3. POLITICAL IDEOLOGY TOTALITARIANISM DEMOCRACY RADICAL LIBERAL
CONSERVATIVE REACTIONARY DICTATORSHIP COMMUNIST THEOCRATIC
AUTHORITARIAN
4. POLITICAL RISK Political Risk Explanation Ownership risk
Threats to a firms property or assets in a foreign country.
Operating risk Threats to a firms ongoing operations or the safety
of its employees Transfer risk Threats to a firms ability to
repatriate its investments or profits out of the country.
5. Managing Political Risk DIRECT APPROACHES INDIRECT
APPROACHES Reactive Approaches Maintain redundant operations in
multiple host countries Hire host country employees and especially
managers. Use home country government pressure on local host
country Secure risk insurance Do contingency planning Proactive
Approaches Establish equity joint ventures with host country firms
Use local licensing agreements Build collaborative relationships
with locals Promote host country goals Lobby home and host
governments for support Be a good local corporate citizen
6. DECISION IN POLITICAL SITUATION
IDENTIFY THE ISSUE
DEFINE THE POLITICAL ASPECT OF THE ISSUE
ACCESS THE POTENTIAL ACTION OF OTHER COMPANIES AND SPECIAL
INTEREST GROUPS
IDENTIFY THE IMPORTANT INSTITUTIONS AND KEY INDIVIDUALS
FORMULATE STRATEGIES
DETERMINE THE IMPACT OF IMPLEMENTATION OF THE STRATEGY
SELECT THE MOST APPROPRIATE STRATEGY
7. LEGAL ENVIRONMENT
COMMON LAW
CIVIL LAW
THEOCRATIC LAW
CUSTOMARY LAW
MIXED SYSTEM
8. UNDERSTANDING BASE OF RULE
THE RULE OF MAN
THE RULE OF LAW
9. TRENDS IN LEGAL SYSTEM
THE PREFERENCE OF STABILITY
THE INFLUENCE OF NATIONAL LEGACIES
THE RECOURSE TO TRADITION IN DISPUTE RESOLUTION
10. Legal issues in International Business
OPERATIONAL CONCERNS
STARTING A BUSINESS
ENTERING AND ENFORCING CONTRACTS
HIRING AND FIRING LOCAL WORKERS
CLOSING DOWN THE BUSINESS
11. Starting a business Country Legal Origin No. of procedures
Time Cost(% of income per capita Australia Common 2 2 1.8 China
Civil 13 35 9.3 France Civil 7 8 1.1 Germany Civil 9 24 5.1 Japan
Civil 8 23 7.5 Korea Civil 12 22 15.2 Russia Socialist 7 28 2.7
United Kingdom Common 6 18 0.7 United States common 5 5 0.7
12. Enforcing Contracts Country Legal Origin No. of procedures
Time (days) Cost(% claim) Australia Common 19 181 12.8 China Civil
31 292 26.8 France Civil 21 331 11.8 Germany Civil 30 394 10.5
Japan Civil 20 242 9.5 Korea Civil 29 230 5.5 Russia Socialist 31
178 13.5 United Kingdom Common 19 229 16.8 United States common 17
300 7.7
13. Closing a business Country Legal Origin Time to Insolvency
(years) Cost(% of estate) Australia Common 1 8 China Civil 2.4 22
France Civil 1.9 9 Germany Civil 1.2 8 Japan Civil 0.6 4 Korea
Civil 1.5 4 Russia Socialist 3.8 9 United Kingdom Common 1 6 United
States common 1.5 7
