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Chapter 5 Powerpoint - Chapter 5 The Political Legal and...

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Chapter 5 The Political, Legal, and
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25-2 Introduction The global marketer must attempt to  comply with each nation’s laws and  regulations with respect to the cross- border movement of services, people,  money, and know-how. Laws and  regulations that change frequently or  are ambiguous can hamper the 
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35-3 The Political Environment Made up of governmental institutions, political  parties, and organizations that rulers and  people use to wield power Each nation’s   political culture   reflects the  importance of the government and legal  system. Issues for foreign investors include the  governing party’s view on sovereignty, 
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45-4 Nation-States and Sovereignty Every sovereign state is bound to respect the independence of every other sovereign state, and the courts in one country 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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55-5 Political Risk Risk of change in  political environment or  government policy that  would adversely affect   a company’s ability to  operate effectively and  profitably   When perceived political risk is high, a country will have      a difficult time attracting foreign direct investment
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65-6 Political Risk Some examples of political risk include War Social unrest Politically motivated violence Transparency Social conditions (population density and wealth  distribution) Corruption, nepotism Crime
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75-7 Taxes Government taxation policies High taxation can lead to black market  growth and cross-border shopping Corporate taxation  Companies attempt to limit tax liability by  shifting location of income
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85-8 Seizure of Assets Expropriation —governmental action to  dispossess a foreign company or  investor Compensation should be provided in  a “prompt, effective, and adequate  manner” Confiscation  occurs when no 
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95-9 Seizure of Assets Nationalization —a government takes  control of some or all of the enterprises  in an entire industry Acceptable according to international law if  Satisfies public purpose   Includes compensation
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