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ThePolitical,Legal

andTechnologicalEnvironmentchaptertwoMcGraw-Hill/IrwinCopyright?2009byTheMcGraw-HillCompanies,Inc.AllRightsReserved.ThePolitical,Legal,and

TechnologicalEnvironment

ChapterObjectives:INTRODUCEthebasicpoliticalsystemsthatcharacterizeregionsandcountriesaroundtheworldandofferbriefexamplesofeach.PRESENTanoverviewofthelegalandregulatoryenvironmentinwhichMNCsoperateworldwide.REVIEWkeytechnologicaldevelopmentsaswellastheirimpactonMNCsnowandinthefuture.PoliticalEnvironment:Ideologies(ideasreflectingbeliefsandvaluesinfluencingbehavior/cultureofnationsandpoliticalsystems)underlietheactionsofgovernments.Evaluateapoliticalsystemalongtwodimensions:(1)rightsofcitizensbasedonasystemofgovernment(rangedemocratictototalitarian);(2)Focusofpoliticalsystemonindividualismvs.collectivism.NopureformofgovernmentDemocratictendtoemphasizeindividualismandtotalitariantendstoemphasizecollectivism.(1)Ideologies:

IndividualismPeopleshouldbefreetopursueeconomicandpoliticalendeavorswithoutconstraint.Inbusinesscontext,similartocapitalismandconnectedtofreemarketsocietyPrivatepropertymoresuccessful,productive,andprogressivethancommunalpropertyBettermentofsocietyrelatedtoleveloffreedomindividualshaveinpursuingeconomicgoals.(1)Ideologies:

CollectivismDoesnotvalueindividualassuchViewsneeds/goalsofsocietyatlargeasmoreimportantthanindividualdesiresNorigidformofcollectivismassocietalgoalsdiffergreatlyamongculturese.g.:Fascism:nationalism,authoritarianism,militarism,corporatism,collectivism,totalitarianism(1)Ideologies:

SocialismGovernmentownershipofinstitutionsProfitisnottheultimategoalCanbeviewedasmoderateexampleofcollectivisminpracticeHasbeenpracticedinChina,NorthKorea,CubaDemocraticsocialism,moremoderateform,practicedbyGreatBritain’sLabourParty,andinFrance,Spain,andGreeceCommunismisextremeformofsocialistthought(2)PoliticalSystems:

DemocracyEuropeanrootsSysteminwhichgovernmentiscontrolledbycitizenseitherdirectlyorthroughelections.Democraticsocietycannotexistwithoutatleastatwo-partysystemOnceelected,representativeisheldaccountabletoelectorateforactions(whichlimitspowerofgovernment)(2)PoliticalSystem:

TotalitarianismOnlyonerepresentativepartywhichexhibitscontrolovereveryfacetofpoliticalandhumanlifePowermaintainedbysuppressionofoppositionDominantidealsincludemediacensorship,politicalrepresentation,denialofrights,andcivillibertiesPoliticalEnvironment

RegionalExample:ChinaEmergingeconomicpowerGovernmentattemptingtoopenupeconomy:SpeedupconversionofstateenterprisesintocorporationsTradeliberalizationatopprioritysincejoiningWTOin2001ingamoreopen,democraticsocietyGreatertoleranceofindividualfreedomsWorkerretraining,low-costhousingandotherprogramsSeekingtounleashamoredynamicmarketeconomyPoliticalEnvironment:

RegionalExample:EuropePrivatizationandeconomicliberalizationreinforceEU-widepoliticalandeconomicintegrationPoliticalpowerisvariableandcomplexStrongoppositiontoU.S.-ledinterventioninIraqsometimesspilloverintobusinessrelationshipsanddealingsEuropeisalargeinterwovenregioneconomically,butcontainsvastculturaldifferencesPoliticalEnvironment:

Example:TheMiddleEastInIranandSaudiArabialawsandgovernmentbasedonIslamicprinciplesBusinessconductinMiddleEastsimilartoWesterninmanywaysWorldwidefalloutfromwaronterrorismhavemadebusinessenvironmentthereriskyandpotentiallydangerousPoliticalEnvironment:

Example:RussiaNeglectandconfusingchangesineconomicpolicyInfrastructureisweakandapoliticalquagmireCorruptioninterfereswithattractionofmoreforeigninvestmentLegalandRegulatoryEnvironmentConfusionandchallengefortheMNCduetomanydifferentlawsandregulationsinglobalbusinessoperationsMNCsmustcarefullyevaluatelegalframeworkineachmarketbeforedoingbusinessFourGlobalFoundationsofLaw:IslamicSocialistCommonCivilorcodeFourGlobalFoundationsofLaw:

IslamicLawDerivedfrominterpretationofQur’anandteachingsofProphetMuhammadFoundinIslamiccountries:MiddleEastandCentralAsiaFourGlobalFoundationsofLaw:SocialistLawOriginsinMarxistsocialistsystemRequiresmostpropertytobeownedbystateorstateenterprisesContinuestoinfluenceregulationsinformercommunistcountries:MembersofformerSovietUnionPeoples’RepublicofChinaVietnamNorthKoreaCubaFourGlobalFoundationsofLaw:

CommonLawOriginsinEnglishlawFoundationoflegalsystemfor:UnitedStatesCanadaEnglandAustraliaNewZealandFourGlobalFoundationsofLaw:

CivilorCodeLawDerivedfromRomanlawFoundinnon-Islamicandnon-socialistcountries:FranceSomeLatinAmericancountriesLouisianaintheU.S.BasicPrinciplesof

InternationalLawSovereigntyandSovereignImmunityInternationalJurisdictionDoctrineofComityActofStateDoctrineTreatmentandRightsofAliensForumforHearingandSettlingDisputesBasicPrinciplesof

InternationalLaw:SovereigntyandSovereignImmunity:Aninternationalprincipleoflawwhichholdsthatgovernmentshavetherighttorulethemselvesastheyseefit.BasicPrinciplesofInternationalLaw:InternationalJurisdiction:AjurisdictionalprincipleofinternationallawwhichholdsthateverycountryhasjurisdictionoveritscitizensnomatterwheretheyarelocatedNationalityprincipleTerritorialityprincipleProtectiveprincipleBasicPrinciplesof

InternationalLaw:DoctrineofComity:Ajurisdictionalprincipleofinternationallawwhichholdsthattheremustbemutualrespectforthelaws,institutions,andgovernmentofothercountriesinthematterofjurisdictionovertheirowncitizens.BasicPrinciplesof

InternationalLaw:ActofStateDoctrine:AjurisdictionalprincipleofinternationallawwhichholdsthatallactsofothergovernmentsareconsideredtobevalidbyU.S.courts,evenifsuchactsareillegalorinappropriateunderU.S.law.BasicPrinciplesof

InternationalLaw:TreatmentandRightsofAliens:Countrieshavethelegalrighttorefuseadmissionofforeigncitizensandtoimposespecialrestrictionsontheirconduct,rightoftravel,wheretheycanstay,andwhatbusinesstheymayconduct.Nationscanalsodeportaliens.BasicPrinciplesof

InternationalLaw:ForumforHearingandSettlingDisputes:U.S.courtscandismisscasesbroughtbeforethembyforeigners;however,theyareboundtoexamineissuessuchas:wheretheplaintiffsarelocatedwheretheevidencemustbegatheredwherepropertytobeusedinrestitutionislocatedLegalandRegulatoryIssuesForeignCorruptPracticesActIllegaltoinfluenceforeignofficialsthrough:personalpaymentpoliticalcontributionRestrictivebureaucratizationPrivatizationRegulationof

TradeandInvestmentIndividualcountriesuselegalandregulatorypoliciestoaffecttheinternationalmanagementenvironmentCountryisperceivedtoengageinunfairtradepractices(WTOandsimilaragreements)Governmentsupport(subsidies)RequireMNCstoacceptlocalpartnersResponsemaybeRetaliatorytariffsRestrictivetraderegulationsTechnologicalEnvironmentand

GlobalShiftsinProductionBiotechnologyNanotechnologySatellitesAutomatictranslationtelephonesArtificialintelligenceandembeddedlearningtechnologyAdvancementsincomputerchiptechnologyputersTechnologicalEnvironmentand

GlobalShiftsinProducti

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