For example, even in the centrally planned political systems of China and Vietnam , the private sector enjoys considerable freedom as the two countries seek to maximize their own economic growth opportunities.
What is PESTLE?
Political risks are present in many countries in different degrees. An unstable government or an environment of political conflict will increase the risks faced by international marketers. Inefficient governments can cause expensive delays especially at customs posts and difficulties in financial settlements.
Weak governments can court popularity or try to make themselves seem strong by taking highly visible and restrictive measures against foreigners, especially foreign business people. Most types of political risks arise out of the following sources:.
Political and Legal Factors That Impact International Trade
Methods of seizure include confiscation, expropriation or nationalization which might result in the full or partial transfer of ownership. While governments rarely use confiscation and expropriation usually with some monetary compensation these days, nationalization continues to remain a vehicle for governments that have ambitions regarding specific sectors. Over the past few decades, the incidence of wars between states has declined, but there has been a proliferation of domestic conflicts civil wars, terrorist campaigns, secessionist movements , which inevitably bring instability and economic uncertainty.
In the past, sanctions were used regularly against the countries of the former Soviet Bloc as well as against the apartheid regime in South Africa. Local content requirements: Laws stipulating that foreign companies must obtain a specified amount of a product or service from local suppliers can force companies to use locally available materials, procure parts from local suppliers or employ a minimum number of local workers.
Overview of the International Business Environment
They can also have an adverse impact on product cost, product quality and quality of the workforce. There are key aspects of politics and law that affect international marketing decisions. The national business environment is essentially a conglomeration of its politics, laws, regulations and economic policies.
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- Cultural, Political and Legal Environments & their implications for International Business.
The international marketer has to understand all the dynamics reflected in the legal, policy and political environment of the target country. Environmental factors can include:. Business Source Ultimate via Ebsco. Passport provides market intelligence on industries, consumers and countries. The Economies tab at the top of the Passport homepage provides background information on each country e. The Australian Competition and Consumer Commission, and contains information on fair trading, business rights and responsibilities and industry monitoring.
The Treasury. The Australian Securities and Investment Commission is an independent government body that acts as a corporate regulator.
It provides information about companies and organisations and finance news. Productivity Commission. It provides information on current ongoing enquiries, economic news and regulatory reviews. The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 36 member countries, founded in to stimulate economic progress and world trade. The OECD iLibrary provides economic information for all member countries, as well as reports, documents and statistical data.
political environment in international marketing
Social factors, such as demographics and culture can impact the industry environment by influencing peak buying periods, purchasing habits, and lifestyle choices. Social factors can include:. To find information on the social and cultural factors in a city of country, investigate the following resources.
Check Factiva for news and publications relating to your industry. C onsumer Information Guide. The Library's Consumer Information Subject Guide carries a huge variety of sources to help identify consumers, consumer preferences, and research into particular demographics. The place to start for coverage of Australia's political, economic, social and cultural affairs.
The Effects of the Political Environment on Business Organizations
Broad-ranging coverage also includes Australian humanities and social sciences, current affairs, and law. Technological factors may have a direct or an indirect influence on an industry. While some industries will be more affected by technology than others, innovations in technology may affect the market and consumer choices and buying power.
Technological factors can include:. To find information on the technological factors in a city of country, investigate the following resources.
Reports and news from the information technology research and advisory company, which aims to research, analyse and interpret the business of IT for IT and business technology decision makers. Check Factiva for news and publications relating to technological developments in your industry. Carries industry reports and academic research in technology-related fields such as ICT and communications. For instance, after the accounting scandals of the early twenty-first century, the United States Securities and Exchange Commission became more focused on corporate compliance and the government introduced the Sarbanes-Oxley compliance regulations of This was a response to the social environment that called for such change to make public companies more accountable.
Particularly for businesses that operate internationally, a lack of political stability in any country has an effect on operations.
A hostile takeover could overthrow a government, for instance. This could lead to rioting and looting and general disorder, which disrupts the operations of a business. Such disruptions have occurred in Sri Lanka, which went through a protracted civil war, and in Egypt and Syria, which have been subject to disturbances as people agitate for greater rights. One way to manage political risk is to buy political risk insurance.
Organizations that have international operations use this type of insurance to mitigate their risk exposure as a result of political instability.