International Business, 8th Edition Griffin & Pustay Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc. Learning Objectives Describe the major types of legal systems confronting international businesses Explain how domestic laws affect the ability of firms to conduct international business List the ways firms can resolve international business disputes Describe the impact of the host country’s technological environment on international business Identify the factors that influence national accounting systems Explain how firms can protect themselves from political risk The goal of this and the next chapter is to understand the impact of the various dimensions of a country’s environment on the management of a firm’s international business. This chapter discusses the legal, technological, accounting, and political dimensions. Copyright © 2015 Pearson Education, Inc.

The Legal Environment: Differences in Legal Systems Common Law Civil Law Religious Law Bureaucratic Law Copyright © 2015 Pearson Education, Inc.

The Legal Environment: Domestically Oriented Laws Impact Firm’s domestic operations International competitiveness of domestic firms Business practices of foreign firms operating outside the country’s borders Copyright © 2015 Pearson Education, Inc.

Copyright © 2015 Pearson Education, Inc. The Legal Environment: Laws Directly Affecting International Business Transactions Sanctions Embargos Export control of dual-use products Extraterritoriality Copyright © 2015 Pearson Education, Inc.

The Legal Environment: Laws Directed against Foreign Firms Nationalization Expropriation Confiscation Privatization Repatriation Copyright © 2015 Pearson Education, Inc.

The Legal Environment: Impacts of MNCs on Host Countries -Economic -Political -Cultural Positive Effects Negative Effects Copyright © 2015 Pearson Education, Inc.

The Technological Environment Foundation & Determinants Resource base Investments in infrastructure and human capital Technology transfer Protection of intellectual property rights Copyright © 2015 Pearson Education, Inc.

The Accounting Environment: The Roots of National Differences Copyright © 2015 Pearson Education, Inc.

The Accounting Environment: Differences in Accounting Practices Valuation and Revaluation of Assets Valuation of Inventories Dealing with the Tax Authorities Use of Accounting Reserves Other Differences Copyright © 2015 Pearson Education, Inc.

The Accounting Environment: Impact on Capital Markets Evaluating the performance of firms incorporated in different countries Assessing the riskiness of potential loans Copyright © 2015 Pearson Education, Inc.

The Political Environment: Political Risk Political Risks Ownership Risk Operating Risk Transfer Risk Copyright © 2015 Pearson Education, Inc.

The Political Environment: Political Risk Political risks Macropolitical Micropolitical Copyright © 2015 Pearson Education, Inc.

The Political Environment: Political Risk Copyright © 2015 Pearson Education, Inc.

The Political Environment: Political Risk Assessment Democracy or dictatorship? Free market or government control? Public or private sector customers? Arbitrary change to policies or rule of law? Stability of the existing government? Copyright © 2015 Pearson Education, Inc.