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INDIAN INSTI.

OF PLANNING & MANAGEMENT


AHMEDABAD. SATURDAY, 20 th SEPTEMBER,2 0 0 8
IM-3 * Political & International Legal Environment -
INTERNATIONAL MARKETING
Dr. PRADIP DESAI
B.E. ,M.B.A. (I.I.F.T.), LL.B., Ph.D.(Management-U.S.A.),CMC
CERTIFIED MANAGEMENT CONSULTANT ( C.M.C.)
CHAIRMAN & C.E.O.
MOUN MARKETING CONSULTANTS
{ EXPORTS -MARKETING-IMPORTS -PROJECT-MGMT. CONSULTANTS}
804, ‘SHILP’ COMPLEX , TEL :0 7 9 -6 6 3 1 0 7 4 0 / 3 0 0 7 1 0 3 0
OPP.STATE BANK OF INDIA , MOBILE : 9 8 2 5 0 -1 1 2 0 0
NAVARANGPURA, C.G.ROAD, TELEFAX : 91- 7 9 - 2 6 4 6 7 1 7 1
AHMEDABAD -38 00 09 RES. : 66 3 1 0 730 /2646 3218
E-MAIL: info @ mouncorp. co.in * WEBSITE: www. mouncorp. co.in/mounconsult.com/
POLITICAL ENVIRONMENT
• Politics is the art of promising people things
they never asked or aspired but dangling a carrot in
front of them to create favourable vote bank.
• In 20th century Foreign Trade followed the
Foreign rule-21stcentury follows Foreign relations
• East India co. came as Intnl.traders & stayed on to
rule India for centuries.
• Not–so friendly countries USA-CHINA are now
biggest trading partners of India.
Political Environment .. cont.
• Upto 1990 world was devided in 3 economic
criterion/ philosophies :
• FreeMarketEconomies:Usa/w.Europe/Japan
• Centrally Planned “: USSR/China/E.Europe
• Mixed Economy:India/Iraq/ARE(Egypt)
5 year Plan:Large projects-Steel,Oil sector,
Radio/TV/Telecommunicaton in govt.Sector &
also huge Pvt.sector has developed.
Politics & Foreign Business-
Problems facing MNCs
• Sources of Political Problems
|
Political Sovereignty *Political Conflict(Civil War)
(authority ) ---------|----------
Direct Effect(violence)*IndirctEffect(PolicyChange)
---------|----------
Need to take corrective action*Divert PublicOpinion
|
FIGHT Syndrome * Flight syndrome
Political Turmoil-Definitions
• P.Sovereignty:Country’s desire to assert its
authorityover foreign business thro’ various
sanctions e.g.coca-cola/IBM in India-1990
• P.Conflict:Turmoil/Internal war/Conspiracy
* Turmoil:Instant upheaval or mass scale opposition
to existing rule e.g.Shah of Iran
* Internal war(civil):Organised &large scale violence
@ govt. e.g. N.vietnam’s action @ S.vietnam
* Conspiracy: Instant/planned act of violence @
persson in power e.g. Assassination of President
Anwar Sadat ofEgypt /Indira Gandhi,1984-P.M.
POLITICAL INTERVANTIONS
• Expropriation: Official seizure of Foreign
Property/funds in host country e.g.Iran/USA
• Exporpriation is recognised by internatioanl law
as s right of sovereign states provided firms are
given fair compensation at market value
• Domestication:
Gradual transfer of ownership to nationals or
higher mgmt.post to be held only by nationals
* Nationalisation: Public sector banks in INDIA by
Mrs.Indira Gandhi
Other forms of P.Interventions-
TRADE BARRIERS
• Exchange Control:Luxury goods not allowed for
Imports due to Balance of Trade
• Import Restrictions:To protect domestic industries
Import Licence for the products
• Market Control:Arab boycott of cos.doing
business with Israel cos.
• Tax control:Higher taxes on foreign cos.
• Price control Mecha.(PSM):Petrol/diesel/kerosene
• Labour Restrictions:Strong labour union-no layoff
Factors of Political Risk
Assessment ( PRA)
• Type of govt.-dictator/democracy/king ruled
• Stability of govt.-high/medium/low
• Economic mgmt.:sound/so-so/weak/worst
• Change in govt.policy:Frequent/stable/so-so
• F.Investment policy:Encouraging/restrictive
• F.relations :Friendly/enemy/need based
• F.Personnel:Welcome/Hated/Tolerated
• Pvt//Public sector :Encouraged/discouraged
• Fair/honest administration:time taken for permits
International LEGAL
ENVIRONMENT
• Law is what it does: Punishes the culprit when
crime is proved beyond doubt but allows scot-free
even at an iota of doubt about crime having
commited by culprit.
• CommonLaw:Procedure&Practice Established in
thePast&recognised overtime e.g.U.K.& Britsh
empire countries,Australia.India,Egypt etc.
• Code LAW:Detailed rules for all eventualities.
1 st Developed by Romans followed by
Italy,France,Germany,Mexico & switzerland
Laws affecting MNCs
• Host country laws:MRTP( Monopoly & Restrictive
Trade Practices law)
• Indian cos.law: Dept. of co.affairs
• Anti-Dumping Law(ADL):When a foreigncountry
sells at much below domestic/Other markets THEN
Anti-dumping duty can be imposed.
• Export-Import licencing:All have to comply with.
• Foreign Direct Investment(FDI/FII): Ownership/
managerial control/employee policy must comply.
• Anti-Trust USA laws: Applicable to U.S.MNCs abroad
• USA Foreign Corrupt PRACTICES ACT(FCPA),1977
• International Arbitration Laws/Indian Arbitration Act
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