Political and Legal Environments Evaluate the main political systems Identify origins of political risk and how its effects can be managed Review common legal systems Describe major legal issues facing international companies

Political Ideologies Anarchy Totalitarianism Pluralism

The Political Spectrum Authoritarian Fascist Communist Authoritarian Radical Liberal Conservative Reactionary Totalitarianism Democracy Democratic Government Nondemocratic Government

Democratic Government Freedom of expression Periodic elections Civil and property rights Minority rights Nonpolitical bureaucracies

Totalitarianism Lack of Constitutional Guarantees Restricted Participation Imposed Authority

Political Systems During Times of Change Political instability Corrupt or poor leadership Frequent changes in government Role of religious or military leaders Racial, religious, or ethnic conflicts Poor relations with other countries

Political Risks of Global Business The risk of a change in political environment or government policy that would adversely affect a company’s ability to operate effectively and profitably. What is the most severe political risk? Economic controls Political Sanctions Political and Social Activities

Political Risk Analysis Important factors: Change in government policy Stability of government Quality of host government’s economic management Host country’s attitude towards foreign investment Host country’s relationship with the rest of the world Host country’s relationship with the parent company’s home government Attitude towards the assignment of foreign personnel Closeness between government and people Fairness and honesty of administrative procedures

Reducing Political Vulnerability Good Corporate Citizenship Managing External Affairs Strategies to lessen political risk Political Payoffs

Global Legal Systems Global Legal Systems CommonLawTheocraticLawCivilLaw

International Legal Issues What is the difference b/t Common law and civil law (or code law)? What is the specialty of Islamic law? Marxist-Socialist Tenets

Jurisdiction in International Legal Disputes International Legal disputes can arise in three situations: Between governments Between a company and a government Between two companies Qs: What is the role of International courts (e.g., World Court at The Hague, the International Court of Justice) in solving the above disputes? And what could we do in the above situations?

International Dispute Resolution Conciliation (or mediation)? Arbitration? Litigation?

Intellectual Property Rights: A Special Problem What does intellectual property compromise? Inadequate protection Prior use vs. Registration (?) International Conventions -- The Paris Convention for the Protection of Industrial Property -- The Inter-American Convention -- The Midrid Arrangement (Bureau for International Registration of Trademarks, most European countries)

Commercial Law within Countries Marketing laws Green marketing legislation Antitrust regulation

U.S. Laws Apply in Host Countries Foreign Corrupt Practices Act Lubrication  extortion  subornation  corruption National Security Laws Antitrust Laws Antiboycott Law