University of St. Cyril and St.

Methodius of Trnava Institute of Social and Political Sciences Department of Political Science

REPORT
On

Aspects of Political Interference within International Marketing

Academic subject: Elements of International Marketing

By student: Principal of the subject: Yanko Iliev Koprlov, PhD.

yanko.ivanov.iliev@gmail.com

Ing. Jana

Trnava, November 2011

Contents:
I. Introduction. 3 II. Global marketing and state politics 4

1. Government policy.. 4 2. Non-government issues... 7 9 III. Geopolitical overview ..

1. Regional and local specifics .. 9 2. International organisations .. 11 IV. Conclusion.. 12 V. References 13

I. Introduction
According to the Oxford English language dictionary, the subject International marketing is described as the action or business of promoting and selling products or services internationally, including market research and advertising. Provided by that, it is assumed that any business which is present in at least two different countries could be entitled as a part of global marketing. Global means powerful and agile. Global though means also vulnerable to different aspects of political originating damage which can occur at anytime and anyplace resulting into a worsening or even stopping a certain firm, business or the whole industry. Weve witnessed quite a lot of similar cases not only in the developing countries but also in regions which are treated as secure like for example mainland Europe. This is actually a small part of a whole system within which politics, state policy, economy and social issues are inter-related and tend to affect each other quite at the same time. The purpose of the current report is to point out some of the main issues of interference between politics and international marketing within the perspective of the current stream of events which shape the overall understanding about the economy for instance, so called free market and the examples of state (and stateorganisational) interference into it or the major rivalry between the different regional economic masters fueled by the overgrowing and evolving consumers society.
3

II. Global market and state politics.

Within the perspective of the global market, the so called marketing planning is crucial for the overall success of any company. Politics, including inner affairs and diplomacy, are key features when it comes to adjusting a certain business to the specific regional requirements without making any compromise with the firms traditional policy or demands. Since the business is already an international one, international affairs and diplomacy also take a great effect. That is why, in most cases it is more than important to have good and long-lasting connections with the other (or others) country within whose borders the newly established branch of the company would be existing. If this fact is underestimated then the branchs future or even the future of the whole companys business could be put to the question. We had a fresh example when, after officially not admitted to the Schengen area Romania have made certain symbolic attempts (of course not officially) in order to try to slower down Nederlands import/export of tulip flowers as the Dutch government was one of the first to confirm its attitude towards the Romanian admission to the Schengen. Such maneuvers are a clear example of state interference within the private sector.

1. Government policy.
In the countries with a working democracy the interference in the private sector is either
4

none or at its minimum. That is provided by the principle of free enterprise which is treated as a vital part of democracy and a clear sign of transition towards democracy for the developing countries. Government interference though is not only direct one. There are certain techniques which can offer great power to the ruling political class, especially if the government is made up from one party or the civil society is very active. That could be viewed in almost all of the countries, no matter the political orientation of the ruling party, the regional specifics or the public reaction. For the business though a stable government with a strict, fair and steady policy towards the free market is the optimal thing to expect. Even though, if we have to be precise, far not all of the governments are stable and business friendly. Actually, even if they are stable and friendly initially, that does not mean that this would continue for the future. We have witnessed lately a major change in a great number of governments when their national economy was struck by the international economic crisis. For example, the Hungarian government has introduced a new tax labeled crisis tax whose main effect fell onto foreign investors and multinational companies. Another factor which affects the government policies is the acting of other political parties, lobbyists or so called pressure groups. Similar to this is the case with Finland whose government is now facing a lack of support in parliament and so, it is now more or less influenced by the far-right nationalistic party True Finns whose 39 MPs are enough for a majority within parliament. One of the most wide-spread reasons for destabilisation of a national government is the results of an election. This could distort not only the government but also it could be a reason for its resignation. This action of course
5

is not directly linked with marketing and state economy but in certain circumstances, it could be dangerous as some political parties or lobbyists are more or less influenced by economic, historical or other issues and thus could target the profit of specific foreign companies through their economic policy which often does not fulfil the legal regulation and the principle of free enterprise in particular. Another point on which a government could fail in protecting the economic certainty is when the government itself is week in terms of economic initiative. For example, if a country has a weak government but strong trade unions and civil society, then the result could be overwhelmingly bad for the foreign companies whose profit would be strongly affected by the implementation of new laws or other generally binding regulations. Often similar cases emerge when a new government is supposed to be leftist but in those cases the general situation (at least in developed countries) tends to remain the same, of course with minimum differences when it comes to acts provoked by partys political orientation and pre-election promises. This very same situation happened in Bulgaria not long ago when the national government, after making political promises, managing the state budget and (or) according to lobbyists recommendation has shut down most of the fuel depots of the international Neftochim oil company. In general, in developed countries, where the main international trade takes place, the supreme legal regulations and Constitutions of different states tend to share one single characteristic full support over free enterprise and prosecution of any acts which tend to abolish or weaken it either politically or economically.

Along with state interference, we can also mention multi-national (or supranational) political communities interference which could be various and often quite difficult to evade. For example, in multi-national organisations, like the EU for example, there are certain things which have to be pre-negotiated along with all the other members of the union. That could be quite a burden for international companies which have to wait for the political implementation of certain economic regulations. People argue whether these supranational organisations are an accelerator or a heavy burden for the international trade. From one point of view, the abolishment of certain economic boundaries is good for the multinational firms, but on the other side, political implementation of laws and bureaucracy tend to slower down the economic growth especially when it comes to developing companies which are in a process of enlargement of their business by establishing branches abroad.

2. Non-government issues.
Interference within the multinational business could not only be initiated by the government but also by non-government subjects. These are quite different by their source and could hardly be defined as a certain group. Speaking roughly, we can identify two different approaches of defying nongovernmental subjects. The first could generally be defined as organisational and official (by law). In other words, these are the various trade unions, pressure groups, members of the civil society, political parties in opposition, lobbyists (if it is legal), NGOs or individuals. These, judging by the impact they make to government issues, are moderately capable of inflicting a
7

sometimes significant damage to companies, especially when it comes to business which deals with utilities, heavy machinery, mining, banking, etc. The techniques they use are non-violent but rather they stress on verbal and symbolic influence, mainly protests and media warfare. The legal authorities like the various levels of the state court could also be added to this group because nevertheless they are not a part of the government but they are quite capable of interference in the economic issues, of course when it is needed to, according to state and/or international laws. Non-governmental interference has one single feature which surfaces every time and that is the fact that non-government authorities and organisations have no power by law, so everything they achieve is a reaction to something which has influenced a lot of individuals and thus, provoked by publics attitude, either the government or some other authorities or subjects make the desired changes, of course not always as it is quite subjective when these changes should and when they should not be made. We have labeled this group official (by law) as its members are registered and recognised by the state authorities. That is because they differ from the other group which, in one way or another, is made up of groups and organisations which are illegal and often prosecuted by law. The so called second group, as we have already mentioned, is made up of various organisations starting from unofficial scout clubs and animal keepers to terrorist sects. Not only because this group is very wide in its range, but also because it could not be described by a single word or term, it would be better to identify the two major types which could be put within the boundaries of this group.
8

A major part of the non-governmental issues is caused by violent and often offensive (in both mind and acts) organisations. These could be described by a lot of different names like for example anarchists, antiglobalists, terrorists, political radicals, secret organisations etc. A common feature between these is the fact that, in one way or another, their goal is to change (radically) the political, economic and social status quo by any means necessary. In their roots, these social and political movements are violent, aggressive and provoke social injustice. That is the reason why they are prosecuted by law. And how do they affect international marketing? Mainly psychologically (because these movements tend to wage propaganda warfare by which they are trying to convert ordinary citizens and make them believe the things they want) but also occasionally directly through, as they call them direct actions, which virtually all of the cases are violent and pursue a certain political goal which often lies hidden for the ordinary participants. The second sub-group has more limited range of interest. These are also sometimes political organisations (or such with political goals) but it is not directly linked with marketing and its environment but rather it is a subsequence of their acts, like for example terrorist acts and/or different aspects of political, social, racial etc. violence. Generally speaking, non-governmental issues have moderately weaker effect that the governmental but their intensity is higher and thus their impact seems more influential that the other. It is hard to make any suitable conclusion whether its influence on international marketing is considerably remarkable or its within the so called sphere of risk when it comes to marketing planning and the future development of the business.

III. Geopolitical overview. 1. Regional and local specifics.

The world has always been divided by a certain issue. Since the time of our human ancestors, humanity has been influenced by the various specifics of the environment weather, terrain, water sources, game and plant population etc. Similar is nowadays the case with nation states. They are now more or less geopolitically divided according to the place or region (but also to the type of policy and state development) in which they are situated. We do frequently hear on the news, newspapers or at the office expressions like geopolitical purpose or geopolitical setting which actually refers more to the political and social orientation rather than to the real geopolitical issues. We can define, of course quite symbolically, several geopolitical regions which have to do with international marketing and politics. These are Western Europe, Northern America (often referred as NAFTA) Eastern Asia (including certain parts of China and some island states) Eastern Europe, Central Asia (incl. former states of the USSR), Southern America, Australia (along with New Zealand), Middle East (subsequently divided into different regions) and Africa with its quite rich diversity when it comes to nations, economy, politics etc. Generally speaking, more or less a single country is influenced by its neighbour states and its setting in geographical aspect. International marketing is influenced indirectly also by the egress to international seas and/or floatable rivers.
10

For multinational business transportation is a crucial word. Whole economies are suspended upon delivering certain goods from one place to another and the faster (and cheaper) it gets there, the better for the business, for the state economy and for the general public and the individual consumer. If there is interference within the transportation process, then the business would definitely have a drawback which in terms of free enterprise and open competition could be lethal for a certain company. We could see how lethal exactly during the eruption of the Eyjafjallajkull volcano in Iceland almost all of Western European commercial and cargo flight were blocked and that had a pretty much terrible result for flight companies and additional ones who deal with issues directly linked with flight transportation. Also, now we witness the devastating impact of geopolitical settings within the framework of the Eurozone crisis when economies with limited geographical grants (Italy, Spain, Portugal, Ireland, Greece etc.) are facing quite a challenge in preserving their economy alive and in one piece as the near future of the Euro currency and the global EU market is not quite secure or positive in its perspective, especially for economies with a geographical setback such as the listed above. In particular, the setback is the distance (or limited share of borders) to the other member states and thus harder and more expensive transportation of goods. This fact is backed up with ranking of the economic environment of various states and also their overall economic rating. According to these scales, all countries which were already mentioned are far than excellent for investing according to these terms.

11

2. International organisations.
In this chapter I would write about international organisations on national level, but yet divided according to regional characteristics. Most of these organisations (like for example, the EU, Arabic league, CIS etc.) are primarily organised upon global political issues, but also in terms of economy and some major regulation for trade and enterprise issues. No matter how general and not-binding these regulations are, in certain manners they could lead to a totally unsatisfying economic environment. This though has a also a certain link to government issues but in the present economic crisis there are clear examples of how general regulations of supranational organisations could lead to reflux of investors and shivering of regional and local branches of international firms. Similar statements were expressed by the Conservative party before the general election last year. Their representatives stressed on getting Britain back on its feet of course by the help of foreign investment which, if we have to be precise, really has shrunk during the Labour rule. Speaking roughly, when an international organisation tries to implement politically motivated economic reforms that should also be treated as supranational interference. We have a fresh and not quite finished yet case in the face of the economic reforms whose aim is to save the Eurozone from total collapse. In a certain way, this interference is [in]direct to multinational business and is quite still unsure if it would be successful.

IV. Conclusion.
12

To sum up this report, Id like to point out once more that any interference within the economy, either issued by the government or by non-government authority, is supposed to be a violation of the free enterprise and should not be executed. Otherwise, any dramatic changes could lead to bankrupt or even to an economic crisis. The term itself interference tends to be a certain violation of the normal process of trade. Thus influencing the normal demandsupply principle (or the free enterprise one) the whole chain of linked together companies and state-governed facilities is distorted.

References*:
1. BBC News EU Budget: Who pays? http://news.bbc.co.uk/2/hi/europe/8036097.stm 2. List of Economic ranking 2011 http://www.heritage.org/index/Ranking 3. Oxford Dictionary online version http://oxforddictionaries.com/ 4. Wikipedia articles (http://wikipedia.org) : Anti-globalization movement - Commonwealth of Independent states - Global marketing - Economic freedom - Euroscepticism - International marketing - NAFTA - other

13

* The above articles have been used within the period of 17 th - 27th November 2011.

14