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Tariffs, Quotas, Boycotts & More Global Marketing Issues - YouTube
Channel: Professor Wolters
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Hey there fellow marketers,
Professor Wolters here.
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And today we're here in Vienna,
Austria, and today I want to talk
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about one of the things that
companies do and firms do in
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order to analyze kind
of the desirability of going to certain
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international markets.
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So how do we kind of evaluate markets?
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Now we have a video on looking
at the social cultural stuff.
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We have a video on economics,
we have video on-on other things,
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but what we need to look at today
is actually the legal/political
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kind of stuff that might
influence us if we're going to
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be going into a new market,
okay, or maybe if we're gonna do
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business with certain countries
and things like that.
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Now, what I want to talk about
are a few kind of things that
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governments do do that do
influence business in terms of
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international business.
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And one of the things is, they
might be limiting the flow of
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goods to a country.
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And that could be, one,
they could have a quota.
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And what a quota does is, it
sets a limit on the total number
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of products that can be brought
in from a certain country.
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Usually, it's probably a certain kind of product.
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So they might say, you know,
only 50,000 Toyota's are
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allowed to come into Austria.
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I mean, that's a lot of-a lot of
cars that come here, but they're
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making a limit only 50,000.
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Now the thing is, that hurts
domestic consumers because
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imagine, if you're the 50,000
and first person in Austria that
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wants to buy a Toyota,
you're kind of out of luck, okay.
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Now on the other side of it
actually helps the domestic
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producers because the domestic
producers in the European Union,
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they're making cars, ha ha,
now that 50,000 and first person has
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to buy one of our Skoda's
or our Volkswagens or something like that.
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So you have those things,
but a quota at least you get to bring something in.
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Sometimes countries have what
are called boycotts, where they will
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allow no products from that country.
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Okay.
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So like in the US, you might
have a boycott on North Korean
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goods, or Iranian goods,
or sometimes Cuban goods and things like that.
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If somebody wants to get
a Cuban cigar, and you're in the US, too
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bad, it's totally a boycott.
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So of course, the domestic
consumer is the one that's missing out.
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Now, if you're going to be
buying, like cigars made in the
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US good for you, hey, that
domestic producer, hey, we're
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getting all that desire demand,
they want to buy the Cuban cigars.
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They can't, they got to buy from us.
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So that's the thing there.
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Okay.
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So remember, quota set limit,
you know, of a certain number
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and boycott is completely nothing's there.
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Now, another thing you probably
hear a lot about in the news are tariffs.
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And what a tariff is, is when a
government imposes a tax on a
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product coming into the country, okay.
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So if I'm trying to bring in,
let's say, wool from Britain,
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okay, let's say it costs $10,
for that will in Britain, but
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the thing is, I'm putting a 20% tax on that.
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Well, now that will when it comes
and the people in the US want to buy it, well,
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instead of it being $10,
it's going to be $12, because they
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put a 20% tariff on there.
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So it makes everything more expensive.
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And the thing is, a lot of times
governments will say is we'll
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put those tariffs to show those
other governments that-that
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they should do stuff.
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Well, the thing is-is-is that
other government paying the tax
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and the tariff, no, they're not,
it's the domestic consumer that
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has to pay the higher price, so
they're losing out because they
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got to spend more money because
you know what, I want to have my
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soccer tour from here in Austria,
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I don't want it from the US,
I want it to be shipped there.
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And so I'm kind of missing out on that.
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Or I want that-that- I want that
British wool from Scotland, I want that.
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And so I'm gonna willing to pay more for it.
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Now, for domestic producers
in the US, if we look at the wool
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thing, hey it's good for them.
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Because if we were to think
about it, if we were $10 wool
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versus $10 wool, and someone
wanted Scottish wool, so they
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can say, oh, I have Scottish
wool on well, now all of a
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sudden it was equal.
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So they buy the Scottish wool.
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But now it's 20% more expensive.
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Now that domestic produce wool
looks more affordable, and
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people buy that more.
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So it actually helps the domestic producer.
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But again, the domestic consumer
is the one that loses out.
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Now the thing is that all
government actions actually bad
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for the domestic consumers.
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These just few first few ones
I was kind of talking about.
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There's another thing you might
see what we call trade
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agreements, you might agree with
things like NAFTA, North
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American Free Trade Agreements,
where it's free trade of goods
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between Canada and Mexico and the US.
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And so we can get goods
and services going around the
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European Union where you know,
you can be born in Portugal and
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work in Germany and then retire
in Spain, you can move all over.
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But also you can move your money all over.
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You can compare prices in
different places buy there and
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stuff like that.
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So it makes it really easy for
people to go places, businesses
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to work in multiple locations,
because hey, we make it there's
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no extra tariffs, no extra problems.
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It's good for a domestic
consumers, because now think
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about it.
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If I'm here in Austria, now I
can get all those tasty Italian
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pastas here, I can get those
German sausages, I can get those
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finished sweets that come down are so good.
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I can have those then, and there's no tariffs.
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There's no limits, nothing like that.
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Because we have that trade agreement.
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And then you'll have what
are called exchange controls.
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And so what exchange controls
do is they might limit the amount
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of financial like money flowing
from different between countries.
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So sometimes what you might
see is a currency control.
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Some countries don't let you
take money out of their country.
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Well, if I can't take my money
or my profits out of the
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country, why am I going to
invest more there, I might not do that.
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So that kind of turns people off
and so some times what companies
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do is they work with what
are called transfer pricing.
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So let's say I'm a company
and I can't get my money out of this country.
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So I'll hire one of my
consultants from my firm back in
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their US branch, have them come
to Austria and then I'll charge
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them $100,000 for their
services, because the people are
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doing work for us, and then that
money can flow back to our
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country that way.
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But taking actual profits out,
sometimes exchanging controls,
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kind of eliminate that.
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So it makes it a little bit more
difficult to get it out there.
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Also, sometimes it might be a
limit about how much money
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people can exchange, I know,
think about it, your local bank,
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would you take money out of the
ATM might put a limit only $500
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a day, or 500 euros a day, what
if you want to spend more money
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you can't you're limited in what you can do.
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Now imagine that for a big
company, it can really limit
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what they can do.
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And so what they might end up
doing is deciding you know what,
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I'm not going to work in that
market, because it's not worth
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it, because all of the exchange
controls and issues like that.
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And that can be some things.
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And also sometimes government
actions might mean that you have
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to work with other companies.
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So you might be forced
into doing a joint venture.
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And if I have intellectual
property, I don't want to lose.
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Do I want to have to work with
somebody else, and they might
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steal my ideas.
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There's all kinds of things you
have to think about in terms of
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government regulation,
and all this kind of stuff, which will
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affect you when you're analyzing
and international market to
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decide if that's a place that you want to go.
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Okay, now we have a lot more
information on here going over
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the economic side of things.
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There's social cultural side
of things all on our website.
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Also, you can check it out here
on YouTube channel, Professor
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Wolters, just search for the
marketing bar, and you'll find
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all kinds of the marketing playlist.
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You'll find all kinds of
marketing videos to help you out.
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We've also got videos on YouTube
stuff, how to teach all kinds of
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good fun business things.
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So do check it out.
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We do appreciate your likes and subscriptions.
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Sorry for the wind and the rain.
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But I'm here wander through
Vienna and I thought this would
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be a good place to talk about
international trade, because
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this was the hub
of international trade back in the day.
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Anyway, I'll say bye from Vienna.
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