International Business Notes PDF

Chapter 2 - National Differences Legal System- the rules and the laws that tell us what we can and can’t do ​ Refers to the rules or laws that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained. ​...

Chapter 2 - National Differences Legal System- the rules and the laws that tell us what we can and can’t do ​ Refers to the rules or laws that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained. ​ Its important because ○​ is regulates how u do business, ○​ define how business transactions are to be executed ○​ sets down the rights and obligations of those involved in business transactions. 3 types of legal system: 1.​ Common law- based on tradition, precedent, and custom (very detailed) a.​ Found in most of great britain former colonies, including U.S. 2.​ Civil law- set of laws organized into codes (includes a description and a punishment) a.​ Found in over 80 countries includeing germany, france, japan, and russia 3.​ Theocratic law- based on religious teachings a.​ Islamic law is most widely practiced b.​ Ex. women need to be covered from head to toe or need to have a male escort when outside. How do common law and civil law differ? ​ Common law- contracts are very detailed with all contingencies(events) spelled out ​ Civil law- contracts are shorter and much less specific ○​ Contract law- the body of law that governs contract enforcement ​ The contract has to specify which areas it applies to (laws need to be specific) ○​ CIGS= contracts for the international sales of goods ○​ Countries that adopt CIGS to other nations must treat the convention rule as part of their law. Property rights- legal rights and ownership to something. ​ Property rights can be violated by: ○​ Private action: theft, piracy, blackmail, and the like by private indicudals or groups ○​ Public action- public officials extort income or resources from property holders. ​ Ex. excessive taxases, expensive licenses or permits ​ Corruption is present in all countries. ○​ High level of corruption: ​ Foreign direct investment falls ​ International trade falls ​ Economic growth falls Extra info: Somalia- is the most corrupt American law works only on American soil so if an American steals at Italy then they deal with Italy consequences and laws but not the laws of America. American law stays on American soil except for 2: ​ Terrorism ​ Bribery of governing official ​ The Foreign Corrupt Practices Act (FCPA)- limits corruption in the U.S. ○​ ILLEGAL TO BRIBE A FOREIGN GOVERNMENT OFFICIAL IN ORDER TO OBTAIN OR MAINTAIN BUSNISS OVER WHICH FOREIGN OFFICIAL HAS AUTHORITY ○​ ALL PUBLICLY TRADED COMPANIES MUST KEEP DETAILED RECORDS SO THAT It IS CLEAR WHETHER A VIOLATION OF THE ACT HAS OCCURRED ○​ Facilitating or expediting payments to secure the performance of routine government actions is permitted. ​ Intellectual property- legal rights to an individual or organization for their creative minds such as creating art, symbols, or designs. ○​ Intellectual property include 3 things: ​ Patents- give investors exclusive rights to the manufacture, use, or sale of that invention ​ Copyrights- exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and suppose their works as they see fit ​ Trademarks- designs, and names, often officially registered by merchants and manufacturers designated and differentiate their products ​ The protection of intellecutual property rights differs greatly from country to country ○​ Paris Convention for the protection of intellectual property- agreement signed by 170 plus countries to protect intellctual property rights ​ Product safety laws- laws that protect consumers from harmful products. (set safety standard) ​ Product liability- holding a firm as responsible for product injury, death, or damages 3 types of economic systems: 1.​ Free market- individual goals are given primacy over collective goals (individuals make most of their decisions) a.​ Price and supply set by markets in the government (minor or no gov interference) b.​ Self-regulating 2.​ Command economy- government will decide what the price and supply should be a.​ Prices are expensive or cheap b.​ No private ownership 3.​ Mixed economy- not everything is a free market. Includes the government a.​ America is a mix economy but is more free market than anything. Market economy- goods and services that a country produces, and the quantity in which they are produced is determined by supply and demand. ​ Consumers determines what goods are produced based on their purchases. ​ Gov. encourages free and fair competition between private producers Command economy- the goods and services that a country produces, the quantity in which they are produced, and price sold are planned by the government. ​ Businesses are state-owned ​ No private ownership and businesses have little incentives. Mix economy- includes elements of both market and command economy Political system- the system of government in a nation ​ Political systems can be assessed in terms of the degree to which they: ○​ Are democratic or totalitarian ​ Ex. China and North Korea are totalitarian. (controlled by gov) ​ Democratic- power and decisions are made by the people (Ex. U.S. and Canada) ○​ Emphasize collectivism as opposed to individualism Collectivism- a system that stresses the primacy of collective goals over individual goals ​ Collectivism is when the needs of society as a whole are more important than individual freedom. ​ Can be traced to the Greek philosopher Plato ​ Socialist support collectivism - to decrease inequality. (basically wanting everyone to be equal in a way) Socialism- modern socialists trace their roots to Karl Marx who believed that wealth should be equally distributed. The state manages the enterprises for the benefit of society as a whole In the early 20th century, socialism split into communist and social democrats: ​ Communists- collectivism could only be achieved through revolution and totalitarian dictatorship ​ Social democrats worked to achieve the same goals by democratic mean ○​ Socialize countries have many private companies -Communist, social, and collectivism- decisions are by the people and where everyone works together as a whole. ​ Individualism- suggests individual should have freedom over their economic and political pursuits ○​ Can be traced to Aristotle, who argued that individual diversity and private ownership are desirable. ​ Individualism stresses: ○​ Individual freedom and self-expression ○​ Letting people pursue their own self-interests to gain best overall good for society ○​ Democratic systems and free markets What is the difference between democracy and totalitarianism? ​ Democracy is a political system where the government is by the people and is exercised through elected representative. ○​ Common form today is representative democracy -elected representatives vote on behalf of constituents ​ Totalitarianism- government in which one person or political party has absolute control over all human life also political parties are prohibited. ○​ Most totalitarian regimes: ​ Is widespread political repression ​ No free and fair elections ​ Media is censored ​ Criticising government in China you can get penalized. In china you can’t get into the social media that arent in china’s agreed media. (media is censored) ​ Basic civil liberties are denied ​ Challenges to the regime are prohibited 4 types of totalitarianism today: 1.​ Communist- advocates achieving socialism through totalitarian dictatorship 2.​ Theocratic- political power is monopolized by a party, group or individual that governs by religious principles 3.​ Tribal- a political party that represents the interest of a particular tribe and monopolizes power a.​ found in Africa. 4.​ Right wing- Individual economic freedom is allowed but individual political freedom is restricted because it can lead to communism. Many nations lie between pure democracy and complete totalitarianism -​ Follow an imperfect or pseudo-democracy -​ Russia and Venezuela Social democracy- many companies are owned by the government. Different ways people protect their goods -​ Copyrights -​ Patents -​ Trademarks Privatization- when a company/socialize company starts selling off their companies. They privatize. -​ It is when outsourcing of government functions to private companies. (transferring ownership and control of a business from the gov. To private individuals or organizations) -​ Ex. Great Britain owned all the railroads … State directive- refers to an official order or instruction issued by a government or state authority that directs specific actions, behaviors, or policies. -​ Ex. Japan and South Korea Economic system (4 types) -​ market, -​ command- goods are produced and determine by gov, -​ mix, -​ state directive Don’t forget to study the Map!!