The International Environment:

In addition to the politics and laws of both the home and the host countries, the international
marketer must consider the overall international political and legal environment. Relations
between countries can have a profound impact on firms trying to do business internationally.

 International Politics:
The effect of politics on international marketing is determined by both the bilateral political
relations between home and host countries and the multilateral agreements governing the
relations among groups of countries. The government-to-government relationship can have a
profound effect, particularly if it becomes unfriendly. Numerous examples exist of the
linkage between international politics and international marketing. E.g US-Iran relationship
currently, the conflict is not allowing the two countries to do any sort of business or trade.
International political relations do not always have harmful effects on international marketers.
If bilateral political relations between countries improve, business can benefit. The
international marketer needs to be aware of political currents worldwide and attempt to
anticipate changes in the international political environment, good or bad, so that the firm can
plan for it. Sometimes, however, management can only wait until the emotional commitment
of conflict has settled and hope that rational governmental negotiations will succeed.

 International Law:
International law plays an important role in the conduct of international business. Although
no enforceable body of international law exists, certain treaties and agreements respected by a
number of countries greatly influence international business operations. As an example, the
World Trade Organization (WTO) defines internationally acceptable economic practices for
its member nations. Although it does not deal directly with individual firms, it does influence
them indirectly by providing a more stable and predictable international market environment.
The international legal environment also affects the marketer to the extent that firms must
concern themselves with jurisdictional disputes. Because no single body of international law
exists, firms usually are restricted by both home and host country laws. If a conflict occurs
between contracting parties in two different countries, a question arises concerning which
country laws will be followed. Sometimes the contract will contain a jurisdictional clause,
which settles the matter. If not, the parties to the dispute can follow either the laws of the
country in which the agreement was made or those of the country in which the contract will
have to be fulfilled.

 International Terrorism and Marketing:

While always regrettable, terrorism nevertheless creates new opportunities for firms in a few
industries like construction, security, and information technology. For most companies,
however, terrorism results in reduced revenues or increased costs, and managers must be
prepared for it. Terrorists intend to affect supply and demand in order to shatter existing
economic systems; this brings about both direct and indirect effects. The direct consequences
to business are the immediate costs levied on individual firms. The indirect negative
consequences of terrorism begin with macroeconomic phenomena, such as the real or
perceived decline in per-capita income, purchasing power, and stock market values. In the
wake of a terror event, these trends cause a fall in the subjective (perceived) security of the
nation. Buyers become uncertain about the state of their nation’s economy, and a sharp
reduction in demand for both consumer and industrial goods follows. A further effect on
enterprises may be the failures in power, communication, transport, and other infrastructure
due to actual physical damage incurred at the terrorist’s hands.