1. International Business Part Two Comparative Environmental Frameworks
Chapter Three
The Political and Legal Environments Facing Business

2. Chapter Objectives
To discuss the goals and functions of a political system
To profile trends in the emergence and diffusion of contemporary political systems
To explain the idea of political risk and describe approaches to managing it
To understand how political and legal systems affect the conduct of business
To describe trends in the evolution and diffusion of contemporary legal systems
To discuss the issue of the rule of law versus the rule of man
To explain legal issues facing international companies
To explain the idea of intellectual property and to discuss areas of concern and controversy
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3. Political and Legal Factors Influencing International Business Operations
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4. Definition of a Political System
The complete set of institutions, political organizations, and interest groups,
The relationships among institutions, and the political norms and rules that govern their functions
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5. Individualism vs. Collectivism
Individualism: primacy of the rights and role of the individual
• Collectivism: primacy of the rights and role of the community
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6. Political Ideology
The system of ideas that expresses the goals, theories, and aims of a sociopolitical program
Most modern societies are pluralistic—different groups champion competing political ideologies
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7. The Political Spectrum
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8. Democracy
Wide participation by citizens in the decision-making process
Five types:
Parliamentary
Liberal
Multiparty
Representative
Social
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9. Fundamental Features of Democratic Political Systems
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10. Totalitarianism Restricts decision making to a few individuals Types:
Authoritarianism
Fascism
Secular totalitarianism
Theocratic totalitarianism
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11. Trends in Political Systems
Engines of democracy:
Failure of totalitarian systems to deliver economic progress
Improved communication technology
Belief that democracy leads to improved standards of living
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12. Definition of Political Risk
The risk that political decisions or events in a country negatively affect the profitability or sustainability of an investment
Types:
Procedural
Distributive
Catastrophic
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13. Definition of a Legal System
The mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction
Types:
Common law
Civil law
Theocratic law
Customary law
Mixed systems
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14. The Diffusion of Civil Law
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15. Trends in Legal Systems
The preference for stability
The influence of national legacies
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16. Bases of Rules
Rule of Man
Rule of Law
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17. Operational concerns that face managers worldwide
Starting a business
Entering and enforcing contracts
Hiring and firing local workers
Closing down the business
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18. Strategic concerns that face managers worldwide
Product safety and liability
Marketplace behavior
Product origin
Legal jurisdiction
Arbitration
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19. Intellectual property
Intangible property rights that are a result of intellectual effort
Intellectual property rights refer to the right to control and derive the benefits from writing, inventions, processes and identifiers
Local attitudes play a large role in piracy
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