As an Organic product’s importer, we must take into account USA’s political climate, which includes nation states and sovereignty, political risks, taxes, and the seizure of assets, all of which could have an impact on our business.Lets have a look for “Impact of Political climate for Global Marketers in USA”-
i. Nation states and sovereignty,
USA is regarded as a sovereign state that is free and independent that’s why Organic products company are agree to operate their business in USA .It regulated trade, managed the flow of people in and out of its borders, and had complete authority over all people and property within its borders. It had the right, authority, and ability to conduct its domestic affairs without outside intervention and to exercise complete discretion over its international influence and power.
ii. Political risks
Maybe the most serious threats to Organic product as global corporate entities’ operations are political risk as well as the most difficult to manage the political environment in which they operate. One day, a foreign company is welcomed into the society; the next, exploitative legislators demonize it.
iii. Taxes
Tax revenues are used by governments to fund welfare care, the military, and other discretionary spending. Regrettably, government taxation policies on the sale of goods and services regularly encourage businesses and individuals to generate revenue by not paying taxes. This policy will encourage Organic Product Company to enter into in USA and operate their business smoothly.
iv. Seizure of assets
Seizure of a company’s assets is the most serious threat a government can pose. The USA government can pose this threat to Organic Product Company through three ways including –
• Expropriation is a term used to describe a government action to take possession of a foreign company or investor. Compensation is generally provided, but not always in the “prompt, effective, and adequate” manner mandated by international standards.
• The action is referred to as confiscation if no compensation is provided. International law is generally interpreted as prohibiting a government from taking foreign property without compensation.
• Nationalization is a broader term than expropriation; it occurs when the government seizes control of some or all of the enterprises in a given industry.
International law
There are no general restrictions on doing business with specific countries or jurisdictions. However, the Chief Controller of Import and Export (CCIE) regularly amends import and export policies, addendums, and Statutory Regulatory Orders (SROs) to prohibit or limit the import and export of certain commodities from or to specific countries for specified periods of time. The UN Security Council resolutions are recognized by the Anti-Terrorism Act of 2009.
The USA government provides some incentives to the investors like tax holidays which are allowed for industrial undertakings and physical infrastructure facilities established between 1 July 2019 and 30 June 2024 in the “thrust” sector. The thrust sector refers to industries/industrial sub-sectors that contribute to the industrialization of the country. It is divided into developed and underdeveloped areas in USA.Tax breaks are also available for industries located in Export Processing Zones (EPZs).
Foreign investors are offered incentives. These include:
• 100 percent foreign ownership and repatriation of invested capital, profit, and dividends; re-investment of repairable dividends as new investment; and re-investment of repairable dividends as new investment.
• For high-growth industries, royalties and technical know-how fees are tax-free (Tax holidays).
• Under certain conditions, interest on foreign loans is tax exempt.
• It is possible to avoid double taxation.
• For up to three years, foreign technicians in certain industries are exempt from paying taxes.
• Companies that generate electricity in the private sector are exempt from paying taxes for the next 15 years.
• Capital gains from the transfer of shares in public limited companies are exempt from taxation.
Intellectual property
The organic Product Company has its own intellectual property. When we bring Organic product in USA, as a global marketer, we will must ensure that patents and trademarks are registered in USA.
• Patent:
A patent is a formal legal document that grants an inventor the exclusive right to make, use, and sell his or her invention for a set period of time. In most cases, the invention represents a “novel” or “nonobvious” “inventive leap.” The Organic Product Company has this right to produce, make and distribute organic product among the customers
• Trademark
A trademark is a distinctive mark, motto, device, or emblem that a manufacturer affixes to a specific product or package to distinguish it from goods produced by other manufacturers. The organic Product Company has its own trademark which can differentiate from others .
• Copyright
A copyright grants ownership of a creative work that has been written, recorded, performed, or filmed. The Organic Product Company has its exclusive right to keep secret of its making procedures and ingredient that it use.
Porter’s five forces model
• Degree of rivalry within the industry
Competitors in the organic products market are fierce and fiercer than ever before. More businesses are entering and extending their position in the organic and natural products industry because of the growing preference of consumers for fresh and organic products. Natural and organic goods are now much more competitively priced at mainstream grocery chains.
• Bargaining power of buyers and suppliers
Buyers at organic products have the option of purchasing products from different vendors. In reality, organic Product Companies customers have shifted to alternative sources of organic and natural foods, which have had an influence on the company’s revenue growth.
Many local, regional, and national distributors and producers supply Whole Foods Market. More than a third of its overall purchases are made from a third-party source, United Natural Foods. When it comes to purchasing food, organic Product Company relies heavily on a single source for most of its purchases, which reduces its purchasing power.
• Threats of substitutes and new entrants
Non-organic foods and items that are less expensive than organic alternatives are common substitutes. Non-organic replacements may not pose much of a threat to customers as they move toward healthier food options.
It also doesn’t require a lot of money or knowledge to get started in the organic food market, so there aren’t many obstacles to entry. In this business, even the smallest retailers can hold their own