Page 235 - Foundations of Marketing

202 Part 3 | Customer Behavior and E-Marketing

may be used to suspend the purchase of a commodity like oil from a country that is involved
in questionable conduct, such as human rights violations or terrorism. For instance, the United
States and the European Union have imposed an embargo against Iran, including a trade sanc-
21
tion on oil exports, due to concerns over Iran’s nuclear weapons program. Laws regarding
competition may also serve as trade barriers. For example, the European Union has stronger
antitrust laws than the United States. Being found guilty of anticompetitive behavior has cost
companies like Intel billions of dollars. Because some companies do not have the resources to
comply with more stringent laws, this can act as a barrier to trade.
Exchange controls , government restrictions on the amount of a particular currency that
can be bought or sold, may also limit international trade. They can force businesspeople
to buy and sell foreign products through a central agency, such as a central bank. On the
other hand, to promote international trade, some countries have joined to form free trade
zones, which are multinational economic communities that eliminate tariffs and other trade
barriers. Such regional trade alliances are discussed later in the chapter. As mentioned ear-
lier, foreign currency exchange rates also affect the prices marketers can charge in foreign
markets. Fluctuations in the international monetary market can change the prices charged
across national boundaries on a daily basis. Thus, these fluctuations must be considered in any
international marketing strategy.
Countries may limit imports to maintain a favorable balance of trade. The balance of
trade is the difference in value between a nation’s exports and its imports. When a nation
exports more products than it imports, a favorable balance of trade exists because money is
flowing into the country. The United States has a negative balance of trade for goods and ser-
22
vices of more than $ 600 billion. A negative balance of trade is considered harmful, because
it means U.S. dollars are supporting foreign economies at the expense of U.S. companies and
workers. At the same time, U.S. citizens benefit from the assortment of imported products and
their typically lower prices.
Many nontariff barriers, such as quotas and minimum price levels set on imports, port-of-
entry taxes, and stringent health and safety requirements, still make it difficult for U.S. com-
panies to export their products. For instance, the collectivistic nature of Japanese culture and
the high-context nature of Japanese communication make some types of direct marketing mes-
sages used to sell products through television and print less effective and may predispose many
23
Japanese to support greater regulation of direct marketing practices. A government’s attitude
toward importers has a direct impact on the economic feasibility of exporting to that country.

Ethical and Social Responsibility Forces

Differences in national standards are illustrated by what the Mexicans call la mordida : “the
bite.” The use of payoffs and bribes is deeply entrenched in many governments. Because
U.S. trade and corporate policy, as well as U.S. law, prohibits direct involvement in payoffs
and bribes, U.S. companies may have a hard time competing with foreign firms that engage
in these practices. Some U.S. businesses that refuse to make payoffs are forced to hire local
consultants, public relations firms, or advertising agencies, which results in indirect payoffs.
The ultimate decision about whether to give small tips or gifts where they are customary must
be based on a company’s code of ethics. However, under the Foreign Corrupt Practices Act
of 1977, it is illegal for U.S. firms to attempt to make large payments or bribes to influence
policy decisions of foreign governments. Nevertheless, facilitating payments, or small pay-
ments to support the performance of standard tasks, are often acceptable. The Foreign Corrupt
Practices Act also subjects all publicly held U.S. corporations to rigorous internal controls and
record-keeping requirements for their overseas operations.
exchange controls
Government restrictions on the Many other countries have also outlawed bribery. As we discussed in Chapter 3 , the U.K.
amount of a particular currency Bribery Act has redefined what many companies consider to be bribery versus gift-giving,
that can be bought or sold causing multinational firms to update their codes of ethics. Companies with operations in the
balance of trade The differ- United Kingdom could still face penalties for bribery, even if the bribery occurred outside the
24
ence in value between a nation’s country and managers were not aware of the misconduct. It is thus essential for global mar-
exports and its imports keters to understand the major laws in the countries in which their companies operate.

Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.