politics and laws

8/7/2019 Politics and Laws

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What We Are Striving To Accomplish

1. To understand the importance of the political and legal

environments in both domestic and overseas markets.

2. To learn how governments affect business through legislation and

regulations.

3. To see how the political actions of countries expose firms to

international risks.

4. To examine the differing laws regulating international trade in

different countries.

5. To understand how international political relations, agreements,

and treaties affect international business.


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Home-Country Perspective

Maintain or gain international market share

Manufacturing location

Legal and regulatory measures

Political environment

Government activity

Embargoes and trade sanctions

Export controls

Regulation of international business behavior


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Embargoes and Sanctions

Reasons for imposing embargoes and sanctions have varied:


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U.S.Export Controls

Export-control systems, designed to deny or at least

delay the acquisition of strategically important goods by

political adversaries.

Dual-use item, goods that are useful for both militaryand civilian purposes.

Export licenses, a license obtainable from the U.S.

Department of Commerce Bureau of Industry and

Security.


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Export Controls

Determinants of

Export Controls

National

Security

Foreign Policy

Short Supply

Nuclear

Nonproliferation

Decision Steps in theExport Licensing

Process

Should a Given Product Be

Exported?

To a Given Country?

For Use by a Given Firm?


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Bribery and Corruption

Regulating International Business

Behavior

Boycotts

Transparency International

Antitrust Laws

International Business Ethics


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Political Risk

Three Major Types ofRisk

Ownership

Operating

Transfer

Possible outcomes

Violence and Conflict

Expropriation

Confiscation

Domestication

Weakening of Intellectual

Property Rights


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Economic Risk

Exchange Controls -

Controls on the movement of capital in and out of a country,

sometimes imposed when the country faces a shortage of

foreign currency.

Tax Policy -

A means by which countries may control foreign investors.

Price Controls -

Government regulation of prices of goods and services; control

of the prices of imported goods or services as a result of

domestic political pressures.


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Influencing Politics and Laws

A high risk option is to simply ignore prevailing rules.

A second approach is to provide input to tradenegotiators.

A third option involves the development of coalitions and

constituencies that can motivate politicians.

The international manager has various options:


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International Relations and Laws

International Politics

Bilateral Agreement

Multilateral Agreement

International Law

Body of rules governing sovereign state

relationships.

Treaties and agreements respected by anumber of countries.

Jurisdictional disputes are settled using

litigation or arbitration.

politics and laws

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