2    Legal System in Terms of Trade
   Protectionist vs. cooperative
   Are trade policies clearly spelled out? Do they change often?
   Does the govt try to protect certain industries which are growing or declning?
   Is trade used as an instrument of political conflict?
   E.g. Jetro Butter and Cheese

3    Political Relationship with Home Country
   Are there areas of disagreement with the home country?
   Are there military conflicts with other surrounding countries?
   Are there military conflicts with countries who supply some raw material or
   labor for your product?
   Are there any sanctions and embargoes? see India and Pakistan

4    Distribution and Purpose of Tariff and Nontariff barriers
   Classifications of products
   Special laws or clearances
   Relation to costs for your product and method of market entry
   BISNIS site

5    Political Risk Indicators

• http://www.politicalresources.net/
• Background notes from the US Dept of State, http://www.state.gov/r/pa/bgn/
• http://www.prsgroup.com/
• Shift in political parties?  rise in feelings of nationalism? change in form of government? civil war?  riots?

6    Now suppose that your firm was considering doing business in Indonesia?
   Use the websites to look up the various types of events which have taken place
   How many political parties?
   Are there any politically charged events?
   Have there been peaceful elections in the past?
   What would you recommend?

7    Politically Vulnerable Products
   Can any product be vulnerable? How about soda?
   Subject of political debates
   Dependence on other industries
   Socially, economically essential?
   Essential to agriculture?
   Related to national defense?
   Local components?

Let’s look at some examples
Can coffee, autos, drugs, beer, or toys be politically vulnerable products?
Is the product under debate within the country’s legal system? Do certain parties have platforms related to your product?
Is the product under debate within the multinational market?  E.g. EU law
Is the product under debate within global organizations?
Suppose you are the marketing manager in charge of global operations?  How can you begin to answer these questions?

Once We Understand the Political System

• We can begin to interpret the legal system
• How does the legal system affect our marketing strategies?
• Jurisdictional Clauses
• Product?
• Price?
• Promotion?
• Place?

Products

• Is local content required?  If so, what percentage?
• Are certain types of labeling required?
• Are certain types of packaging allowed, required, or prohibited?
• Environmentalism:  what are the regulations concerning packaging? What are regulations regarding disposal and recycling?
• What safety requirements are enforced?
• What units of measurement are required?

Pricing and Discounts

• Are certain price levels required by law?
• Are certain margins set by the government?
• Are coupons allowed to be used?  If so, on what products? If so, how are they redeemed?
• Are prizes and rebates allowed to be given?  If so, what?
• Are we allowed to give discounts?

• Are certain themes forbidden?  Are there regulations that are related to religion?
• Are there regulations regarding advertising to children? E.g toothbrush in candy ads, helmets in bicycle ads?
• Are certain types of information or warnings required?
• Credulous person standard:  what will a reasonable person understand? Misunderstand?
• What types of government preclearances are required?
• Is ad placement regulated?
• Are there restrictions on the actors in ads?
• Any restrictions and proof for comparative ads?

Place of Distribution

• Are there laws about where goods are distributed?
• Are products allowed to be sold door-to-door?
• What about e-commerce?

Intellectual Property Law
 

• Fake products, copies, and ripoffs cost companies millions of dollars each year
• Patent laws differ from country to country
• Code law:  protection through registration
• Common law:  protection through prior use

International Conventions

• Paris convention:  registration in 1 country protects your product in all, 100 countries
• Inter-American Convention:  US and Latin America
• Patent Cooperation Treaty - a single application can be filed

U.S. Governmental Sources

• The FTC (Federal Trade Commission) gives us guidance
• The FCPA:  Foreign Corrupt Practices Act:  US law, makes it illegal for companies to pay bribes

• Utilitarian principle:  looks at the balance of costs and benefits “benificence”
• Rights principle:  are the rights of all persons involved considered? How would you want to be treated?
• Justice:  Is the policy or action fair to all?  How would it be judged in a court of law?

The Russian Case

• In the film we see four companies that are struggling to enter the Russian market
• Consumers needs are significant
• Barriers to entry are difficult
• The laws are not well-defined

 

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