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International
Marketing MKT630
VU
Lesson
# 11
FOREIGN
NATIONAL ENVIRONMENTS
Legal
Environments
Differences
in legal systems:
Businesses
are affected by legal
environments of countries in many ways.
Legal environments are
not
just
based on different laws and regulations
concerning businesses, these
are also defined by the
factors
like
rule of law, access to legal
systems by foreigners, litigations
systems etc.
·
National
legal systems vary on the
following aspects;
The
rule of law
Some
country have strong rule of law in
that laws are applied
strictly, quickly and
fairly,
while
in others laws are not
applied for various reasons,
such as corruption, strong
nationalism,
weak legal institutions
etc.
The
role of lawyers
A
firm depends on lawyers to
access courts to seek
justice or to defend in case of
any
litigation
against. International business firms
are affected by the role of
lawyers in foreign
countries.
In some countries there are few
lawyers and it is difficult of
very costly to engage
a
good
lawyer. In some countries lawyers
may be corrupt or biased in
favor of locals.
Access
to legal system
Access
to legal system also varies
from country to country,
especially for foreign
entities. In
some
countries foreigners can easily
access courts to seek
remedies while in other
countries
there
may be restrictions.
The
burden of proof
In
some countries the burden of proof, in
case of any litigation, is on the
defendant, while in
other
countries the applicant / plaintiff has
to first prove that there is a
case for the court to
proceed
against someone. It may become
difficult for foreigners to get
proofs in certain
situations.
The
right to judicial
review
Various
countries have different legal provisions
for appeals and review of
lower court or
earlier
judgments. These provisions may
also vary for foreign
entities.
And
the laws
Laws
relevant to businesses (including
foreign firms) also vary
from country to
country.
Types
of legal systems:
Business
environments in foreign countries also
vary with the types of legal
systems. Various types of
legal
systems are described in the
following;
·
Common
law
Law
based on cumulative wisdom of
judges' decisions on individual cases
over time. Relevant
judgments
of upper courts have bearings on lower
court decisions.
·
Statutory
law
Laws
enacted by legislative actions, i.e.,
through parliamentary proceedings
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International
Marketing MKT630
VU
·
Civil
law
Law
based on codification and
detailed listings. Laws,
their applications and penalties
are all
detailed
and judges have little flexibility
compared with common based
law systems.
·
Tort
law
Cover
wrongful acts, damages, and
injuries caused by an action
other than breach of contract.
In
some
countries, like USA, judges make
big awards for tortuous
liabilities, while in many
other
countries
courts are reluctant to
entertain big claims under
tort.
·
Religious law -
(Theocracy)
-
When the cases are
adjudicated based on religious
knowledge and
beliefs.
·
Bureaucratic
law
When
officials adjudicate cases,
such as in communist countries. This
results into lack of
consistency,
predictability & appeal
procedures
Legal
issues faced by marketers in
international markets:
Variations
in legal environments, rule of
law, laws, and legal systems
affect foreign business
firms in a
number
or areas. Key areas of
business that are affected
by legal environments are
listed below;
·
Laws concerning
employment and labor affect
managing of workforce in international
markets.
·
Different laws in
foreign countries regulate financing of
operations by foreigners. In some
countries
foreign
firms are restricted access to
local deposits /
funds.
·
Various countries
around the world have different laws
concerning marketing of products,
especially
food
products, pharmaceuticals, hazardous materials and strategic
products to a nation.
·
Countries also
control and regulate developing and
utilizing of technologies through
various laws
and
regulations.
·
Many countries
also have different laws and regulations
that affect ownership of
businesses by
foreigners.
·
Countries also
regulate / restrict remittances to
foreign countries and repatriation of
profits.
·
Some countries
regulate closing of operations and in
some countries businesses are
not allowed to
close
shop especially when they
have sold products that have guarantees
and warranties from
the
foreign
firms.
·
Various countries
around the world have implemented
different trade and investment
regulations.
·
Countries also
have their own taxation requirements,
systems and laws.
·
Countries also
differ on the accounting reporting
requirements from various categories of
firms.
·
Legal
environments of countries vary that
also affect dispute
resolution situations and
·
contractual
relationships.
·
Countries
around the world have also
actively implemented environmental
regulations that
affect
businesses.
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