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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.
 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
 Embargoes and Sanctions

Reasons for imposing embargoes and sanctions have varied:

 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 military
and civilian purposes.
• Export licenses, a license obtainable from the U.S.
Department of Commerce Bureau of Industry and
Security.
 Export Controls
Decision Steps in the
Export Licensing
Process
Determinants of
Export Controls Should a Given Product Be
Exported?
•National
Security
•Foreign Policy To a Given Country?

•Short Supply
•Nuclear
For Use by a Given Firm?
Nonproliferation
 Regulating International Business
Behavior

•Boycotts

•Antitrust Laws

•Bribery and Corruption

•International Business Ethics

Transparency International
 Political Risk

Three Major Types of Risk

•Ownership
•Operating
•Transfer
Possible outcomes
• Violence and Conflict
• Expropriation
• Confiscation
• Domestication
• Weakening of Intellectual
Property Rights
 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.
 Risk Management

Corporate:
• Non-exploitative
• Monitoring of political
development
• Insurance
• Lobbyists

Basic Systems of Law:

• Common law
• Code law
 Influencing Politics and Laws

The international manager has various options:

• A high risk option is to simply ignore prevailing rules.

• A second approach is to provide input to trade
negotiators.
• A third option involves the development of coalitions and
constituencies that can motivate politicians.
 International Relations and Laws

International Politics
•Bilateral Agreement
•Multilateral Agreement
International Law
•Body of rules governing sovereign state
relationships.
•Treaties and agreements respected by a
number of countries.
•Jurisdictional disputes are settled using
litigation or arbitration.