International Business Environments & Operations

Transcription

1 International Business Environments & Operations 15e, Global Edition Daniels Radebaugh Sullivan 3-1

2 Chapter 3 Governmental and Legal Systems 3-2

3 Learning Objectives Discuss the philosophy and practices of the political environment Profile trends in contemporary political systems Describe current trends in political ideologies and their implications to MNE s choices Explain political risk management Compare the relative benefits and drawbacks of proactive versus passive political risk management Discuss the principles and practices of the legal system 3-3

4 Learning Objectives Profile trends in contemporary legal systems Identify and describe key legal issues facing international companies 3-4

5 Introduction Learning Objective: Discuss the philosophy and practices of the political environment Copyright 2015 Pearson Education, Inc. 3-5

6 Introduction Every country has its own political and legal environment Companies must determine where, when, and how to adjust their business practices without undermining the basis for success 3-6

7 Introduction Political and Legal Factors Influencing International Business Operations Copyright 2015 Pearson Education, Inc. 3-7

8 The Political Environment Managers evaluate, monitor, and forecast political environments A country s political system refers to the structural dimensions and power dynamics of its government that specify institutions, organizations, and interest groups, and define the norms that govern political activities 3-8

9 Individualism vs. Collectivism Individualism primacy of the rights and role of the individual Collectivism primacy of the rights and role of the community 3-9

10 Political Ideology A political ideology stipulates how society ought to function and outlines the methods by which it will do so Most modern societies are pluralistic different groups champion competing political ideologies Democrats vs. Republicans in the United States Democratic Party vs. Liberal Party in Japan 3-10

11 Spectrum Analysis A political spectrum outlines the various forms of political ideology Political freedom measures the degree to which fair and competitive elections occur the extent to which individual and group freedoms are guaranteed the legitimacy ascribed to the general rule of law the freedom expression 3-11

12 Spectrum Analysis The Political Spectrum 3-12

13 In a democracy Democracy all citizens are politically and legally equal all are equally entitled to freedom of thought, opinion, belief, speech, and association all equally command sovereign power over public officials Prominent types of democracy include Representative Multiparty Parliamentary Social 3-13

14 Totalitarianism A totalitarian system subordinates the individual to the interests of the collective dissent is eliminated through indoctrination, persecution, surveillance, propaganda, censorship, and violence Prominent types of totalitarianism include Authoritarianism Fascism Secular Theocratic 3-14

15 The Standard of Freedom Freedom House, and independent watchdog organization, assesses political and civil freedom around the world Freedom House recognizes three types of political systems Free Partly free Not free 3-15

16 The Standard of Freedom Map of Political Freedom,

17 Trends in Political Ideologies Learning Objective: Profile trends in contemporary political systems 3-17

18 Third Wave of Democratization Third Wave of Democratization number of democracies doubled in two decades Engines of Democracy 1. The failure of totalitarian regimes to deliver economic progress 2. Improved communications technology 3. Economic dividends of increasing political freedom 3-18

19 Democracy: Recession and Retreat Democracy s retreat just 26 of the world s democracies are full democracies Engines of Authoritarianism Political economy of growth Rhetoric vs. Reality - Inconsistencies Economic problems Who defines Democracy? 3-19

20 Democracy: Recession and Retreat Freedom in the World: Gains and Declines 3-20

21 Political Ideology and the MNE What will the political map look like in the future? The Washington Consensus The Beijing Consensus The Clash of Civilizations 3-21

22 Political Risk Learning Objective: Explain political risk management 3-22

23 Political Risk Political risk refers to the risk that political decisions or events in a country negatively affect the profitability or sustainability of an investment Types: Systemic Procedural Distributive Catastrophic 3-23

24 Classifying Political Risk Characteristics of Political Risk 3-24

25 The Legal Environment Learning Objective: Discuss the principles and practices of the legal system 3-25

26 The Legal Environment The legal system is the mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction Types: Common law Civil law Theocratic law Customary law Mixed systems 3-26

27 The Legal Environment The Wide World of Legal Systems 3-27

28 Trends in Legal Systems Learning Objective: Profile trends in contemporary legal systems 3-28

29 Trends in Legal Systems What is the basis of rule in a country? The rule of man legal rights derive from the individual who commands the power to impose them associated with a totalitarian system The rule of law systematic and objective laws applied by public officials who are held accountable for their administration associated with a democratic system 3-29

30 Trends in Legal Systems The Worldwide Practice of the Rule of Law 3-30

31 Legal Issues in IB Learning Objective: Identify and describe key legal issues facing international companies 3-31

32 Operational Concerns Operational issues Starting a business Making and enforcing contracts Hiring and firing local workers Closing down the business In general rich countries regulate less poor countries regulate more 3-32

33 Strategic Concerns Country Characteristics Product safety and liability Legal jurisdiction Intellectual property 3-33

34 Intellectual Property: Rights and Protection Intellectual property refers to creative ideas, expertise, or intangible insights that grant its owner a competitive advantage Intellectual property rights refer to the right to control and derive the benefits from writing, inventions, processes, and identifiers no global patent, trademark or copyright exists 3-34

35 Intellectual Property: Rights and Protection Attitudes towards intellectual property Historical legacies rule of man versus rule of law Economic circumstances levels of economic development Cultural orientation individualism versus collectivism 3-35