Question

The legal or regulatory frameworks affecting marketing are at different stages around the world; different priorities and influences are at work. Explain their impact on marketing in KSA or your region, and how companies are reacting to the laws or regulations.

Answer 1

Government regulation of economic and social activities permeates our lives. While regulation in many instances yields important public benefits, regulations often are imposed on individuals and organizations with too little thought or analysis of what is gained in comparison with the losses incurred in time, money, indecision, and productivity. Further, the growth of government involvement in the market system sometimes constrains our ability to achieve fundamental economic and social goals.

Regulations are indispensable to the proper function of economies and societies. They create the “rules of the game” for citizens, business, government and civil society. They underpin markets, protect the rights and safety of citizens and ensure the delivery of public goods and services. At the same time, regulations are not costless. Businesses complain that red tape holds back competitiveness while citizens complain about the time that it takes to fill out government paperwork. Moreover, designing and enforcing regulations also requires resources for government and public administrations. Regulations can also have unintended costs, when they become outdated or inconsistent with the achievement of policy objectives.

Government regulations are more likely to improve rather than impede the performance of the economy when they adhere to broad economic principles rather than impose narrow statutory rules. Principles-based regulatory approaches have the advantage of being more adaptable to changes in economic conditions and economic opportunities, as new markets develop in the economy and particular businesses rise or fall in response to appropriate price signals. Admittedly, the lack of specificity in principles-based regulations can allow unintended behaviour to be characterized as “compliant.” On the other hand, whereas a highly prescriptive rules-based approach makes it harder for businesses and regulators to “fudge” compliance, such brighter-line regulations can become so specific and tailored to the situation of the moment that they can easily become obsolete or even counter-productive particularly from a public interest or societal perspective—as the economy evolves. They can also be specifically designed to favour incumbent businesses as well to the detriment of new business formation and the innovation and productivity growth of the overall economy.

The case for a highly specific rules-based regulatory system is that in our litigious society, laws and rules must fully cover every contingency, lest the clever manipulate the system to take unfair advantage. Even sound and well-intended rules, this perspective would contend, could leave enormous and debilitating uncertainty until all of those contingencies were resolved perhaps even in court. However, we believe that the benefits of a more concise principles-based approach are substantial enough that the nation should change its collective mentality, including perhaps a dispute-resolution system that could deliver timely judgments, possibly with penalties for attempts at manipulation that are fairly determined to be frivolous.

Legal factors are external factors which refer to how the law affects the way businesses operate and customers behave. Product transportation, profit margins, and viability of certain markets are all Legal factors can decide whether or not there is a business behind selling a certain product (perhaps drugs, or sharp objects), and can also affect the mechanisms through which a company stocks their inventory or interacts with the customer.

Legal Factors affecting business include:

Consumer law

Discrimination law

Copyright law

Health and Safety law

Employment law

Fraud law

Pyramid scheme legality

Import/Export law

The legal environment affects the business and its managers greatly. Legal factors involve how flexible and adaptable the law and legal rules that govern the business are. It also includes the exact rulings and courts decision. Legal provisions may also contribute to more or less income depending on the environment of operation.

The legal and regulatory environment plays a very crucial role in determining the success of any businesses. The government imposes taxes among other regulatory measures to promote economic growth and to cushion consumers from exploitation. Therefore, before establishing or when running a business, it is imperative to understand the role of regional tax measures and regulatory measures to determine how they affect your business.

Tax

Tax is one of the legal and regulatory factors that affect business. Tax codes may vary from one country to the other and from one region in a country to the other.

Trade Policies

Trade policies also affect business. They include tax policies, monetary policies, fiscal policy, government policy, regulatory policy and property rights policies.

Politics

Politics can affect a business a great deal. This is form of government where political environment determines whether a business will be stable or not. A stable political environment builds investor confidence and boosts the growth of a business.

Economic Policy

Economic policy of the government also affects business. It is a legal and regulatory factor that helps to promote economic growth in a country. With favorable economic policy, a business can grow enormously without any problem.

Legal environment is a set of legal aspects as follows:

1) Law and regulations that influence business activity on the market (e.g. companies law, competition law)

2) Law and regulations that influence business activity within an organisation (e.g. labour law, accounting and tax law)

3) Provisions of the Constitution (general rules and principles that the government in the name of all society considers as the most important and worth to implement and enforce; also rights and duties in related to citizens)

4) Justice activity (especially activity of civil justice, as the courts investigate cases that are either related to trade or directly affect business). It may be stated that the rule of law connects all the above-mentioned legal aspects of businesses activity.

The legal environment is an important part of the reality in which entrepreneurs operate. Like any other environment, it is also complex, variable, and diverse. Many additional forces affect its shape and impact. The forces are shaped by internal conditions – economic, political or social as well as external. The external conditions relate to the country’s geopolitical situation, its role and importance in the international arena, and its involvement in international economic and political organisations. The wide spectrum of impact causes the legal environment to be more turbulent than it would be expected by entrepreneurs, forcing them to change and adapt, which does not always seem to be in line with the logic of market functioning. The ability to create reasonable, coherent, and rational law promotes the entrepreneurship development.

Concerted efforts have been made to redefine the KSA economy, and now KSA can boast diversification rather than geographical serendipity as its headline act. It's all reforms and liberalisation, and for foreign investors this means entry-options aplenty. Energy, finance, education, construction, environment, ICT, and consumer goods are just a handful of sectors that are susceptible to investment.

International Marketing/advertising entails dissemination of a commercial message to target audiences in more than one country. Target audiences differ from country to country in terms of how they perceive or interpret symbols or stimuli, respond to humour or emotional appeals, as well as in levels of literacy and languages spoken. International Marketing/advertising can, therefore, be viewed as a communication process that takes place in multiple cultures that differ in terms of values, communication styles, and consumption patterns.

The first thing we would do is gather marketing data by analysing the specific society, its people, their habits, their dreams and aspiration. Our goal, of course, is to sell as much as possible and our mission, consequently is to identify the need of the consumer (his cultural inclination and tendencies. And we must combine the product with existing cultural symbols to which the consumer can identify itself. Many of the marketing campaigns are kept the same in countries that have approximately the same culture, the same way of living and the same way of consumption. And one of the countries that come to mind while talking about adapted international campaign is Saudi Arabia.

Saudi Arabia has made an effort to improve the lives of its citizens using the wealth generated from the Kingdom’s natural resources to fund the social and economic development of the nation. Every measure of human development life expectancy, infant mortality, literacy, per capita income, etc, has improved dramatically in the span of a single generation. Nevertheless, a new generation brings new challenges and opportunities and a new impetus for development.

Law and Regulations is essential to building an ambitious nation. The responsibilities of governance have grown significantly since the Kingdom was founded. These responsibilities must continue to keep pace with the rising expectations of a new generation of citizens. The Kingdom has initiated a program of restructuring at all levels of government. Such initiatives are focused on building a government that is effective, transparent, and accountable. Furthermore, such a government is more inclusive, as more and more women become part of the project of governance.

Saudi Arabia has enormous untapped opportunities and a rich blend of natural resources, but our real wealth lies in our people and our society. The happiness and fulfilment of citizens and residents are important to us. This can only be achieved through promoting physical, psychological, and social well-being. At the heart of our vision is a society in which all enjoy a good quality of life, a healthy lifestyle, and an attractive living environment. Our goal is to promote and reinvigorate social development in order to build a strong a productive society.

Vision and Goals to Thriving Economy     (Source from Economic Times)

· Increase private sector contributions to Gross Domestic Product from 40 percent to 65 percent

· Raise Saudi Arabia’s ranking on the Global Competitiveness Index from 25th to among the Top 10 nations

· Increase foreign-direct investment from 3.8 percent of GDP to the international average of 5.7 percent of GDP

· Rank Saudi Arabia among the Top 15 largest economies in the world from its current position of 19th

· Increase the assets of the Public Investment Fund from SAR 600 billion to over SAR 7 trillion ($160 billion to over $2 trillion)

· Increase localization of oil and gas sectors from 40 percent to 75 percent

· Increase women’s participation in the workforce from 22 percent to 30 percent

· Lower rate of unemployment from 11.6 percent to 7 percent • Increase contributions of small and medium enterprises from 20 percent to 35 percent of GDP

· Increase share of non-oil exports from 16 percent to 50 percent of non-oil GDP

· Raise Saudi Arabia’s global ranking in the Logistics Performance Index from 49th to 25th place

However, many sectors of the business have long complained about government regulations. Often cited as an impediment to corporate and small-business profits and a waste of resources, government rules have been denounced, side-stepped, and violated by many businesses since the early 20th century, when the regulations corporate were enacted or first enforced.

Since then, amid an ever-increasing number of regulations and a huge, complex tax, business has both prospered and suffered as a consequence of government action. The relationship has been at times collaborative and complementary, or restrictive and adversarial. Yet the same rules have protected consumers from exploitative business practices. Below, we'll look at some of these regulations to see why the question of whether they help business has no easy answers.

Rules and Regulations are essential for a country’s progress and economic development. However, it should not pose a hindrance to the economic development of a country as well as business.

Four principles that are essential to a good legal environment for marketing.

Aim for simplicity

The laws that govern businesses should be stringent but not complex. The report argues that simpler rules governing business structures (meaning they are limited in scope and easy to understand and explain) are easier to administer and therefore do not impose a substantial cost burden on businesses. They are also, the report continues, more difficult to break undetected. Over the past century, though, the regulatory burden on businesses has grown significantly. The report puts forward some suggestions that might help to tackle this problem.

Be open and transparent

The second principle identified in the report is that lawmakers should be open and transparent with businesses during the development and implementation of business law. For the good of society, business needs a predictable environment in which to prosper, says the report; government should indicate as far as possible the direction in which it intends to steer the business environment to allow business to plan for the long term. In practice this means consultation with stakeholders before new business laws are implemented, and a ‘reasonable time frame’ in which to implement new laws.

Behave consistently

The report stresses that business law must be applied consistently and equally among business enterprises. This is important for the effective application of law – because the perception that regulation is designed exclusively for one group will dissuade others from engaging with it – and also to avoid protectionism and abuse of competition. Governments should be ready to step in where it becomes clear that legitimate exploitation of competitive advantage has become an abuse, says the report, and especially so where such activity is coordinated between interests to create an impression of acceptability.

Prepare to be accountable

The accountability of business fosters trust, argues the report, and business law should facilitate this. ‘Business should be prepared and able to explain their actions and strategies to stakeholders,’ it says. The legal framework within which business operates should be designed so as to enable that openness, and at the same time give stakeholders confidence that the disclosures presented by business are complete, comparable and reliable.