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8/8/2019 LECT 3 - Political %26 Legal Environments %2B MIS %2B Marketing Research
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Global Marketing
Political & Legal Environments +
shaping success in business and finance
Marketing Research
Week 3
David Shaw
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Chapter 5
The Political Le al and
Regulatory Environments of GlobalMarketing
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Introduction
The global marketer must attempt tocomply with each nations laws and
regulations with respect to the cross-
shaping success in business and finance 5-3
border movement of services,people, money, and know-how. Laws
and regulations that change
frequently or are ambiguous canhamper the companys activities.
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The Political Environment
Made up of governmental institutions,
political parties, and organizations thatrulers and people use to wield power
Each nations political culture reflects the
shaping success in business and finance 5-4
importance of the government and legalsystem.
Issues for foreign investors include the
governing partys view on sovereignty,political risk, taxes, equity dilution, andexpropriation.
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Nation-States and Sovereignty
Every sovereign state is bound to respect
the independence of every other
shaping success in business and finance 5-5
sovereign state, and the courts in onecountry will not sit in judgment on the
acts of government of another done
within its territory.U.S. Supreme Court Justice
Fuller
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Political Risk
Risk of change in
political environment or
government policy that
would adversely affect
shaping success in business and finance 5-6
a companys ability tooperate effectively and
profitably
When perceived political risk is high, a country will havea difficult time attracting foreign direct investment
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Political Risk
Some examples of political risk include
War Social unrest
Politically motivated violence
shaping success in business and finance 5-7
Social conditions (population density and wealthdistribution)
Corruption, nepotism
Crime Labor costs
Tax discrimination
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Taxes
Government taxation policies
shaping success in business and finance 5-8
growth and cross-border shopping
Corporate taxation
Companies attempt to limit tax liabilityby shifting location of income
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Seizure of Assets
Expropriationgovernmental actionto dispossess a foreign company orinvestor
shaping success in business and finance 5-9
Compensation should be providedin a prompt, effective, andadequate manner
Confiscation occurs when nocompensation is provided
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Seizure of Assets
Nationalizationa government
takes control of some or all of the
shaping success in business and finance 5-10
enterprises in an entire industry Acceptable according to international
law if
Satisfies public purpose
Includes compensation
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Seizure of Assets
Creeping expropriationlimits economic
activities of foreign firms May include Limits on repatriation of profits, dividends, or royalties
shaping success in business and finance 5-11
Increased local content laws Quotas for hiring local nationals
Price controls
Discriminatory tariff and nontariff barriers Discriminatory laws on patents and trademarks
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International Law
The rules and principles that nation-states consider binding among
themselves
shaping success in business and finance 5-12
Disputes between nations are issuesof public international law
World Court or International Court ofJustice (ICJ)
Judicial arm of the United Nations
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Common Law vs. Civil Law
The Napoleonic Codeof 1804 drew on the
Roman legal system
shaping success in business and finance 5-13
an s e as s or
continental European
law today. Code law is
also known as civil law.
U.S. law is rooted inEnglish common law.
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Common Law versus Civil Law
Common lawcountry
Disputes are decided by
Civil law country Legal system reflects
the structural concepts
shaping success in business and finance 5-14
of past judicial decisions Companies are legally
incorporated by stateauthority
Code law is used in fewareas; the U.S. UniformCommercial Code
and principles of theRoman Empire
Companies are formed
by contract between
two or more partieswho are fully liable for
the actions of the
company
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Sidestepping Legal Issues
Get expert legalhelp
shaping success in business and finance 5-16
Establish jurisdiction
Protect intellectual
property
Avoid bribery
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Jurisdiction
Refers to a courts authority to rule onparticular types of issues arising outside ofa nations borders or to exercise power
over individuals or entities from differentcountries
Employees of foreign companies should
shaping success in business and finance 5-17
understand the extent to which they aresubject to jurisdiction of host-countrycourts
Courts have jurisdiction if it can bedemonstrated that the company is doingbusiness in the state the court sits
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Intellectual Property
Intellectual property must be registered ineach country where business is conducted
Patentgives an inventor exclusive right to
shaping success in business and finance 5-18
, ,
period of time
Trademarkdistinctive mark, motto, device, or
emblem used to distinguish it from competing
products Copyrightestablishes ownership of a written,
recorded, performed, or filmed creative work
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Infringement of IntellectualProperty Counterfeitingunauthorized
copying and production of a product
Associative counterfeit/imitation
shaping success in business and finance 5-19
pro uct name ers s g t y rom awell-known brand
Piracyunauthorized publication or
reproduction of copyrighted work
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Intellectual Property
shaping success in business and finance 5-20
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Protecting Intellectual Property
In the United States, registration iswith the Federal Patent Office
shaping success in business and finance 5-21
,
European Patent Office or register
country by country
Soon the Community PatentConvention will cover 25 countries
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Protecting Intellectual Property
World Intellectual Property
Or anization
shaping success in business and finance 5-22
Governed by the Madrid Agreementand the Madrid Protocol
Allows trademark owners to seek
protection in as many as 74 countries
with a single application and fee
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Protecting Intellectual Property
International Convention for the Protectionof Industrial Property
Paris Convention
shaping success in business and finance 5-23
Facilitates multi-country patent registration,ensures that once a company files, it has aright of priority in other countries for 1 yearfrom that date
Patent Cooperation Treaty
European Patent Convention
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U.S. Companies Receiving the Most Patents,2005
Company # of Patents
1. IBM 2,941
2. Hitachi 1,918
3. Canon Kabushiki Kaisha 1,875
4. Matsushita Electric Industrial 1 813
shaping success in business and finance 5-24
5. Hewlett-Packard 1,8086. Samsung Electronics 1,641
7. Micron Technology 1,561
8. Intel 1,5499. Siemems 1,345
10. Toshiba 1,338
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Antitrust
Laws are designed to combat restrictive businesspractices and to encourage competition.
Enforced by FTC in the United States, Fair TradeCommission in Japan, European Commission in
shaping success in business and finance 5-25
The Sherman Act of 1890 prohibits certainrestrictive business practices including fixingprices, limiting production, allocating markets, orany other scheme designed to limit or avoid
competition. Law applies to U.S. companiesoutside U.S. borders and to foreign companiesoperating in the United States.
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Licensing and Trade Secrets Licensing is a contractual agreement in
which a licensor allows a licensee to usepatents, trademarks, trade secrets,technology, and other intangible assets in
shaping success in business and finance 5-26
return or roya ty payments or ot er ormsof compensation.
Important considerations What assets may be licensed
How to price assets
The rights granted
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Licensing and Trade Secrets
Trade secrets are confidential information or
knowledge that has commercial value and isnot in the public domain and for which stepshave been taken to keep it secret
shaping success in business and finance 5-27
To prevent disclosure, use confidentialitycontracts
The Uniform Trade Secrets Act has beenadopted by most U.S. states
TRIPS, Trade-Related Aspects of IntellectualProperty Rights signed by members of GATT
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Bribery and Corruption Foreign Corrupt Practices Act
Requires publicly held companies to institute
internal accounting controls that would record alltransactions
Makes it a crime for a U.S. corporation to bribe anofficial of a forei n overnment or olitical art to
shaping success in business and finance 5-28
obtain or retain business Prohibits payments to third parties when there isreason to believe it may be channeled to foreignofficials
Omnibus Trade and Competitiveness Act Allows for grease payments to cut red tape, suchas getting shipments trough customs, gettingpermits
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2006 Corruption Rankings
See Table 5-4
shaping success in business and finance 5-29
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Conflict ResolutionCountry Lawyers per
_________100,000 People
United States 290
Australia 242
shaping success in business and finance 5-30
United Kingdom 141France 80
Germany 79
Hungary 79
Japan 11
Korea 3
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Conflict Resolution
Litigation
Formal arbitration
Settles disputes outside of court
shaping success in business and finance 5-31
Groups agree to abide by panels decision
1958 United Nations Convention on the
Recognition and Enforcement of Foreign
Arbitral Awards (New York Convention) Most important treaty regarding international
arbitration signed by 107 countries
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The Regulatory Environment Agencies, both governmental and
non-governmental, that enforce lawsor set guidelines for conducting
shaping success in business and finance 5-32
Marketing activities affected byinternational and regional economicorganizations
EU
WTO
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Looking Ahead to Chapter 6
Global information systems and
market research
shaping success in business and finance 5-33
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Chapter 6Global Management Information
ys ems an
Marketing Research
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Introduction Understand the importance of information
technology and marketing informationsystems
shaping success in business and finance 6-35
scanning and opportunity identification Understand the formal market research
process
Know how to manage the marketinginformation collection system and marketresearch effort
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Information Technology for Global
Marketing
Information technologyrefers to an
organizations processes for creating,
shaping success in business and finance 6-36
storing, exchanging, using, and managinginformation.
Management information systems provide
managers and other decision-makers witha continuous flow of information about
company operations.
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Tools of MIS
Intranet Electronic Data Interchange (EDI)
shaping success in business and finance 6-37
(ECR)
Electronic point of sale
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Intranet
A private network
Allows authorized company
ersonnel or outsiders to share
shaping success in business and finance 6-38
information electronically 24-hour nerve center
Allows companies like Amazon.comand Dell to operate as real-time
enterprises
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Electronic Data Interchange
Allows business units to
Submit orders
Issue invoices
shaping success in business and finance 6-39
Conduct business electronically Transaction formats are universal
Allows computers from differentcompanies to speak the same
language
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Efficient Consumer Response (ECR) A joint initiative by members of a
supply chain to work towardimproving and optimizing aspects of
shaping success in business and finance 6-40
This is in addition to EDI
An effort for retailers and vendors to
work closely on stock replenishment Utilizes electronic point of sale (EDI)
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Customer RelationshipManagement
New business model Philosophy that values two-way
communication between company and
shaping success in business and finance 6-41
cus omer
Every point of contact with a consumer isan opportunity to collect data
Can make employees more productiveand enhance corporate profitability
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Customer RelationshipManagement
The major thing is, One size fits all is
not true. CRM is desi ned to su ort the
shaping success in business and finance 6-42
sales process, and if I develop a systemthat works in the United States, it might
not work in Europe.
Jim Dickie, Insight Technology
Group
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Privacy
Safe Harbor Agreement establishes
principles for privacy protection forcompanies that transfer data to the United
States from Euro e
shaping success in business and finance 6-43
Purposes of the information collected and used An opt out option to prevent disclosure of
personal information
Can only transfer information to third parties thatare in compliance with Safe Harbor
Individuals must have access to information
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Data Warehouses
Help fine-tune product assortments
for multi le locations
shaping success in business and finance 6-44
Enhance the ability of managementto respond to changing business
conditions
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Formal Market Research
Global marketing research is the
ro ect-s ecific s stematic atherin
shaping success in business and finance 6-47
of data in the search scanning modeon a global basis
Challenge is to recognize and respond
to national differences that influence theway information is obtained
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Step 1: Identifying the InformationRequirement
What information do I need? Existing marketscustomer needs already being served by
one or more companies; information may be readilyavailable
shaping success in business and finance 6-49
Potential markets Latent marketan undiscovered market; demand would
be there if product was there
Incipient marketmarket will emerge as macroenvironmental trends continue
Why do I need this information?
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Step 2: Problem Definition and Overcoming
the SRC
Self-reference criterion occurs when a persons values and
beliefs intrude on the assessment of a foreign culture
shaping success in business and finance 6-50
Enhances managements willingness to conduct marketresearch
Ensures that research design has minimal home-country
bias
Increases managements receptiveness to findings
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Step 3: Choose a Unit of Analysis
Will the market be Global
shaping success in business and finance 6-51
A country
A province
A state A city
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Step 4: Examine Data Availability
Sources may be
Company records
Secondary sources
shaping success in business and finance 6-52
Trade journals
Government sources such as CIA World
Factbook, Statistical Yearbook of the United
Nations, World Bank
Commercial sources such asThe Economistand Financial Times, Marketresearch.com
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Step 5: Assess Value of Research
What is the information worth versus
what it will cost to collect?
shaping success in business and finance 6-53
What will it cost if the data are notcollected?
What will the company gain with thisinformation?
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Step 6: Research DesignData Collection
Use multiple indicators Develop customized indicators specific to the
shaping success in business and finance 6-54
, ,
Do not assess a market in isolation
Observation of purchasing patterns/ behavior
is more important than reports of purchase
intention or price sensitivity
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Step 6: Research DesignResearch
Methodologies
Primary data collection methods
shaping success in business and finance 6-55
Interviews Consumer panels
Observation
Focus groups
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Special Considerations for Surveys
Benefits Data collection from a large sample
Both quantitative and qualitative data possible
shaping success in business and finance 6-56
an e se -a m n s ere
Issues Subjects may not want to answer or intentionally
give inaccurate response
Translation may be difficult Use back and parallel translations to ensure accuracy
and validity
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Research Methodologies
Personal interviews Consumer panels
NielsenTV viewin
shaping success in business and finance 6-57
Observation Using people or
cameras
Focus groups
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Sampling
A sample is a selected subset of a
o ulation that is re resentative of
shaping success in business and finance 6-58
the entire population. Probability samples
Non-probability samples
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Step 7: Analyzing Data
Clean the data
Tabulate the data
shaping success in business and finance 6-59
us ng s a s ca
techniquesANOVA,regression, factor
analysis, cluster
analysis Perceptual mapping,
conjoint analysis
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Presenting the Findings
Report must clearly address problem
identified in Ste 1
shaping success in business and finance 6-60
Include a memo or executivesummary of the key findings along
with main report
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Enhancing Comparability of Data Emic analysis
Ethnographic innature
Etic analysis
From the outside Detached
perspective that is
shaping success in business and finance 6-61
from within Uses cultures own
meanings and
values
used in multi-country studies
Enhancescomparability butminimizesprecision
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Looking Ahead to Chapter 7
Segmentation, targeting, and
ositionin
shaping success in business and finance 6-62
HAVE A NICE DAY!
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Thank You
shaping success in business and finance