GM Term Paper

8/4/2019 GM Term Paper

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Contents1.0Introduction:....................................................................................................................................... 3

1.1Introduction of the report:.................................................................................................................. 3

1.2 Objectives of the report: .................................................................................................................... 4

1.3 Methodology: .................................................................................................................................... 4

1.3.1 Sources of data: .............................................................................................................................. 5

1.3.2. Collection procedure of data: ......................................................................................................... 5

1.4 Limitations: ........................................................................................................................................ 5

1.5 Time Line ........................................................................................................................................... 6

2.0 The Sovereignty of Nations: ............................................................................................................... 6

3.0 Stability of Government Policies:........................................................................................................ 8

4.0 Forms of government and political systems ..................................................................................... 10

5.0 Political Parties: ............................................................................................................................... 12

5.1 Single dominant party .............................................................................................................. 12

5.2 Two political parties ................................................................................................................. 13

5.3 Multiple political parties ...................... ................................ ...................... ............................... 13

5.4 Balanced Voting multiple-party systems ........................... ................................ ........................ 14

6.0 Nationalism ..................................................................................................................................... 15

7.0 Trade disputes: ................................................................................................................................ 16

8.0 The Political Environment ................................................................................................................ 16

8.1 Political Risks of Global Business ...................................................................................................... 17

CONFISCATION, EXPROPRIATION AND DOMESTICATION ........................... ............................. ........ 17

9.0 Economic Risks................................................................................................................................. 17

10.0 Assessing Political Vulnerability ............................ ................................ ...................... .................... 17

POLITICALLY SENSITIVE PRODUCTS................................................................................................. 18

FORECASTING POLITICAL RISKS ...................................................................................................... 18

11.0 Reducing Political Vulnerability ...................................................................................................... 18

GOOD CORPORATE CITIZENSHIP .................................................................................................... 18

11.1 Strategies to Lessen Political Risks ............................. ............................... ............................. ......... 18

12.0 Government Encouragement of Global Business ............................... ...................... ....................... 19

FOREIGN GOVERNMENT ENCOURAGEMENT ........................ ................................ ....................... ... 19


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13.0 Conclusion ..................................................................................................................................... 19


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1.0Introduction:

For a long time (certainly until World War I, in fact up to 1945), human rights were part of the"reserved domain" of States, that is a matter which was "not, in principle, regulated by international

law". However, even "In such a case, jurisdiction which, in principle, belongs solely to the State, is

limited by rules of international law". And the Permanent Court of International Justice recalled in this

respect that "the jurisdiction of a State isexclusive within the limits fixed by international law -- using this

expression in its wider sense, that is to say, embracing both customary law and general as well as

particular treaty law"1. Therefore, State sovereignty must be interpreted in view of, and combined with,

general principles of international law such as the general prohibition of abuses of rights,

proportionality, respect of other States' sovereignty, due diligence, "minimum standards of civilization",

etc.

In other words, sovereignty is not -- and has never been -- an unlimited power to do all that isnot expressly forbidden by international law2. It can only be defined as the very criterion of States, by

virtue of which such an entity "possesses the totality of international rights and duties recognized by

international law"3 as long as it has not limited them in particular terms by concluding a treaty.

1.1Introduction of the report:

Each professional degree needs practical knowledge of the respective field of discipline

to be fruitful. Our MBA program also is similar, relating to the exchange of theoretical

knowledge into the real life practical situation. The report entitled The Political Environment: A

Critical Concern originated from the partial fulfillment of the global marketing course. The

main purpose of the preparation of the report is due to the partial fulfillment of the course of

the EMBA Program conducted by the Faculty of Business Studies, Dhaka University.

During the course, I was under the supervision and guidance of Dr. Abu Sayeed

Talukder, Professor, Department Of Marketing, Faculty of Business studies, Dhaka University.


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1.2 Objectives of the report:

The General objective of the study is to provide an overview of the political

environment and its effect on global marketing and fulfill the course requirement. Beside the

general objective, the report can be categorized into main objective and specific objectives. The

objectives behind this report are mentioned below:

Main Objective:

The main objective of this study is to prepare a term paper(which is a partial

requirement of the completion of this course) on the specified topic implementing the

knowledge that have been gathered over the past semester at the Dhaka University (DU).

Specific Objectives:

The specific objectives of this report are as follows:

To understand the political environment. To identify the factors associated with the political environment and learn their effect

on global marketing.

1.3 Methodology:

This report is a descriptive one, which was administered by collecting primary and

secondary data. Descriptive Research has an important objective: gives description of

something marketing characteristics of function (Malhotra, 2007) and also the description of

phenomenon or characteristic associated with an object population (who, what, when, where

and how of a topic, Copper, 2007).

The report tried to evaluate the political environment. Before going in to the deep

study, conceptual structure visualized under which the whole study was conducted.

Preparing a report about the political environment is a difficult and complicated task

and no single method is appropriate for preparing the report. For this reason, a number of

procedures have followed to prepare a meaningful report. The methodology of the task can be

depicted as follows:


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1.3.1 Sources of data:

This study covered only one type of data, which is:

Secondary data

Secondary Data:

Going through different documents and papers developed from time to time are the

sources of secondary data.

1.3.2. Collection procedure of data:

International Marketing,13th

Edition by Philip R Cateora and John L. Graham was the

main source for data collection. Other than this, various journals, newspaper articles and

internet publications were also used.

1.4 Limitations:

The study is not free from some practical limitations. Following limitations have faced

during the study and the time of working & data collection:

Time is the main limitation for my study. Work load during the semester at the work place was also a barrier to prepare this

report.


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1.5 Time Line

June 2011Beginning of literature review, formulating research objective, conducting introductorychapter including detailed context of the study as well as development of research

design.Data collection, emphasizing on the methodological part as its initial stage and

primary data analysis and preparing data presentation.

July 2011Preparing the report and prepare the ancillaries for presentation of the final report.

2.0 The Sovereignty of Nations:

From the international laws point of view a sovereign state is independent and free from external

control; enjoys full legal equality; governs its own territory; selects its own political, social, economic

systems; and has the power to enter into agreements with other nations. It is extension of national laws

beyond a country's borders that much of the conflict in international business arises. Nations can and do

abridge specific aspects of their sovereign rights in order to coexist with other countries. Like the

European Union, North American Free Trade Agreement (NAFTA) are examples of nations voluntarily

agreeing to give up some of their sovereign rights in order to participate with member nations for

common, mutually beneficial goals. For example the pajama game discussed in global perspective is not

unusual for multinational corporations. The pajama caper was a controversy arose over a US embargo

forbidding US businesses to trade with Cuba. Wal-Mart was selling Cuban made pajamas in Canadian

market. When Wal-Mart officials in US came to know about this, they ordered all offending Cubanpajama's as it was against US law. Canada was incensed with the obtrusion of US law on Canadian

citizens. The Canadian citizen's felt that they should be able to buy Cuban-made pajama's if they wanted

to. Wal-Mart was caught between a Canada-US foreign policy feud. Wal-Mart Canada was breaking US

law if it continued to sell pajamas, and was subject to a million-dollar fine and possible imprisonment.

However, if it did pull out pajamas from Canadian market it was subject to 1.2 million dollar fine under

Canadian law. The ideal political climate for a multinational firm is stable, friendly environment.

Unfortunately, that is never really the case, it's not always friendly and stable. Since foreign businesses

are judged by standards as variable as there are nations, the friendliness and stability of the government

in each country must be assessed as an ongoing business practice.

It goes without saying that, in modern times (say, since 1945), the large (but not unlimited) freedom

of action traditionally belonging to States when dealing with human rights has been restricted in many

respects:

y the Charter of the United Nations, even though it focuses mainly on "keeping the peace" andnot on human rights, nonetheless abounds in allusions to "fundamental human rights"

4;


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y at the regional as well as the global level, a great number of Conventions have been adopted forthe protection of human rights, either in general or focusing on specific rights (against

genocide, apartheid, torture, etc.) or on particular categories of human beings (women,

children, workers, etc.); and

y many of these rules protecting human rights have consolidated into customary rules ofinternational law, binding States whether they have ratified those Conventions or not.

Another striking feature of this evolution is that this tight normative net is made up of legal rules of

quite diverse binding nature:

y some are purely optional and bind only those States which have accepted them by ratifying therelevant treaties (for example, rules protecting workers, such as those at stake in the framework

of the -- now dead? -- "Millennium round");

y some are binding in a region or some regions, but clearly not at the universal level (I wouldsuggest that this is so concerning freedom of speech, whether we like it or not);

y or they are binding for all States, but they may be waived by an express contrary treaty (this isprobably so concerning some judicial rights -- this category does not strongly differ from the

previous one); buty others must be seen as "peremptory norms of general public international law"5 and these form

the main part of the famous (among international lawyers) jus cogens.

This makes of course quite a difference when a State violates a rule of human rights. Since there exists a

hierarchy among international legal rules protecting human rights, their violation does not call for one

uniform response; the kind of reaction expected from other States will vary according to the degree of

"bindingness" of the violated rules.

Two things are crystal clear. First, when a State is not bound by a rule, its international

responsibility is not "entailed" when it does not comply with the requirement of said rule. Second,

human rights rules are, in this respect, of a particular nature since they are not "reciprocal". As theWorld Court put it in a celebrated dictum(relating to the 1948 Genocide Convention, but which, indeed,

holds true for any other human rights treaty): "In such a convention, the contracting States do not have

any interests of their own; they merely have, one and all, a common interest, namely, the

accomplishment of those high purposes which are the raison d'tre of the convention"6. Consequently,

many of these human rights instruments provide for an international mechanism of implementation and

control which can be used either by other States, acting as surrogate "international prosecutors" or, and

this was the great revolution of the 1950 European Convention on H uman Rights even if it may seem

"banal" nowadays, by individuals, whether they are nationals of the wrongdoing State or foreigners.

If such a mechanism does not exist -- or if a State does not comply with the requirements of

such a mechanism when it does exist -- we are, nevertheless, sent back to general international law7. In

other words, what if there is no international mechanism or if it exists but is impotent? Here, the

hierarchy existing among human rights rules does matter.

If we are facing a violation of a "simply binding" human right (e.g.: the freedom of speech, the

right to a fair trial, the right to privacy, etc.), not much can be done, according to existing international

law, if the victim is a national of the wrongdoing State -- except that other States, or international

organisations (including NGOs) are entitled to make remonstrations and recommendations without

being accused of "intervention in internal affairs". Human rights are no longer "internal affairs"; as


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explained above, they are not "essentially within the domestic jurisdiction of any State" in the terms

used by Article 2, paragraph 7 of the Charter of the United Nations. And the situation is not that much

better if the victim is a foreigner, except that, besides the same possibilities, his or her national State

may offer him or her its "diplomatic protection" and act on his or her behalf at the international level.

3.0 Stability of Government Policies:

The ideal political climate for a multinational form is a stable, friendly government.

Unfortunately, governments are not always stable and friendly nor do stable friendly governments

remain so. Radical shifts in government philosophy when an opposing political party ascends to power,

pressure from nationalist and self interest groups, weakened economic conditions bias against foreign

investment, or conflicts between governments are all issues that can affect the stability of a

government. Because foreign businesses are judged by standards as variable as there are nations, the

stability and friendliness of the government in each country must be assessed as an ongoing businesspractice.

At the top of the list of political issues concerning businesses is the stability or instability of

prevailing government policies. Governments might change or new political parties might be elected,

but the concern of the multinational corporation is the continuity of the set of rules or codes of behavior

and the continuation of the rule of law regardless of which government is in power. A change in

government, whether by election or coup, does not always mean a change in the level of political risk. In

Italy, for example more than 50 different governments have been formed since the end of World War II.

While the political turmoil in Italy continues business goes on as usual. In contrast, India has had as

many different governments since 1945 as Italy with several in the past few years favorable to

investment and open markets. However, much government policy remains hostile to foreigninvestment. Senior civil servants who are not directly accountable to the electorate but who remain in

place despite the change of the elected government continue with former policies. Even after elections

of parties favoring economic reform, the bureaucracy continues to be staffed by old style central

planners in India.

Conversely radical changes in policies toward foreign business can occur in the most stable

governments. The same political party, the Institutional Revolutionary Party (PRI), controlled Mexico

from 1929 to 2000. During that period, the political risk for foreign investors ranged from expropriation

of foreign investments to Mexicos membership in NAFTA and an open door for foreign investment and

trade. In recent years, the PRI created a stable political environment for foreign investment in contrast

to earlier expropriations and harassment. Beginning with the elections in 2000, however, a new era inMexican politics emerged as a result of profound changes within the PRI brought about by then-

president Zedillo. Since 1929, the Mexican president has selected his successor, who, without effective

challenge was always elected. President Zedillo changed the process by refusing to nominate candidate;

instead he let the nomination be decided by an open primary the first in seven decades. From a field of

four candidates the PRI selected Labastida Ochoa and the opposing party PAN selected Vicente Fox,

who, although considered a long shot, won the presidency. Although the PAN had gained strength for


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several years in the congress and among state governments, its presidential candidates never had a

wining chance until 2000 election.

A form of government, or form of state governance, refers to the set of political institutions by

which a government of a state is organized. Synonyms include "regime type" and "system of

government".On the surface, identifying a form of government appears to be easy. Most would say thatthe United States is a federal republic while the former Soviet Union was a totalitarian state. However,

as Kopstein and Lichbach argue, defining regimes is tricky.]Defining a form of government is especially

problematic when trying to identify those elements that are essential to that form. There appears to be

a disparity between being able to identify a form of government and identifying the necessary

characteristics of that form.

For example, in trying to identify the essential characteristics of a democracy, one might say

"elections." However, both citizens of the former Soviet Union and citizens of the United States voted

for candidates to public office in their respective states. The problem with such a comparison is that

most people are not likely to accept it because it does not comport with their sense of reality. Since

most people are not going to accept an evaluation that makes the former Soviet Unionas democratic as

the United States, the usefulness of the concept is undermined.

In political science, it has long been a goal to create a typology or taxonomy of polities, as

typologies of political systems are not obvious. It is especially important in the political science fields

of comparativepolitics and international relations.

One approach is to further elaborate on the nature of the characteristics found within each

regime. In the example of the United States and the Soviet Union, both did conduct elections, and yet

one important difference between these two regimes is that the USSR had a single-party system, with all

other parties being outlawed. In contrast, the United States effectively has a bipartisan system with

political parties being regulated, but not forbidden. In addition most Westminster democracies such as

the United Kingdom or countries in the Commonwealth of Nations usually have at least three major

parties. A system generally seen as arepresentative democracy (for instance Canada, India and

the United States) may also include measures providing for: a degree of direct democracy in the form

ofreferendums and for deliberative democracy in the form of the extensive processes required for

constitutional amendment.

Another complication is that a huge number of political systems originate as socio-economic

movements and are then carried into governments by specificparties naming themselves after those

movements. Experience with those movements in power, and the strong ties they may have to

particular forms of government, can cause them to be considered as forms of government in

themselves.


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4.0 Forms of government and political

systems

According to a series of different ways of categorising them. The systems listed are of course not

mutually exclusive, and often have overlapping definitions.

Autocracy (The Rule of One) Dictatorship

Military dictatorship Stratocracy Despotism

Kleptocracy Kritarchy Monarchy

Absolute monarchy Constitutional monarchy Duchy

Grand Duchy Diarchy Enlightened absolutism Elective monarchy Hereditary monarchy Non-Sovereign Monarchy Popular monarchy Principality New Monarchs Self-proclaimed monarchy Regent

Plutocracy Timocracy

Police state Oligarchy

Saeculum obscurum Theocracy Tyranny

Anarchy (Absence of organized government) Ochlocracy Tribalism

Anarchism (Government of consent, not coercion) Anarchist communism


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Libertarian socialism Libertarian municipalism Anarcho-capitalism Green anarchism Isocracy

Socialism Socialist state Communist state Collective leadership State socialism Soviet republic (system of government)

Democracy (The Say of the People) Consociationalism Deliberative democracy Democratic socialism Totalitarian democracy

Dictatorship of the proletariat Direct democracy Egalitarianism Futarchy Open source governance Participatory democracy Representative democracy

Parliamentary system Consensus government Westminster system

Polyarchy Presidential system Semi-presidential system

Republic (The Rule Oflaw) Constitutional republic Parliamentary republic Federal Republic


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5.0 Political Parties:

A political party is a political organization that typically seeks to influence government policy,

usually by nominating their own candidates and trying to seat them in political office. Parties participate

in electoral campaigns, educational outreach or protest actions. Parties often espouse anexpressed ideology or vision bolstered by a written platform with specific goals, forming

a coalition among disparate interests.

Particularly important to the marketer is the knowledge of all philosophies of all major political

parties within a country, since anyone might become dominant and alter prevailing attitudes. In those

countries where there are two strong political parties where usually one succeeds the other, it is

important to know the direction each of the parties is likely to take. Changes in direction a country may

take toward trade and related issues are caused not only by political parties but also by politically strong

interest groups and factions within different political parties, which cooperate to affect trade policies.

The freedom to form, declare membership in, or campaign for candidates from a political partyis considered a measurement of a state's adherence to liberal democracy as a political value. Regulation

of parties may run from a crackdown on or repression of all opposition parties, a norm for authoritarian

governments, to the repression of certain parties which hold or promote views which run counter to the

general ideology of the state's incumbents (or possess membership by-laws which are legally

unenforceable). Furthermore, in the case of far-right, far-left and regionalist parties in the national

parliaments of much of the European Union, mainstream political parties may form an informal cordon

sanitaire which applies a policy of non-cooperation towards those "Outsider Parties" present in the

legislature which are viewed as 'anti-system' or otherwise unacceptable for government. Cordon

Sanitaires, however, have been increasingly abandoned over the past two decades in multi-party

democracies as the pressure to construct broad coalitions in order to win elections - along with the

increased willingness of outsider parties themselves to participate in government - has led to many such

parties entering electoral and government coalitions.

5.1 Single dominant party

In single-party systems, one political party is legally allowed to hold effective power. Although

minor parties may sometimes be allowed, they are legally required to accept the leadership of the

dominant party. This party may not always be identical to the government, although sometimes

positions within the party may in fact be more important than positions within the government. China is

an example; others can be found in Fascist states, such as Nazi Germany between 1934 and 1945.

The single-party system is thus usually equated with dictatorships and tyranny.

In dominant-party systems, opposition parties are allowed, and there may be even a deeplyestablished democratic tradition, but other parties are widely considered to have no real chance of

gaining power. Sometimes, political, social and economic circumstances, and public opinion are the

reason for others parties' failure. Sometimes, typically in countries with less of an established

democratic tradition, it is possible the dominant party will remain in power by using patronage and

sometimes by voting fraud. In the latter case, the definition between Dominant and single-party system

becomes rather blurred. Examples of dominant party systems include the People's Action

Party inSingapore, the African National Congress in South Africa and the Democratic Party of Socialists of


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Montenegro in Montenegro. One party dominant systems also existed inMexico with the Institutional

Revolutionary Party until the 1990s, in the southern United States with the Democratic Party from the

late 19th century until the 1970s, inIndonesia with the Golongan Karya (Party of the Functional Groups)

from the early 1970s until 1998, and in Japan with the Liberal Democratic Party until 2009.

5.2 Two political parties

Two-party systems are states such as Jamaica, and Ghana in which there are two political parties

dominant to such an extent that electoral success under the banner of any other party is almost

impossible. One right wing coalition party and one left wing coalition party is the most common

ideological breakdown in such a system but in two-party states political parties are traditionally catch all

parties which are ideologically broad and inclusive.

The United States is widely considered a two-party system. Since the birth of the republic a

conservative (such as the Republican Party) and liberal (such as the Democratic Party) party have usually

been the status quo within American politics, with some exception. Third parties often receive little

support and are not often the victors in many races. Despite this, there have been several examples of

third parties siphoning votes from major parties that were expected to win (such as TheodoreRoosevelt in theelection of 1912 and Ross Perot in the election of 1992).

The United Kingdom is widely considered a two-party state, as historically power has alternated

between two dominant parties (currently the Labour Party and theConservative Party). However, the

2010 General Election resulted in a coalition government led by the conservative Party and including

the Liberal Democrats. There also numerous other parties as well as independent MPs, hold a

substantial number of seats in Parliament.

A plurality voting system usually leads to a two-party system, a relationship described

by Maurice Duverger and known as Duverger's Law.

5.3 Multiple political parties

Multi-party systems are systems in which more than two parties are represented and elected to

public office.Australia, Canada, Pakistan, India, Republic of Ireland, United Kingdom and Norway are

examples of countries with two strong parties and additional smaller parties that have also obtained

representation. The smaller or "third" parties may form a part of a coalition government together with

one of the larger parties or act independently from the other dominant parties.

More commonly, in cases where there are three or more parties, no one party is likely to gain

power alone, and parties work with each other to form coalition governments. This has been anemerging trend in the politics of the Republic of Ireland since the 1980s and is almost always the case

in Germany on national and state level, and in most constituencies at the communal level. Furthermore

since the forming of the Republic of Iceland there has never been a government not led by a coalition

(usually of the Independence Party and one other often the Social Democratic Alliance. Political change

is often easier with a coalition government than in one-party or two-party dominant systems.


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5.4 Balanced Voting multiple-party systems

Extensive studies including simulations and polls[5]

by Donald Arthur Kronos, have shown that an

effectively two-party system such as that currently used in the United States could be modified into a

balanced plurality voting system through the addition of a negative vote option to better represent the

intentions of the voters. This differs from a standard Plurality voting system or an anti-plurality

voting system in that rather than either allowing a choice of whom to vote foror allowing a choice ofwhom to vote against, a balanced system would allow each vote to be either for or against any

candidate. In the case of balancedrange voting an individual could in fact cast a combination of for and

against votes.

The problem with the traditional plurality voting system is that any attempt to prevent a

candidate from getting elected tends to result in a false positive vote, generally for a candidate thought

to have an advantaged position over other candidates, thereby causing or increasing such advantage. A

balanced plurality election would allow the voter to represent a true negative vote, thus eliminating or

at least reducing the occurrence of false positive votes.

A balanced voting multiple-party system significantly reduces the odds of a well known but

largely unpopular candidate winning an election, by allowing those who oppose the election of that

candidate to cast a more accurate vote than would have been possible in an unbalanced system of only

negative votes or only positive votes. Of course the option of a positive vote is also necessary in order to

have balance. Simply changing to an all negative vote system would just reverse the polarity of the

imbalance rather than remove it.

The number of votes per voter is not a factor in the system being balanced. It should be

consistent within an election across all voters to be fair. This also has the mathematical effect of

eliminating the feedback loop that would otherwise give an unfair advantage over time to exactly two

parties. This feedback loop happens in a traditional plurality voting system when a voter attempts to

represent a negative vote where only positive votes are available. The voter is forced to evaluate the

choices available and determine what is most likely to reduce the odds of a win by the opposed

candidate. For example, since the history of a party may give some indication of the electability of a

candidate endorsed by the party, the closest thing to a vote against a candidate in a general election

would be a vote for the candidate of the party that the voter believes has won the most elections

historically. If the opposed candidate is in fact running under that same party, then the obvious choice is

the next most historically successful party's candidate. This causes only two parties to have any

reasonable viability once a history has been established. A balanced voting system would eliminate this

feedback loop for voters who take advantage of it.

The addition of a negative vote option to balance a party system can theoretically be applied to

a popular vote, an electoral college vote, or both. In cases where an electoral college is expected to in

some way represent the popular vote, it would of course make sense to allow balanced voting options

for both the electoral college and the populace.The concept of a balanced election system is applicable

to many types of voting systems including instant runoff voting and other such multiple vote systems

and can be applied equally well to plurality voting or proportional representation systems.


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6.0 Nationalism

Nationalism is a political ideology that involves a strong identification of a group of individuals

with a political entity defined in national terms, i.e. a nation. In the 'modernist' image of the nation, it is

nationalism that creates national identity.[1] There are various definitions for what constitutes a nation,however, which leads to several different strands of nationalism. It can be a belief that citizenship in a

state should be limited to one ethnic, cultural or identity group, or that multinationality in a single state

should necessarily comprise the right to express and exercise national identity even by minorities.

Economic nationalism that exists to some degree in all countries is another factor that affects

international environment. Nationalism is intense feelings of national pride and unity, an awakening of

nation's people to take pride in their own country. This pride can take an anti-foreign business bias. One

of the central aims of economic nationalism is the preservation of national economic anatomy where

national interest and security are more important than international considerations.

It can also include the belief that the state is of primary importance, or the belief that one state

is naturally superior to all other states.[3][4] It is also used to describe a movement to establish or protecta 'homeland' (usually an autonomous state) for an ethnic group. In some cases the identification of a

national culture is combined with a negative view of other races or cultures.[5]

Conversely, nationalism might also be portrayed as collective identities toward imagined

communities which are not naturally expressed in language, race orreligion but rather socially

constructed by the very individuals that belong to a given nation.[6]

Nationalism is

sometimes reactionary, calling for a return to a national past, and sometimes for the expulsion of

foreigners. Other forms of nationalism are revolutionary, calling for the establishment of an

independent state as a homeland for an ethnic underclass.

Nationalism emphasizes collective identity - a 'people' must be autonomous, united, and

express a single national culture. Integral nationalism is a belief that a nation is an organic unit, with a

social hierarchy, co-operation between the different social classes and common political goals.

However, liberal nationalists stress individualism as an important part of their own national identity.[8]

National flags, national anthems, and other symbols of national identity are often considered

sacred, as if they were religious rather than political symbols. Deep emotions are aroused. Gellner and

Breuilly, in Nations andNationalism, contrast nationalism and patriotism. "If the nobler word

'patriotism' then replaced 'civic/Western nationalism', nationalism as a phenomenon had ceased to

exist.

It is important for marketers not to confuse nationalism, whose animosity is directed generally

towards all foreign countries with a widespread fear or animosity directed at a particular country. This

was a mistake made by Toyota in the United States in the late 1980s and early 1990s. Sales of Japanese

cars were declining in the States and an advertising campaign was designed and delivered that assumedthe problem was American nationalism. However, nationalism was clearly not the problem because

sales of German cars were not experiencing the same kinds of declines. The properly defined problem

was Americans fear of Japan. Indeed at the time Americans considered to economic threat from Japan

greater than the military threat from the Soviet Union. So when Toyota spent millions on an advertising

campaign showing threat from the Soviet Union. So when Toyota spent millions on an advertising

campaign showing Toyotas being made by Americans in a plant in Kentucky it may well have

exacerbated the fear that the Japanese were colonizing the United States.


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7.0 Trade disputes:

Trade disputes over national product standards are a growing source of tension in

theinternational trading system. The usual pattern is that a country introduces a new productstandard

for all sales of a good in its local market, which is justified as necessary forconsumer or environmentalprotection. Importers into the local market, however, challengethe standard as a disguised barrier to

trade or green protectionism.

Companies doing business internationally are grappling with political issues that sometimes

surprise even the most experienced. A new study by PwC and Eurasia Group shows that despite current

efforts, a high percentage of multinational companies believe they are not doing all they could to

manage political risk effectively. Experts believe that more effective management of political risk can

help companies protect their investments and take advantage of new opportunities, thereby improving

global business performance. In our view, this requires leaving behind fear and uncertainty and

integrating political risk management into a systematic process embedded in a companys other

business processes. Companies doing business internationally are, by nature, willing to take big risks.We believe that big risk takers should be informed risk takersand political risk management is an

essential element of risk-taking savvy. When it comes to improving global business performance,

managing political risk helps in two fundamental ways. First, it protects new and existing global

investments and operations by helping management anticipate the business risk implications of political

change or instability. Prepared and aware, management is more likely to be able to exit markets that are

in danger of growing too unstable. Where short-term instability does not dampen the appetite to pursue

long-term opportunity, management can implement risk mitigation and operational oversight to control

against shocks. Second, for a company constantly on the lookout for new opportunities, monitoring

political risk within target regions or across continents can help management hone in on political

developments that foretell a business boom, beating competitors to the punch.

8.0 The Political Environment

The critical concern Political environment has a very important impact on every business

operation no matter what its size, its area of operation. Whether the company is domestic, national,

international, large or small political factors of the country it is located in will have an impact on it. And

the most crucial & unavoidable realities of international business are that both host and home

governments are integral partners. Reflected in its policies and attitudes toward business are a

governments idea of how best to promote the national interest, considering its own resources andpolitical philosophy. A government control's and restricts a company's activities by encouraging and

offering support or by discouraging and banning or restricting its activities depending on the

government. Here steps in international law. International law recognizes the right of nations to grant or

withhold permission to do business within its political boundaries and control its citizens when it comes

to conducting business. Thus, political environment of countries is a critical concern for the international

marketer and he should examine the salient features of political features of global markets they plan to

enter.


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8.1 Political Risks of Global Business

CONFISCATION, EXPROPRIATION AND DOMESTICATION

The most severe political risk is confiscation, which is seizing of company's assets without

payment. Less severe is however, expropriation, which requires reimbursement, for the government

seized investment. A third type of risk is domestication, which occurs when host country takes steps to

transfer foreign investments to national control and ownership through series of government decrees. A

change in the government's attitudes, policies, economic plans and philosophies toward the role of

foreign investment is the reason behind the decision to confiscate, expropriate or domesticate existing

foreign assets.

9.0 Economic Risks

International companies are often faced with many economic risks most of which arise without

any prior warning. Economic risks are an important and a recurring part of political environment that a

few companies can avoid. Exchange controls stems from shortage of foreign exchange held by the

country. When this happens, controls may be placed upon all movements of capital or selectively

against most politically vulnerable companies. Exchange controls are extended to cover products by

applying a system of multiple exchange rates to regulate trade. Local-content laws- companies oftenrequire a portion of any product sold in a country to have a local content. Import restrictions- selective

restrictions on import of certain raw materials, machines and spare parts are common strategies used to

force foreign companies to purchase more materials within host country creating markets for local

products. Tax controls- taxes are a classified risk when used as a means of controlling' foreign

investments. They are often raised without warning and in violation of formal agreements. Price

controls- essential products that command considerable public interest are often subject to price

controls.

10.0 Assessing Political VulnerabilitySome products are more politically vulnerable than others, in that they receive more

government attention. This special attention may result in positive or negative actions towards the

company. Unfortunately there are no absolute guidelines for marketer's to follow whether the product

will receive government attention or not.


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POLITICALLY SENSITIVE PRODUCTS.

There are some generalizations that help to identify the tendency for products to be politically

sensitive. Products that have an effect upon the environment exchange rates, national and economic

security, and the welfare of the people are more apt to be politically sensitive. For products judged non

essential the risk would be greater, but for those thought to be making an important contribution,

encouragement and special considerations could be available.

FORECASTING POLITICAL RISKS

A number of firms are employing systematic methods of measuring political risk. Political risk

assessment can: Help managers decide if risk insurance is needed Devise and intelligence network and

an early warning system Help managers develop a contingency plan Build a database of past political

events for use by corporate management Interpret the data gathered and getting forewarnings about

political and economic situations

11.0 Reducing Political Vulnerability

Even though the company cannot directly control or alter the political environment, there are

measures with which it can lessen the susceptibility of a specific business venture.

GOOD CORPORATE CITIZENSHIPA company can reduce its political vulnerability by being a corporate citizen and remembering: -

1. It is a guest in the country and should act accordingly 2. The profits are not it's solely, the local

employees and the economy of the nation should also benefit. 3. It is not wise to try and win over new

customers by totally Americanizing them. 4. A fluency in the local language helps making sales and

cementing good public relationships. 5. It should train its executives to act appropriately in the foreign

environment.

11.1 Strategies to Lessen Political RisksMNCs can use other strategies to minimize political risks and vulnerability. They are: -

Joint ventures

Expanding the investment base

Marketing and distribution


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Licensing

Planned domestication

Political payoffs

12.0 Government Encouragement of

Global Business

FOREIGN GOVERNMENT ENCOURAGEMENT

Governments also encourage foreign investment. The most important reason to encourage

investment is to accelerate the development of an economy. An increasing number of countries are

encouraging investments with specific guidelines toward economic goals. MNCs may be expected to

create local employment, transfer technology, generate export sales, stimulate growth anddevelopment of the local industry.

13.0 Conclusion

Vital to every marketers assessment of a foreign market is an appreciation for the political

environment of the country within which he or she plans to operate. Keeping this in mind, the marketers

of today should have a clear concept about the diverse political environment of countries across the

world & try to appropriately adapt to it in order to excel in todays ever growing & competitive business

world.

Documents

GM Term Paper