How the political environment can impact international marketing environment.

Every campaign, product launch or global market initiative has the chance/probability to go wrong. The factors that could pose threat to the launch are countless and while some are predictable and can be controlled, many others cannot. In general, the factors that can be controlled are pertinent to the company and its organization and are called internal factors. Those that cannot be controlled are the external factors, or the environment. Politics is one of the main environmental factors and is in general out of companies’ ambit. When a company launches a product, a campaign or operations in a foreign market, it can be entangled in problems if the launch runs into issues that are political in nature.

Structural influences are determined by elements that are already in place and to a certain extent predictable like active legislation, taxation, trade regulations, international treaties and agreements, the ruling party or government in place until the end of the mandate, etc. Public factors pertain to public identities and sensitivities that are linked to people’s political identity and it can be related to ideology, history, nationalism, even mythology; any element that is constitutive of people’s political identity has the potential to backlash if people feel it is being challenged or disrespected or if it undermines their belief. Public factors are far more volatile in nature and are notoriously difficult to predict. However, in the digital age, they have the potential to be even more disruptive than the structural ones as reactions can be shared and spread online in a matter of minutes and regaining control can be very costly and challenging.

Structural Challenges in Political Environment

An environment could help the decision makers during the early phases of the business strategy, PESTEL or PESTLE, with the addition of the Legal and Environmental factors as they progressively became more important from a business standpoint. These factors are tremendously important and they represent huge hurdles on businesses both domestically and internationally. At the global level, all the factors get importance by every country that is part of the business strategy and are added to the international treaties, conventions, customs and practices. The enterprise can be daunting and a detailed analysis of the environment is an absolute must. Obviously, some factors are more stable and more predictable than others, however there is always a potential for change and a continuous scanning of the political landscape can make a big difference when planning a campaign or an international business expansion.

Several recent examples of rapid and unexpected changes in the political environment that brought considerable uncertainty to global business operations. Ex: Brexit referendum in the UK has significantly increased the risk factors for certain industries and the international operations. Even for companies that weren’t directly affected by these changes, the increase in the uncertainty and risk factors is bound to impact every international business as it affects the overall economic environment and most of all the financial one.

Some of the questions that the PESTEL analysis will help you answer are:

  • In East Asia the instability caused by North Korea’s erratic policies going to affect the mobile phones market? If there is a launch campaign for Samsung’s phones accessories, then will a business have to wait when political stability is restored?
  • Offices in London and international marketing operations based there, what should a business do after Brexit goes into effect? should the business relocate offices to Ireland or to Amsterdam? Which location offers advantages in terms of logistics, taxation incentives, labour laws, etc.
  • How is the current stance of Elon Musk look towards the current administration after Musk is going to affect marketing campaign for solar panels and electrical storage batteries. Will the new administration try to boost the image of traditional fossil fuel industry? Will they offer incentives to fossil fuel industries that could potentially harm products’ popularity and sales?
  • A language service provider with offices in Barcelona, what is the likelihood of Catalunya gaining independence from Spain? If it happens at all, what are the chances of this being a peaceful, smooth transition? Will an independent Catalunya be business friendly or are they likely to increase taxation? Would a business be better off relocating to Prague, Paris, Madrid or Milan?

Through the use of predictive analysis, companies will not only have certainties but also, they will have to reduce the risk factors considerably and then they will have time to develop alternative strategies if the outcome they were hoping for, becomes more or less likely.

Political Constraints of Public

While structural political factors such as elections, referendum, treaty renewals, etc. are very big factors in the business environment, there are other ways in which political issues can impact companies’ marketing operations, and those are the reactions of the people that are linked to their political identities. These factors are even more difficult to analyse and more unpredictable than the structural political factors.

Examples of these are Google’s repeated gaffes over the labelling in Google Maps of territories that are disputed. It has angered or caused protest, boycotts, petitions and open condemnation from Israel, the Palestinians, China, India, Iran, Nicaragua, Turkey and even the forgotten Sahrawis, just to name a few.

The dispute over territory is particularly sensitive as territories are not just demarcated lines on a map, there is an entire social and psychological dimension that links people to territories. This has deep implications on people’s identities and their ties to social and political groups. Feelings of belonging to a territory, of the motherland, the homeland, of entitlement to a specific territory that have fuelled countless conflicts throughout history and are a major motivation for social and political action. Considering that Google Maps are used as reference by the wide majority of websites who want to indicate their location to the user, it is easy to see how Google has a major responsibility to ensure that naming and labelling on the maps are fair and respectful to the people involved. Moreover, disputed territories often acquire an ideological dimension and other groups, states and political parties will choose sides and might act in defence of or solidarity with the offended party. For example, a worldwide backlash against products that have even the slightest association with anti-Semitic groups.

While often the reaction comes from people, other times it comes directly from the government. Google has had several incidents with the Indian government as well as with the Chinese. With India the clash was both over the attribution of Jammu and Kashmir to Pakistan in 2005 and then again in 2010 over Arunachal Pradesh, a disputed territory between India and China next to Bhutan. Google had to modify the map after the official complaint of the Indian government, however, not to offend the Chinese, Google had to initially produce 3 different maps and has since changed to 2 versions of the map. Now, to the Indian user Arunachal Pradesh appears as part of India and to the rest of the world the territory is surrounded by a dotted line that indicates the disputed status. The same goes for Jammu and Kashmir, since India’s official policy is to deny its disputed status, Google Maps India shows the region as part of the Indian territory. See comparison from Google maps below. Now, while the dispute over Jammu and Kashmir is quite complex and extremely sensitive both for India and for Pakistan, Arunachal Pradesh is an area close to Tibet that is a very tiny fraction of territory when compared to the size of India and China, and while it might have had some strategic military value in the age of traditional warfare, in the age of long distance ballistic missiles and extensive air to ground warfare technology it is puzzling that the two countries still cling to that sliver of territory and feel offended if their perceived rights are not acknowledged. This clearly shows how the link between people, identity and territory goes beyond the realm of what we would consider a rational calculation of interest and into the realm of the feelings of group identity and belonging that can react to perceived insensitivity and escalate the reaction to a completely different level.


Comparison created by the author by taking screenshots of the Indian Google Maps site and the US one.

Public backlashes to an insensitive campaign can also happen when there will be no direct territorial or political implication, but the reference will be a cultural element that will come to embody a territorial conflict. For example, when Orange Telecom, a former telecom provider in the UK, wanted to open retail points in Northern Ireland, they were faced with huge problems because of the sensitivities that their name and slogan, “The future’s bright, the future’s Orange”, might evoke in a land where the two sides of the conflict have long associated each other with the colours, orange and green. Orange for the Protestants and particularly the members of the Orange Order, and the green for the Catholics and Unionists. The company was worried about the commercial backlash from the Catholic population, but also about possibly sparking violence in a situation where sectarian violence was sporadic but still very much a reality in the daily political life.

Conclusion

Every product launch or international expansion carries a certain amount of risk that, while it cannot be completely avoided, it can certainly be mitigated by extensive research. While retrieving information is easier than it has ever been, unravelling/discerning authoritative material from misleading information can be tricky. With regards to information on political issues this is even more important since political issues can very easily become partisan issues and view the facts though the powerful lenses of political ideology. Although it is not an easy task to understand the political environment through the PESTEL analysis and building strategic scenarios based on political realities in the markets a company is targeting, but is a fundamental step in creating a solid international marketing and busniess strategy.

References
In relation to the issues faced by Orange in Ulster/Northern Ireland see:

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