ABSTRACT
Oil-rich Venezuela was once considered an attractive Latin American market. However, when Venezuelans elected Lieutenant Colonel Hugo Chavez president, he threatened to default on Venezuela’s foreign debt and to reassert government control over much of the economy. The new president overhauled the country’s constitution and judiciary, centralizing more power in the presidency. The response of foreign businesses was immediate. The next year foreign investment fell 40 percent. Eli Lilly and Honda were among the multinational corporations (MNCs) that closed operations in Venezuela. 1 Conditions did not improve for companies that stayed. Several years later Venezuela announced that cement companies were to be nationalized. Mexican-based Cemex, the world’s largest cement company, rejected a government offer of $500 million for its Venezuelan assets. Venezuela eventually paid Cemex $600 million in compensation for its expropriated assets. After Hugo Chavez died, Cemex’s chairman announced that Cemex would consider a return to Venezuela, but only if there was a change in government. 2
This chapter identifies the political forces that influence global marketing operations. These forces include both the host and home governments of MNCs. Governments both support and restrict business as they seek to achieve a variety of goals from self-preservation to protecting their nation’s cultural identity. International marketers must also be aware of special-interest groups that exert pressure on governments with respect to an increasing number of issues from environmental concerns to human rights.
