How the political environment can impact international marketing environment?

The political environment abroad is quite different from that of North America. Most nations desire to become self-reliant and to raise their status in the eyes of the rest of the world. This is the essence of nationalism. The nationalistic spirit that exists in many nations has led them to engage in practices that have been very damaging to other countries’ marketing organizations. For example, foreign governments can intervene in marketing programs in the following ways:

• contracts for the supply and delivery of goods and services
• the registration and enforcement of trademarks, brand names, and labelling
• patents
• marketing communications
• pricing
• product safety, acceptability, and environmental issues

Political Stability

Business activity tends to grow and thrive when a nation is politically stable. When a nation is politically unstable, multinational firms can still conduct business profitably. Their strategies will be affected however. Most firms probably prefer to engage in the export business rather than invest considerable sums of money in investments in foreign subsidiaries. Inventories will be low and currency will be converted rapidly. The result is that consumers in the foreign nation pay high prices, get less satisfactory products, and have fewer jobs.

Core Principles of International Marketing – Chapter 4.2 by Babu John Mariadoss is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

A key factor to assess in the political environment is the stability of the local government. You should also examine the country's policies toward business including such factors as trade and tariff policy, tax structure, anti-trust and competition regulations, union power, and consumer protection laws.

THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country's borders that much of the conflict in international business arises. Nations can and do abridge s...

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...MENT ENCOURAGEMENT OF GLOBAL BUSINESS FOREIGN GOVERNMENT ENCOURAGEMENT Governments also encourage foreign investment. The most important reason to encourage investment is to accelerate the development of an economy. An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry. US GOVENRMENT ENCOURAEMENT The US government is motivated for economic as well as political reasons to encourage American firms to seek opportunities in the countries worldwide. It seeks to create a favorable climate for overseas business by providing the assistance by providing the assistance that helps minimize some of the troublesome politically motivated financial risks of doing business abroad.

The liability caused by the financial or personnel losses because of wrong political decisions or conflicts are known as political risks. Apart from the market based causes, business is highly influenced by political decisions taken by the governments in different countries. For example, political decisions by a ruling party regarding taxes currency, trade tariffs, investment, labor laws, environmental regulations and development priorities have a major impact on the business conditions and profitability which thereby may affect the national economy.

Similarly, non-economic factors can also alter the status of a business. For example, political conflicts at times give rise to terrorism, civil wars, international wars, and even political elections that may replace a ruling political party with another political party, can also affect international market.

In order to balance the political environment, we should consider the points discussed below −

• Ideology − A country undergoes change when the ideology of the ruling party changes. The past years saw changes formulated in a nation due to change in the ideology of the ruling power. For example, many African nations are abandoning their centrist leanings in favor of market led economies like Zimbabwe and Tanzania.

• Nationalism − It is primarily a peculiarity of the developing nations. For example,, Yugoslavia does not counter all features of nationalism as they are deprived of holding foreign assets.

• Stability − The environment of a country may change due to violence and cultural divisions based on language or other factors causing unstable situations. For example, the violence of Somalia and Yugoslavia increase the exposure and decrease the confidence of doing business in these countries.

• International relations − The relationship between countries have improved over the last twenty years. This is mainly due to the development of GATT, NATO and the EU as they have gone a long way to minimize the component of "foreignness".

  How political factors affect international marketing?

  Similarly, non-economic factors can also alter the status of a business. For example, political conflicts at times give rise to terrorism, civil wars, international wars, and even political elections that may replace a ruling political party with another political party, can also affect international market.

  What is political environment in international marketing?

  The political environment of global marketing is the set of governmental institutions, political parties and organizations that are manifestations of the people of the nations of the world.

  What is the impact of political environment?

  The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. You should understand that the political factors have the power to change results. It can also affect government policies at local to federal level.

  What are the environmental factors affecting international marketing?

  However, there are some differences, many of which are centered on environmental factors which affect international marketing: (a) the economic environment, (b) the competitive environment, (c) the cultural environment, (d) the political/legal environment, and (e) technological environment and the ethical environment.