DISCUSSION QUESTIONS
5-1. Describe some of the sources of political risk. Specifically, what forms can political risk
take?
Political risk increases when a country experiences a currency crisis, when there is civil
5-2. Global marketers can avoid legal conflicts by understanding the reasons conflicts arise in the
first place. Identify and describe several legal issues that relate to global commerce.
The chapter discusses five potential sources of conflict:
1. Jurisdiction concerns the right of a court to hear and decide a case brought before it.
both home-country and host-country bribery laws.
5-3. You are an American traveling on business in the Middle East. As you are leaving country
X, the passport control officer at the airport tells you there will be a passport “processing” delay
of 12 hours. You explain that your plane leaves in 30 minutes, and the official suggests that a
contribution of $50 would probably speed things up. If you comply with the suggestion, have
you violated U.S. law? Explain.
5-4. “See you in court” is one way to respond when legal issues arise. Why can that approach
backfire when the issue concerns global marketing?
Arbitration can be faster, easier, and less expensive than litigation. Also, with arbitration,
CASES
Case 5-1: Will Western Sanctions Hurt Putin’s Russia?
Overview: Russia is being transformed by economic change. In Moscow, for example, affluent
Russians can shop at boutiques that offer Versace, Burberry, Bulgari, and other exclusive brands.
Although per capita gross national income (GNI) in Russia is only $13,850, Russian shoppers
spend billions each year on luxury goods. In 2006, flush with dollars from oil exports, the
Russian government lifted all currency controls and made the ruble freely convertible in world
markets.
In March 2014, Putin angered the West by annexing Crimea, a region that had been considered
part of Ukraine. A few months later, after pro-Russian separatists launched a military campaign
in Ukraine, the West turned the tables and threatened Russia with sanctions. As 2014 came to an
end, the global price of oil dropped below $ 60 per barrel and the Russian ruble plunged in value.
As the global economic downturn deepened and lending standards tightened around the globe,
credit lines from Russia’s banks dried up. Now, Russia’s dependence on a single commodity for
the bulk of its export earnings has turned out to be a liability. Despite talk of creating a Silicon
Valley–type development in suburban Moscow, some observers have begun asking whether it is
time to take the“R” out of “BRICS.”
5-5. Discuss why the Putin government decided to pursue legal action against the members of
Pussy Riot.
Putin stated that the band had “undermined the moral foundations” of the nation and “got
what they asked for”. Although Pussy Riot is generally associated with the opposition
movement in Russia, the band members are quick to point out that they view themselves
5-6. What impact will the Magnitsky law have on the political and legal environment in Russia?
Large corporations who might have been considering opening operations in Russia, may
have to reconsider their decisions. The safety of their employees and the ability to
firm. When Magnitsky went public with his allegations in 2008, he was arrested. He died
5-7. As this book went to press in mid-2015, Russia’s Economy Ministry was predicting that a
recession brought on by sanctions would last into 2016. What is the current economic situation
in Russia?
happen in 2016.
5-8. As the chief marketing officer of a global company, would you recommend establishing
operations in Russia?
Case 5-2: President Barack Obama’s 2014 “Christmas Surprise”
Overview: Cuba and United States have a tense relationship over years beginning with the Fidel
Castro’s coming to power in 1959. The expropriation of American property by Cuban
government resulted in American embargo toward the island nation. Helms-Burton Act was
signed by President Clinton in 1996 and led to many disputes in the world political and business
arena.
5-9. What was the key issue that prompted the EU to take the Helms-Burton dispute to the
WTO?
The Helms-Burton act was considered as a violation to the rules of international trade.
5-10. Who benefits the most from an embargo of this type? Who suffers?
Cuba definitely suffers from this embargo. The country’s economy requires international
investments, which are restricted by the Helms-Burton act. Without the act, Cuba is still
5-11. Now that the United States and Cuba have resumed diplomatic relations, what is the
likelihood that U.S. legislators will lift the trade embargo?
Student answers will vary depending upon their political affiliation. Political strategists
Case 5-3: Gambling Goes Global on the Internet
Overview: Gambling is an old habit of the mankind that started thousands years ago. Nowadays
gambling is global. American government tries to raise an issue about the internet offshore
gaming companies and prosecute those who are involved in this business. European countries are
voting against the American policy. WTO rules that the United States are unfairly discriminating
against offshore gaming companies by its Unlawful Internet Gaming Enforcement Act.
5-12. Do you think that the Unlawful Internet Gaming Enforcement Act unfairly discriminated
against offshore gaming companies?
I think that the Unlawful Internet Gaming Enforcement Act unfairly discriminated against
offshore gaming companies. I agree with WTO ruling that the U.S. discriminated against
5-13. Some in the gaming industry oppose legalizing online gambling on the grounds that
allowing people to play at home contributes to social ills. By contrast, proponents of legalization
assert that regulations are needed to protect consumers who will play whether it is legal or not.
Should concerns about the erosion of social values dominate the discussion of Internet
gambling? Or should the debate focus on consumer protection?
5-14. In the final analysis, is the regulation of online gambling a federal issue or a matter that
should be left to individual states to determine?