The Political and Legal Environment: A Critical Concern PDF

The Political and legal Environment: A Critical Concern ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written Stability of Government Politics Polit...

The Political and legal Environment: A Critical Concern ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written Stability of Government Politics Political Climate Ideal climate for multinational firm is stable and friendly government Causes of instability 1. Wars 2. Political shifts during elections impact trade conditions 3. Trade disputes Other economic wars Stability of Government Politics Forms of Government Monarchy – rule by one Aristocracy/oligarchy – rule by few Democracy – rule by many Which one is best for international companies?  Stability of Government Politics Political Parties Important for international marketer to: Know philosophies of all major political parties within a country Know direction each party is likely to take after shift in power Assessing Political Vulnerability Some companies are more vulnerable than others Vulnerable companies Subject to political attention May face unpredictable government restrictions Less vulnerable companies Often are in high-priority industry for host country Excused from taxes, duties, quotas, controls Lessening Political Vulnerability Strategies to reduce political vulnerability and risk Expanding the investment base Licensing/franchising (Boycott campaigns!!)  Legal environment Foreign Business Transaction Law – No uniform international commercial law exists – Important to comply with the laws in each country in which the multinational corporation operates Bases for Legal Systems Four heritages of today’s legal systems 1. Common law 2. Civil or code law 3. Islamic law 4. Commercial legal system Interpretation of system varies by country Importance of law also varies Number of attorneys per capita  Figure 7.1 Lawyers per 100,000 People in Selected Countries Jump to long description. Sources: Randy Peerenboom, “Economic Development and the Development of the Legal Profession in China,” presentation at Oxford University, 2006; Council of Bars and Law Societies of Europe, http://www.ccbe.edu, 2010; http://www.oab.org.br, 2010; http://www.abanet.org, 2010; Bruce E. Aronson, “The Brave New World of Lawyers in Japan,” Pacific Rim Law & Policy Journal 21, no. 2 (March 2012), pp. 255–75.; Mitsuro Obe, "Japanese Lawyers' Problem: Too Few Cases, Wall Street Journal, April 3, 2016, online.  International Law The rules and principles that nation- states consider binding among themselves Disputes between nations are issues of public international law https://www.youtube.com/watch?v=jTzKgI68VLc https://www.youtube.com/watch?v=jTzKgI68VLc 5-11 International Court of Justice Judicial arm of the United Nations founded in 1947 Settles disputes between nations – International Peace Palace, ICJ, The Hague, conventions Netherlands – International custom – General principles of law 5-12  Islamic Law Legal system in many Middle Eastern countries Sharia–a comprehensive code governing Muslim conduct in all areas of life, including business Identifies forbidden practices “haram” 5-13  Bribery and Corruption Transparency International (www.transparency.org) compiles an annual report ranking countries by Corruption Perceptions Index. 5-14 Jurisdiction in International Disputes Legal disputes can arise in three situations 1. Between governments Resolved by The World Court at the Hague 2. Between a company and government Handled by a court in one of the countries involved or through arbitration 3. Between two companies Handled by a court in one of the countries involved or through arbitration Cyberlaw: Unresolved Issues Internet Law is Too Vague Global in reach, no political or geographic boundaries The EU, US, and other countries drafting legislation Until complete, businesses at risk Might have to rely on host nation’s laws  Infringement of Intellectual Property Counterfeiting–unauthorized copying and production of a product Associative Counterfeit/Imitation– product name differs slightly from a well-known brand Piracy–unauthorized publication or reproduction of copyrighted work 5-17 Figure 7.2 Piracy Rates for Computer Software, Top and Bottom Ten Highest Rates Lowest Rates Country Rate % Country Rate % Libya 90 United States 17 Zimbabwe 90 Japan 18 Venezuela 88 New Zealand 18 Yemen 87 Luxembourg 19 Armenia 86 Australia 20 Bangladesh 86 Austria 21 Moldova 86 Sweden 21 Iraq 85 Denmark 22 Azerbaijan 84 Germany 22 Belarus 84 United Kingdom 22  Protecting Intellectual Property in 5-19