Lecture 2A Political Env of IM

Department of Marketing
www.buseco.monash.edu/mkt
Business and Economics
MKW3444 International Marketing

Associate Prof Yunus Ali
Lecture 2 A
Political
Environment &
International Marketinh
Department of Marketing –
Stages in International
Semester Learning Plan Marketing Process
 International Marketing and Globalization (L1)
 Environment of IM (L2 - L4) Analysing &

– Legal-Political Environment (L2)
– Economic Environment (L3)
understanding
– Cultural & Social Environment (L4) foreign markets
 Market Research, Selection & Entry (L5-L6) Selecting & entering
foreign markets
 Strategic Plan & Marketing Mix Strategies
(L7 – L10) Designing Marketing
Mix Strategies
 Future Direction of IM & Review (L11- L12)
Future Direction &
Challenges
2
1
ANALYSIS OF ENVIRONMENTAL FACTORS
Political & Legal Economic & Financial Cultural & Social
Home Country Host Country

Government Government
 Control foreign firms’

 Control domestic firm’s access to some sectors;
international activities  Regulate inflow of goods
 Encourage and support & services in the country;
international business  Encourage and support
 Discourage, ban or inflow of investment;
 Regulate foreign
restrict activities business behaviour in
the country.
3
Learning Objective of the week

This lecture will help you:
 Identify and evaluate Home and Host country political,
legal & other environment of international markets;
 Evaluate impacts of these environmental factors on
corporate International Marketing strategies;
 To build skills and capabilities to exploit opportunities and
manage challenges of ever changing environment; and
 Manage ethical dilemmas of doing business
internationally, especially in developing nations.
4
2
Introduction
 Every sovereign nation has its own political system,
rules, regulations and associated factors
 Some of these factors set legal and operating limit,
others provide incentives and create opportunities
 Marketers should understand and manage them
efficiently to survive and prosper
 Operate within this framework – do not judge, just
evaluate and learn how to survive and prosper
 Some rules are overt, others are hidden, culture-bound
and linked.
5
Ranking of Factors that Affect International Investment Climate
SOURCE: Czinkota and Ronkenon (2008), Exhibit 5.1)

6
3
Realities in International Marketing

 Both host and home governments are integral
partners in international business. Home govt.
– Control and restrict a company’s activities
– Encourage and support international business
– Discourage, ban or restrict activities.
 Host governments grant or withhold permission to

do business within its political boundaries
– Control foreigners where its citizens conduct business;
– Regulate inflow of goods and services in the country;
– Encourage and support inflow of investment;
– Regulate foreign business behaviour in the country.
7
POLITICAL & LEGAL ENVIRONMENT
GOVERNMENT ANALYSIS OF LEGAL ASPECTS OF

ROLES in IM POLITICAL RISKS THE MARKET
Participator
Facilitator:
 Macro-level
facilities
 Micro-level
incentives
Regulator:
 FDI & Import-
Export
 Firms business
behaviour
8
4
READING MATERIAL: Fletcher & Crawford (2014) Chapter 2
Role of government: Participator

 Government as buyer of products and services
 State owned commercial establishment
 Potential areas of commercial activities undertaken by
government include:
• State owned enterprises and statutory marketing
authorities
• Often required for lack of private investment but
inefficient
• the pace of privatisation increased
 Businesses need to establish the degree of government
involvement in some countries
9
Role of government: Facilitator

 Governments facilitate business at the macro level
via national industry policies including:
• National economic plan [e.g., 3rd Industrial Master Plan (IMP3)]
• Harnessing the resources of the private sector
• Bilateral and multinational agreements
– Free Trade Agreements and Trading Blocks (e.g., ASEAN,
EU, NAFTA, APEC
 Facilitate local firms’ international marketing via:
• Financial incentives for export-oriented activities
– Tax incentives, subsidies and concessional loans or grants etc.
• Market development incentives (Trade fair, sales leads etc.)
Visit: http://www.matrade.gov.my/en/ and https://www.miti.gov.my/ and
identify Malaysian government’s foreign trade facilitating roles.
10
5
Government Incentives to International activities
 Government Infrastructural facilities to promote trade
overseas
– E.g., Austrade in Australia and MATRADE in Malaysia
facilitate local firms’ international business overseas
 Export Promotion Assistance
– Most governments all over the world provide assistance
to local business firms’ international marketing activities
– Export promotion programs (EPPs) directly and indirectly
boost international marketing activities of business firms.
– EPPs are designed to overcome business managers’
barriers to international operations
– EPPs facilitate export readiness of Small and Medium-
sized enterprises
11
Role of government: Regulator

 Government regulatory activities can involve:
– Import duty and taxes (tariffs) on imported products
– Embargoes or boycotts on dealing with other countries -
UN initiated or unilateral
– Restriction on FDI in certain strategic sectors
– Imposition of export control on certain products
– Controls on imports for health, safety, protection
of local industries
– Regulates foreign business behaviour of local
and foreign firms
12
6
Regulation of international business
behaviour
 Boycotts
– Firms refuse to do business with firm in some countries.
– Often used for political reasons, e.g, Malaysian companies’
boycott to deal with Israeli companies.
 Antitrust laws
– Legal and regulatory system against agreements with
competing firms that may restrict competition
 Bribery and corruption laws
– Legal and regulatory system to regulate domestic firms’
corrupt activities overseas (e.g., US corrupt Practices Act)
13

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Department of Marketing

Business and Economics

MKW3444 International Marketing

 Environment of IM (L2 - L4) Analysing &

Political & Legal Economic & Financial Cultural & Social

Home Country Host Country

 Control foreign firms’

Learning Objective of the week

SOURCE: Czinkota and Ronkenon (2008), Exhibit 5.1)

Realities in International Marketing

 Host governments grant or withhold permission to

GOVERNMENT ANALYSIS OF LEGAL ASPECTS OF

Role of government: Participator

READING MATERIAL: Fletcher & Crawford (2014) Chapter 2

Role of government: Facilitator

READING MATERIAL: Fletcher & Crawford (2014) Chapter 2

Role of government: Regulator

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