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Chapter 3: Legal, Technological, and Political ForcesInternational Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall
Chapter Objectives_1 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 ©2004 Prentice Hall
Chapter Objectives_2 Describe the impact of the host country’s technological environment on international business Explain how firms can protect themselves from political risk ©2004 Prentice Hall
The Legal Environment Common Law Civil Law Religious LawBureaucratic Law ©2004 Prentice Hall
Common Law Based on wisdom of judges decisions on individual cases through history Cases create legal precedents ©2004 Prentice Hall
Countries Using Common LawUnited States Canada Australia India New Zealand Barbados Saint Kitts Nevis Malaysia ©2004 Prentice Hall
Civil Law Based on codification of what is and is not permissibleOriginated in biblical times with the Romans Reinforced by French Napoleonic code Judge determines scope of evidence collected and presented ©2004 Prentice Hall
Egypt’s legal system is a blend of English common law, the French Napoleonic code, and Islamic Law©2004 Prentice Hall
Religious Law Based on the officially established rules governing faith and practice of a particular religion Theocracy: country that applies religious law to civil and criminal conduct ©2004 Prentice Hall
Bureaucratic Law Legal system in communist countries and in dictatorships ©2004 Prentice Hall
Laws Affecting International Business TransactionsSanctions Embargo Extraterritoriality Helms-Burton Act ©2004 Prentice Hall
Laws Directed Against Foreign FirmsNationalization Expropriation Confiscation Privatization ©2004 Prentice Hall
Impacts of MNCs on Host Countries: Economic/PoliticalAdvantages Greater selection Higher standards Job creation Tax benefits Technology transfers Disadvantages Competition Job loss Dependency on economic health of MNC Political power ©2004 Prentice Hall
Dispute Resolution Which country’s law applies?In which country should the issue be resolved? Which technique should be used to resolve the conflict? How will the settlement be enforced? ©2004 Prentice Hall
Conflict Resolution TechniquesLitigation Arbitration Mediation Negotiation ©2004 Prentice Hall
Principle of Comity A country will honor and enforce within its own territory the judgments of foreign courts Conditions of the principle: Reciprocity is extended Defendant is given proper notice Judgment does not violate domestic statutes or treaty obligations ©2004 Prentice Hall
Joint venture between Volkswagen and the Shanghai Automotive Industry Group©2004 Prentice Hall
Intellectual PropertyPatents Copyrights Trademarks Brandnames Intellectual property often forms the basis of a firm’s competitive advantage! ©2004 Prentice Hall
International Treaties Protecting Intellectual Property RightsInternational Convention for the Protection of Industrial Property Rights (i.e., the Paris Convention) Berne Convention for the Protection of Literary and Artistic Works Universal Copyright Convention Trade-Related Intellectual Property Rights agreement ©2004 Prentice Hall
Figure 3.2 Software Revenue Lost to Piracy©2004 Prentice Hall
Political Risk Ownership risk Operating risk Transfer risk©2004 Prentice Hall
Table 3.1 Examples of Political RisksExpropriation Confiscation Campaigns against foreign goods Mandatory labor benefits legislation Civil wars Inflation Kidnappings, terrorist threats, and other forms of violence Repatriation Currency devaluations Increased taxation ©2004 Prentice Hall
Basic Country KnowledgeIs the country a democracy or dictatorship? Does country rely on free market or government controls? Does government view foreign firms as positive influence? Are firm’s customers private or public? Does government act arbitrarily? Is existing government stable? ©2004 Prentice Hall
Insurance against Political RisksOverseas Private Investment Corporation (OPIC) Multilateral Investment Guarantee Agency (MIGA) ©2004 Prentice Hall
Map 3.2 Countries’ Relative Political Riskiness, 2002©2004 Prentice Hall
© 2011 South-Western | Cengage Learning Government and Global Business Political Environment and Global Business How Government Discourages.
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International Political and Legal Environments. Doing business abroad is risky. Political risk Economic risk Commercial risk Regulatory risk Legal risk.
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1 Trade Facilitation A narrow sense –A reduction/streamlining of the logistics of moving goods through ports or the documentation requirements at a customs.
©2004 Prentice Hall9-1 Chapter 9: Formulation of National Trade Policies International Business, 4 th Edition Griffin & Pustay.
©2004 Prentice Hall3-1 Joint venture between Volkswagen and the Shanghai Automotive Industry Group.
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