine the merits of the case and make a judgment both parties agree to honor o Arbitrator usually comes up with a “split the difference” decision • Litigation o Companies don’t like o Fear of creating a poor image o Fear of unfair treatment in a foreign court o Difficulty in collecting a judgment o Cost and time o Loss of confidentiality Bank letters of credit • Buying company establishes credit with their own bank—the bank agrees to provide the money to the seller when the seller’s products get there • If the buyer says they aren’t going to pay you, the bank will pay you • Much safer way to do business internationally • Don’t do it domestically unless the company we’re doing business with isn’t credit worthy 10/16/16 12:21 PM 10/16/16 12:21 PM