The International Political and Legal Environment Class 6

Good Corporate Citizenship ● It is a guest in the country and should act accordingly ● The profits of an enterprise are not solely the company’s; the local national employees and the economy of the country should also benefit ● It is not wise to try to win over new customers by completely Americanizing them ● Although English is an accepted language overseas, a fluency in the local language goes far in making sales and cementing good public relations ● The company should try to contribute to the country’s economy and culture with worthwhile public projects ● It should train its executives and their families to act appropriately in the foreign environment ● It is best not to conduct business from the United States but to staff foreign offices with competent nationals and supervise the operation from the United States

Bases for Legal Systems Common Law Civil or Code Law Islamic Law Socialist Law

Difficulties for International Companies Conform to more than one legal system Determine whose law applies

Effect of Legal System on Marketing Taxation Income Media Labor Regulations Promotions Packaging Product Standards Labor Ownership

U.S. Laws Apply in Host Countries Foreign Corrupt Practices Act National Security Laws Antitrust Laws Antiboycott Law Extraterritoriality of U.S. Laws

Areas affected by laws that vary from country to country Bribery and corrupt practices Laws regulating competitive behavior Product liability Bankruptcy Intellectual Property Rights E-Commerce

Intellectual Property Patents, Trademarks,and copyright Protects products, processes and symbols Patents and trademarks are issued by individual countries 48% of US patents issued to foreigners Other countries less open US Priority Watch List – Brazil, India, China, Thailand

u Software piracy around the globe u U.S - 35% of sales u U.K u Italy - 86% u Japan - 92% u Thailand - 99% Japanese govt. tried to change law to reengineer software w/o approval Copyright laws and violations

Global Economic Environment

World Population Top In Millions China: 1,711 India: 1,578 Rest of World: 3,907 Pakistan: 280 Indonesia: 303 Brazil: 260 Bangladesh: 210 Nigeria: 227 Taiwan: 162 United States: 329 Russian Federation: 165

GNP per Capita: 1995 & 2020 Top Ten Countries Luxembourg$37,800 Switzerland36,900 Japan33,700 Denmark 27,100 Norway 26,600 U.S. 25,300 Sweden 24,900 Germany 24,500 Austria24,100 Kuwait23, Singapore$75,200 Luxembourg73,600 Japan72,400 Hong Kong71,900 Switzerland44,000 Austria40,500 Belgium40,200 Germany39,200 Korea38,400 Cyprus38,

GLOBAL INCOME AND POPULATION: 1995 World (Total) $25,097 $4, , Triad (Total) 19,119 24, North America* 7,253 24, Japan 4,247 33, EU 7,619 20, Other High Income , <1 Upper Middle Income 2,239 4, Lower Middle Income 2,403 1, , Low Income , Unavailable Data N/A N/A N/A GNP (billion) GNP Per Capita % of World GNP Population (million) % of World Population Market *Not including Mexico

GLOBAL INCOME AND POPULATION: 1995 GNP with PPP GNP Per Capita GNP Per Capita with PPP Market *Not including Mexico World (Total) $25,097 $30, $4,678 $5,863 Triad (Total) 19,119 16, ,203 21,511 North America* 7,253 7, ,903 24,877 Japan 4,247 2, ,748 22,636 EU 7,619 6, ,435 18,502 Other High Income ,415 35,904 Upper Middle Income 2,239 3, ,397 7,604 Lower Middle Income 2,403 7, ,001 3,126 Low Income 491 2, ,370 Purchasing Power Parity Compared (billion) % of world GNP % of world GNP with PPP

Standard of Living China ,000,000 Hong Kong ,000 Japan ,000 U.S ,000 Russia ,000,000 Life Expectancy Schooling (av. years) Number of people per: DoctorTVPhoneMcDonald’s Sources: WEFA, AsiaWeek, McDonald’s, The New York Times

Income Inequality Source: Brookings Institutions; IFS; Lynn Karoly, RAND Corporation, World Bank Ratio of income of richest 20% of households to poorest 20%, latest year available

India: A Closer Look Per capita income$330 Per capita GDP$310 Population950m Literacy rate<50% Telephones6m Television Sets35m Access to clean sanitation*14% Population with income >$2,5002.3% Average household size5.2 Growth rate3.5% 1994 *One of the lowest rates of access in the world