Page 79 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes 4.2 Legal Environments

As there is a multiplicity of political environment, there are various legal environments: domestic,
foreign and international. If laws are not handled properly they can prohibit the marketing of a
product altogether. To most business people, laws act as an inconvenience.

Example: Club Med’s policy of rotating its international staff every six months is
hampered by the US immigration law, which makes the process of rotation, both time consuming
and costly.
There are a number of products that cannot be legally imported into most of the countries. They
include counterfeit money, illicit drugs, pornographic materials, dangerous explosives and
espionage equipment. It is also illegal to import live animals and fresh fruits unless accompanied
by the required certificates from the medical authorities. There are certain products that have to
be modified to conform to the laws of the land. These modifications may be technical in nature
from the engineering point of view or cosmetic as in the case of certain packaging changes.
The legal environment can affect a company’s production strategy. Some of the countries impose
bans on the importation of Saturday Night Specials – cheap, short barrelled pistols because they
are used for crimes like sex and violence. As a result, Beretta, an Italian gun maker, is able to
overcome the import ban by setting up a manufacturing operation in the State of Maryland
because the gun control legislation does not prohibit the sale of such inexpensive weapons.

Every country has its own legal bindings on imports as well as on foreign investors. They have
to abide by such laws because of socio-political reasons. The complexity can only arise for those
companies that do business in various countries where various laws may demand contradictory
actions.

4.2.1 Bribery

Bribery is both unethical and illegal. However, it seems that bribery is not really that
straightforward an issue. The main questions regarding bribery are: what is bribery, how it is
used and why it is used. The ethical and legal problems associated with bribery are quite
complex.
According to Foreign Corrupt Practices Act (FCPA), bribery is the use of inter state commerce to
offer, pay, promise to pay, or authorise giving anything of value to influence an act or decision
by a foreign government, politician, or political party to assist in obtaining, retaining, or directing
business to any person. The bribe is also known as “Pay-Off”, “Grease Money”, “Kickback”,
“Lubricant”, “Little Envelop”, “Bite” (in Mexico), “Paper Weight”, “Under the Table Money”
and other terms. A bribe may be in the form of cash, gifts, jobs and free trips. Example understated
Fodder Scam, describes the bribe as a scam.

Example: Fooder Scam
It was in the 1990s when Laloo Prasad Yadav and the previous Chief Minister of Bihar, Misra,
were at the helm of affairs in Bihar. They had been withdrawing money with the help of certain
corrupt bureaucrats from the Treasury for the purchase of fodder for the cattle. The total amount
withdrawn by them for their personal use came to the tune of more than ` 1000 crore and this
came to light only after about four years. A CBI enquiry had been ordered and arrests made.
A prima facie case has been established against two former chief ministers and a large number
of bureaucrats who have been charge-sheeted.

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