1. © 2002 Thomson Learning, Inc. CHAPTER 4 Politics and Laws Text by Profs. M. Czinkota, I. Ronkainen, and M. Moffett Multimedia Presentation by Prof. Milton Pressley The University of New Orleans milton.pressley@uno.edu

2. © 2002 Thomson Learning, Inc. To understand the importance of the political and legal environments in both the home and host countries to the international business executive To understand the importance of the political and legal environments in both the home and host countries to the international business executive To learn how the governments affect business through legislation and regulations To learn how the governments affect business through legislation and regulations To see how the political actions of countries expose firms to international risks To see how the political actions of countries expose firms to international risks To examine the differing laws regulating international trade found in different countries To examine the differing laws regulating international trade found in different countries To understand how international political relations, agreements, and treaties can affect international business To understand how international political relations, agreements, and treaties can affect international business LEARNING OBJECTIVES

3. © 2002 Thomson Learning, Inc. The Home-Country Perspective International Competitiveness International Competitiveness Extraterritoriality Extraterritoriality Embargoes and Sanctions Embargoes and Sanctions Export Controls Export Controls Export Control Systems Export Control Systems Dual Use Items Dual Use Items Export Licenses Export Licenses Critical Commodities List Critical Commodities List © PhotoDisc

4. © 2002 Thomson Learning, Inc. Figure 4.1 – U.S. Export Control System

5. © 2002 Thomson Learning, Inc. The Home-Country Perspective A Changed Environment for Export Controls A Changed Environment for Export Controls Foreign Availability Foreign Availability Export Control Problems and Conflicts Export Control Problems and Conflicts Dual-use Products Dual-use Products Deemed Exports Deemed Exports © PhotoDisc

6. © 2002 Thomson Learning, Inc. The Home-Country Perspective Regulating International Business Behavior Regulating International Business Behavior Boycotts Boycotts Antitrust Laws Antitrust Laws Webb-Promerene Act Webb-Promerene Act Bribery Bribery Corruption Corruption Foreign Corrupt Practices Act Foreign Corrupt Practices Act © PhotoDisc

7. © 2002 Thomson Learning, Inc. Host Country Political and Legal Environment Political Action and Risk Political Action and Risk Political Risk Political Risk Ownership Risk Ownership Risk Operating Risk Operating Risk Transfer Risk Transfer Risk © PhotoDisc

8. © 2002 Thomson Learning, Inc. Figure 4.2 – Exposure to Political Risk

9. © 2002 Thomson Learning, Inc. Host Country Political and Legal Environment Terrorism Terrorism Coups D’etat Coups D’etat Expropriation Expropriation Confiscation Confiscation Domestication Domestication Local Content Local Content Intellectual Property Right (IPR) Intellectual Property Right (IPR) © PhotoDisc

10. © 2002 Thomson Learning, Inc. Host Country Political and Legal Environment Economic Risk Economic Risk Exchange Controls Exchange Controls Tax Policy Tax Policy Price Controls Price Controls Managing the Risk Managing the Risk Legal Differences and Restraints Legal Differences and Restraints Theocracy Theocracy Common Law Common Law Code Law Code Law © PhotoDisc

11. © 2002 Thomson Learning, Inc. Host Country Political and Legal Environment The Influencing of Politics and Laws The Influencing of Politics and Laws Lobbyists Lobbyists © PhotoDisc

12. © 2002 Thomson Learning, Inc. International Relations and Laws International Politics International Politics International Law International Law Patent Cooperation Treaty (PCT) Patent Cooperation Treaty (PCT) Arbitration Arbitration © PhotoDisc