267 Reading: Institutional Factors Shaping the Global Marketing Environment
267 Reading: Institutional Factors Shaping the Global Marketing Environment
The Influence of Government and Regulations on Global Marketing
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, but there are higher risks and often higher costs associated with business operations. Political instability makes a country less attractive from a business investment perspective, so foreign and domestic companies doing business there frequently must pay higher interest rates on business loans, higher insurance rates, and often higher costs to protect the security of their employees and operations. Alternatively, in countries with stable political environments, the behavior of consumers and markets is more predictable, and organizations can rely on governments enforcing the rule of law, meaning that governments do not exercise power arbitrarily. Instead, they adhere to established, recognized, and well-defined laws.
Domestic and Global Business Law
Governments around the world maintain laws that regulate business practices. In some nations, these laws are more heavy-handed, and in other countries, the environment for business is more freewheeling or self-regulating. As we reviewed in Chapter 5, there are many legal and ethical considerations from a marketers perspective. There are even laws and regulations that affect what marketers are allowed to include in marketing communications, although these are far more strict in some countries than in others.
Marketers should become familiar with the political and regulatory environments in the countries and world regions where they operate, and specifically the laws, regulations, and legal processes that may affect business and marketing operations. For example, it is common for countries to maintain laws and regulations in the following areas:
- Contract law governing agreements about the supply and delivery of goods and services
- Trademark registration and enforcement for brand names, logos, tag lines, and so forth
- Labeling for the purposes of consumer safety, protection, and transparency
- Patents to enforce intellectual property rights and business rights associated with unique inventions and “ownable” business ideas
- Decency, censorship, and freedom-of-expression laws to which marketing communications are subject
- Price floors, ceilings, and other regulations regarding the prices organizations can charge for some types of goods and services
- Product safety, testing, and quality control
- Environmental protection, conservation, and the use of permits and other regulatory tools to encourage acceptable and responsible business practices
- Privacy, including laws governing data collection, storage, use, and permissions associated with consumers and their digital identities
- Financial reporting and disclosure to ensure that organizations provide transparency aroun