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Kotler outlined four political-legal factors that must be taken into consideration before entering an international market. The National Commercial Bank, in making a decision to enter the Cayman market, had to consider the Caymanians attitudes towards international buying, government bureaucracy, political stability and monetary regulations. The attitude nations display towards foreign firms varies, as some nations are quite responsive to offshore business entities. Monetary regulations are an important factor, as companies want to take their profits in a currency of value to them.
Political stability is an interesting area, as governments often times respond to the voice of the people and impose quotas or set new duties upon the foreign company, as well as take their property and block their currency holding. It was also important for NCB to ensure that the political climate was stable. Luckily, to the advantage of NCB, the Cayman governmental policies maintain an environment that encourages investments and business incentives - the result of a stable political climate [Lowtax.net]. Should the political climate be unstable, it would have been difficult for NCB to plan and carry out the business of the company on a daily basis.
The final factor in the political-legal environment that NCB would have to consider was the government bureaucracy: “this is the extent to which the host government runs an efficient system for helping foreign companies” (Principles of Marketing, pg 594). This is evident in The Cayman Islands, where the government encourages offshore business activities by exempting them from import duties on construction material. Foreigners are also treated in the same way as residents, and there is no tax to impinge on the investment process.
Understanding the differences between countries and how they vary in terms of their legal boundaries and political governance is an important aspect of marketing that any company wishing to expand internationally must understand. It therefore means that they must be in acceptance of the rules and regulations of the country they wish to do business in; and at the same time, “still be guided by those of their home country where it has its principal office and operations” [Marketing Basics for the Caribbean; pg. 391]. Developing an understanding of the issues that guide the host nation will lead the trader or marketer to accepting and practicing the trade laws and incentives; as well as their investment and financial regulations, some of which may prohibit entry.
Multinational corporations must understand the trade laws; a nation will protect its businesses, as they contribute to the economic well being of the country. Take for example the Barbados, when they launched a form of nationalism, where the people were reminded of the importance of purchasing domestic goods in a “100% Bajan” campaign. It is important for marketers to also keep abreast of the political influence on commercial activities; as well as to understand their objectives, as the company’s business could be affected.
Marketers must therefore, before entering a foreign market, be aware of the variations between national and international marketing. Marketing is a dynamic aspect of business that must be tailored to suit one’s target population. This is evident in the factors mentioned above, where the marketer had to ensure they had adequate knowledge of the Cayman economy, market conditions, political stability and the legal and regulatory factors that could hinder them from doing business in the country; in addition to their observances of cultural differences that could affect their profit levels and marketability.
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Good Work!! Jaevion Nelson | Apr 10th, 2006
Very good work ... really like this essay.
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