Chapter 3: Legal, Technological, and Political Forces

Transcription

1 Chapter 3: Legal, Technological, and Political Forces By Mahsina, SE., MSI FB: mahsina se Follow me et: mahsina_se Download this file et: International Business, 4 th Edition Griffin & Pustay

2 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 3-2

3 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 3-3

4 The Legal Environment Common Law Civil Law Religious Law Bureaucratic Law 3-4

5 Common Law Based on wisdom of judges decisions on individual cases through history Cases create legal precedents 3-5

6 Countries Using Common Law United States Canada Australia India New Zealand Barbados Saint Kitts Nevis Malaysia 3-6

7 Civil Law Based on codification of what is and is not permissible Originated in biblical times with the Romans Reinforced by French Napoleonic code Judge determines scope of evidence collected and presented 3-7

8 Egypt s legal system is a blend of English common law, the French Napoleonic code, and Islamic Law 3-8

9 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 3-9

10 Bureaucratic Law Legal system in communist countries and in dictatorships 3-10

11 Laws Affecting International Business Transactions Sanctions Embargo Extraterritoriality Helms-Burton Act 3-11

12 Laws Directed Against Foreign Firms Nationalization Expropriation Confiscation Privatization 3-12

13 Impacts of MNCs on Host Countries: Economic/Political Advantages Greater selection Higher standards Job creation Tax benefits Technology transfers Disadvantages Competition Job loss Dependency on economic health of MNC Political power 3-13

14 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? 3-14

15 Conflict Resolution Techniques Litigation Arbitration Mediation Negotiation 3-15

16 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 3-16

17 Joint venture between Volkswagen and the Shanghai Automotive Industry Group 3-17

18 Intellectual Property Patents Copyrights Trademarks Brandnames Intellectual property often forms the basis of a firm s competitive advantage! 3-18

19 International Treaties Protecting Intellectual Property Rights International 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 3-19

20 Figure 3.2 Software Revenue Lost to Piracy 3-20

21 Political Risk Ownership risk Operating risk Transfer risk 3-21

22 Table 3.1 Examples of Political Risks Expropriation Confiscation Campaigns against foreign goods Mandatory labor benefits legislation Civil wars Inflation 3-22 Kidnappings, terrorist threats, and other forms of violence Repatriation Currency devaluations Increased taxation

23 Basic Country Knowledge Is 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? 3-23

24 Insurance against Political Risks Overseas Private Investment Corporation (OPIC) Multilateral Investment Guarantee Agency (MIGA) 3-24

25 Map 3.2 Countries Relative Political Riskiness,