Chapters 6-7 discuss the international political and legal environment for business. They cover topics such as the sovereignty of nations, forms of government, political risks like expropriation, economic risks including exchange controls and import restrictions, assessing political vulnerability, and lessening political risks through strategies like joint ventures. The chapters also examine the different legal systems of common law, civil law, and religious law used around the world and how they can affect international business disputes and intellectual property rights. Businesses must also navigate international laws on issues like foreign corrupt practices, antitrust, and export restrictions.

1. Chapters 6-7Chapters 6-7
INTERNATIONALINTERNATIONAL
POLITICAL AND LEGALPOLITICAL AND LEGAL
ENVIROMENTENVIROMENT

2. THE POLITICAL ENVIRONMENT (CH. 6)THE POLITICAL ENVIRONMENT (CH. 6)
The Sovereignty of NationsThe Sovereignty of Nations
 Ultimate power of the stateUltimate power of the state
Stability of government policiesStability of government policies
 Forms of GovernmentForms of Government
 Political partiesPolitical parties
 Nationalism vs. patriotismNationalism vs. patriotism
 Trade disputes, fear, and animosityTrade disputes, fear, and animosity
Political Risks of Global BusinessPolitical Risks of Global Business

3. POLITICAL RISKS AND MODELSPOLITICAL RISKS AND MODELS
 Definition and meaningDefinition and meaning
 Common political risks: Confiscation, Expropriation,Common political risks: Confiscation, Expropriation,
and Domesticationand Domestication
 Economic Risks: Exchange controls, Local-contentEconomic Risks: Exchange controls, Local-content
laws, Import restrictions, Tax controls, Price controls,laws, Import restrictions, Tax controls, Price controls,
Labor problemsLabor problems
 Risks from Civil Violence, NGOs, Terrorism, CyberRisks from Civil Violence, NGOs, Terrorism, Cyber
CrimeCrime
 Assessing political vulnerability/risk-forecasting riskAssessing political vulnerability/risk-forecasting risk
 Lessening political vulnerabilityLessening political vulnerability
 Models: Freedom House, Fraser Institute, HeritageModels: Freedom House, Fraser Institute, Heritage
Foundation, and International Country Risk GuideFoundation, and International Country Risk Guide

4. LESSENING POLITICAL VULNERABILITY
Good corporate citizenshipGood corporate citizenship
Business strategiesBusiness strategies
 Joint ventureJoint venture
 Expanding the investment baseExpanding the investment base
 LicensingLicensing
 Planned domesticationPlanned domestication
 Political bargainingPolitical bargaining
 Government attitude and incentivesGovernment attitude and incentives

5. THE INTERNATIONAL LEGALTHE INTERNATIONAL LEGAL
ENVIRONMENT (CH. 7)ENVIRONMENT (CH. 7)
 Bases of Legal SystemsBases of Legal Systems
 Common LawCommon Law
 Code LawCode Law
 Theocratic Law (e.g., Islamic law)Theocratic Law (e.g., Islamic law)
 Marxist-Socialists TenetsMarxist-Socialists Tenets
 International Legal DisputesInternational Legal Disputes
 JurisdictionJurisdiction
 Conciliation (mediation)Conciliation (mediation)
 ArbitrationArbitration
 LitigationLitigation

6. THE INTERNATIONAL LEGALTHE INTERNATIONAL LEGAL
ENVIRONMENT (continued)ENVIRONMENT (continued)
 Intellectual Property RightsIntellectual Property Rights
 Counterfeiting and piracyCounterfeiting and piracy
 Inadequate protectionInadequate protection
 International conventionsInternational conventions
 Business on the Net: Cyberlaw and unresolvedBusiness on the Net: Cyberlaw and unresolved
issuesissues
 Domain namesDomain names
 Collection of sales tax or dutiesCollection of sales tax or duties
 Contracts, jurisdiction, validity issuesContracts, jurisdiction, validity issues

7. LAWS AFFCTING BUSINESSLAWS AFFCTING BUSINESS
Commercial LawsCommercial Laws
 Company formationCompany formation
 Marketing lawsMarketing laws
 Antitrust lawsAntitrust laws
 Green marketing issuesGreen marketing issues
Foreign Corrupt Practices Act (FCPA)-Foreign Corrupt Practices Act (FCPA)-
extraterritoriality of U.S. lawsextraterritoriality of U.S. laws
Export restrictionsExport restrictions
 Laws, procedures change, get updated fromLaws, procedures change, get updated from
the Department of Commercethe Department of Commerce

8. Discussion QuestionsDiscussion Questions
1.1. Define and explain political risk. How can we assessDefine and explain political risk. How can we assess
and lessen political risk in a country?and lessen political risk in a country?
2.2. Discuss and elaborate various “economic risks”Discuss and elaborate various “economic risks”
companies face in international business/marketing.companies face in international business/marketing.
3.3. Explain the four types/bases of legal system. HowExplain the four types/bases of legal system. How
do they affect international business/marketing?do they affect international business/marketing?
4.4. Explain how internet is influencing the commercial,Explain how internet is influencing the commercial,
legal and marketing environment.legal and marketing environment.