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MBA 713 - Chapter 03
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Chapter 3 - 1
Chapter 3
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Legal, Technological, Accounting, and
Political Environments
Chapter 3 - 2
Learning Objectives
• Describe the major legal systems that confront international business
• Explain how domestic laws affect the ability of firms to conduct international business
• List ways firms can resolve international business disputes
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Chapter 3 - 3
Learning Objectives
• Learn how the technological environment of the host country affects international business
• Identify the factors that influence national accounting systems
• Explain how firms can guard against political risk
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Chapter 3 - 4
The Legal Environment
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Chapter 3 - 5Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Differences in Legal Systems
• Common Law
• Civil Law
• Religious Law
• Bureaucratic Law
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Summary of Discussion
Chapter 3 - 7
How Domestic Laws Affect the Ability of Firms to Conduct International
Business
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Chapter 3 - 8Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Domestically Oriented Laws
Domestic Effects
InternationalEffects
Chapter 3 - 9
• Sanctions
• Embargos
• Extraterritoriality
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Laws Directly Affecting International Business
Chapter 3 - 10Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Laws Directed Against Foreign Firms
• Nationalization
• Expropriation
• Confiscation
• Privatization
• Repatriation
Chapter 3 - 11Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
The Impacts of MNCs on Host Countries
Political
Economic
Cultural
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Summary of Discussion
Chapter 3 - 13
Dispute Resolution in International Business
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Chapter 3 - 14
Which country’s law applies?
Where should the issue be resolved?
How will the conflict be resolved?
How will the settlement be enforced?
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Four Essential Questions
Chapter 3 - 15
Business Contracts
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Forum Shopping
Principle of Comity
Arbitration
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Summary of Discussion
Chapter 3 - 17
The Technological Environment
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Chapter 3 - 18
Changing or Shaping Technological Environments
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InvestmentsTechnology
Transfer
Infrastructure
Human Capital
Foreign Direct Investment
Business Requirements
Chapter 3 - 19
Intellectual Property Rights
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• Laws
• Patents
• Trademarks
• Brand Names
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Summary of Discussion
Chapter 3 - 21
The Accounting Environment
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Chapter 3 - 22
The Roots of National Differences
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Legal
Cultural
Political Economi
c
Accounting
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Differences in Accounting Practices
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Determining Values for Assets
Determining Values for Inventory
Dealing with Tax Authorities
Using Accounting Reserves
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Other Differences
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•Financial Leases
•R&D Expenses
•Goodwill
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Capital Market Impact
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•Performance
•Investments
•Loans
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Summary of Discussion
Chapter 3 - 27
The Political Environment
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Chapter 3 - 28
Political Risk
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• Ownership Risk
• Operating Risk
• Transfer Risk
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Risk Categories
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MicropoliticalMacropolitical
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• Democracy or dictatorship?
• Free market or government control?
• Public or private sector customers?
• Changes to government policy?
• Stability of the existing government?
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Assess Political Risk
Chapter 3 - 31
Reducing Risks of Foreign Operations
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Overseas Private Investment Corporation (OPIC)
Multilateral Investment Guarantee
Agency (MIGA)
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Summary of Discussion
Chapter 3 - 33
Chapter 3
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Legal, Technological, Accounting, and
Political Environments
Chapter 3 - 34Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
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