Explain how governmental instability can affect marketing an

Explain how governmental instability can affect marketing and international marketing efforts. Is this evident today in terms of countries like Libya and Egypt?

Solution

There are several factors that affect marketing and international marketing efforts of a business organization in a country. Government instability is one of the biggest factor for the same. Government instability results in sudden shifts of the governments in a country. This would result in sudden changes in government attitude towards the domestic and global business.

With the change in government the rules and regulations for operating a business, legal formalities for licensing and permits, taxes and tariffs, investment restrictions, and trade barriers would keep changing. This might put major restrictions on the operation of a company. Although these factors would have relatively lesser effect on the domestic businesses, however the foreign firms might experience greatest threat. Hence, government instability can seriously impact the marketing and international marketing efforts of a business.

This statement is even evident today in countries like Libya and Egypt. Due to highly volatile political situation in the country, anytime a war might break out there that can result in loss of customer base, hindering of the company’s operations, and damage of company’s assets. Due to this reason foreign comapnies do not want to invest in these countries.