Page 62 - DMGT547_INTERNATIONAL_MARKETING

Unit 3: Political Environment of International Marketing

society’s needs. Monostary encourages competition but systems emphasize cooperation. As Notes
explained by Alderson, “A cooperative society tends to be a closed society. Closure is essential
if the group is in some sense to act as one”. China, although wanting to modernise its economy,
does not fully embrace an open economy, which is likely to encourage dissension among
various groups. For the sake of its own survival, a cooperative society may have to obstruct the
dissemination of new ideas and neutralise an external group that poses a threat. China apparently
has learnt a lesson from the Soviet Union’s experience.
A liberated political climate can easily lead to a call of the long suppressed national minority
group for cultural and territorial independence. The group’s conflicts, unsettled but subdued
during the communist period, are likely to escalate. Three kinds of conflicts may occur. First, a
domestic dispute may escalate into violence that is confined within the boundaries of the country
in question. The civil war that started in 1991 between Serbs and Croats in Yugoslavia is a classic
example of this. Another example is the centuries old ethnic animosity between Christian
Armenia and Muslims neighbouring Azharbizan, which led some 600 Armenian nationalists to
clash with Soviet soldiers during earth quake rescue operations in Armenia. Second, an internal
dispute may draw interested parties outside the country in question into the conflict.

Example: Problems in Yugoslavian Macedonia may force Bulgaria and Greece to
intervene.

Finally, the third form of conflict resulting either from first two kinds of conflicts or from
international dispute may lead to a direct confrontation between the two countries. Romania
and Hungary, who have deep-rooted grievances against each other, could become involved in
this form of conflict. India and Pakistan are also deeply involved in this form of conflict though
the main cause is the Kashmir problem.

Attitudes of Nationals

An assessment of the political climate is not complete without an investigation of the attitudes
of the citizens and government of the host country. The nationals’ attitude towards foreign
enterprises and citizens can be inhospitable. Nationals are often concerned with foreigners’
intentions with regard to exploitation and colonialism, and these concerns are often linked to
concerns over foreign governments’ actions that may be seen as improper. Such attitudes may
arise out of local socialist or nationalist philosophies, which may be in conflict with policy of the
company’s home country government. The governments may come and go, but citizens’ hostility
may remain.

Example: 12 US firms decided to leave El Salvador in 1980s.

Policies of the Host Government

Unlike citizens’ inherent hostility, the government’s attitude towards foreigners is often relatively
short-lived. The mood can change either with time or change in leadership and it can change for
either the better or the worse. The impact of change in mood can be quite dramatic especially in
the short run.
Government policy formulation can affect business operations either internally or externally.
The effect is internal when the policy regulates the firm’s operations within the home country.
The effect is external when the policy regulates the firm’s activities in another country.

Example: An internal policy is Quebec’s Bill 101. The Bill requires all business to be
conducted entirely in French and dictates where the investments of insurance and trust companies

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