THE POLITICAL AND
ECONOMIC ENVIRONMENT
TABLE OF CONTENT
1 THE POLITICAL/LEGAL ENVIRONMENT 2 THE ECONOMIC ENVIRONMENT
HOME COUNTRY ENVIRONMENT
HOST COUNTRY ENVIRONMENT
TRADE BARRIERS
THE POLITICAL/LEGAL ENVIRONMENT
HOME COUNTRY ENVIRONMENT
PROMOTIONAL ACTIVITIES INFORMATION SERVICES
(SPONSORED BY GOVERNMENTAL + Economic, social and political data on individual
ORGANIZATIONS) countries, including their infrastructure;
+ Summary and detailed information on aggregate
+ Lack of motivation, as global marketing is viewed
global marketing transactions;
as more time-consuming, costly and
+ Individual reports on foreign firms;
risky, and less profitable, than domestic business;
+ Specific export opportunities;
+ Lack of adequate information;
+ Lists of potential overseas buyers, distributors and
+ Operational/resource-based limitations.
agents for various products in different countries;
+ Information on relevant government regulations both
FINANCIAL ACTIVITIES at home and abroad;
+ Granting of subsidies + Sources of various kinds of information not always
+ Credit policy available from the government, e.g. foreign credit
+ Export credit insurance information;
+ Information that will help the company manage its
operation, e.g. information on export procedures and
techniques.
HOME COUNTRY ENVIRONMENT
EXPORT-FACILITATING ACTIVITIES PROMOTION BY PRIVATE
+ Trade development offices abroad, either as a separate entity or ORGANIZATIONS
as part of the normal + Industry and trade associations, national, regional and
operations of an embassy or consulate; sectoral industry associations, associations of trading houses,
+ Government-sponsored trade fairs and exhibitions – a trade fair mixed associations of manufacturers and traders, and other
is a convenient market bodies;
place in which buyers and sellers can meet, and in which an + Chambers of commerce: local chambers of commerce,
exporter can display products; national chambers, national and international associations of
+ Sponsoring trade missions of businesspeople who go abroad chambers, national chambers abroad and binational
for the purpose of making chambers;
sales and/or establishing agencies and other foreign + Other organizations concerned with trade promotion:
representation; organizations carrying out export research, regional export
+ Operating permanent trade centres in foreign market areas, promotion organizations, world trade centres, geographically
which run trade shows often oriented trade promotion organizations, export associations
concentrating on a single industry. and clubs, international business associations, world trade
clubs and organizations concerned with commercial
arbitration;
STATE TRADING + Export service organizations, banks, transport companies,
freight forwarders, export merchants and trading companies.
HOST COUNTRY ENVIRONMENT
GOVERNMENT ACTIONS
+ Import restrictions
+ Local-content laws
OWNERSHIP RISK + Exchange controls
+ Market control
OPERATING RISK + Price controls
+ Tax controls
TRANSFER RISK + Labour restrictions
+ Change of government party
+ Nationalization: Takeover of foreign companies by the
host government.
+ Domestication
TRADE BARRIERS
TARIFF BARRIERS NON-TARIFF BARRIERS
A tool used by governments to protect local + Quotas
companies from outside competition. The most + Embargoes
common forms are specific, ad valorem and + Administrative delays
discriminatory. + Local-content requirements
+ Specific + Historical development of barriers
+ Ad valorem
THE ECONOMIC ENVIRONMENT