82506
Chapter 7:Political and
legal systems in
National environments
- The Nature of country risk:
- Exposure to potential loss or adverse
effects on the company operations and
profitability caused by the development
in the country's political and legal
environments.
- Government intervention,
protectionism and barriers to trade
and the investment and particularly
notable in the international business
- Preferential subsidies,
government incentives,
protection from competition
reduces business costs and
influences strategic decision
making. Many government
encourage domestic
investment for foreign MNE by
offering tax incentives to
employ local workers.
- Political and legislative actions can
inadvertently harm business interests
such as laws that are unexpectedly strict
or result in unintended consequences.
Many laws favor Host country interest.
- Exposure to potential loss or adverse
effects on the company operations and
profitability caused by the development
in the country's political and legal
environments.
- Discuss the different types of political systems:
- Political system is a set of formal institutions
that constitutes a government. Includes
legislative bodies, political parties, lobbying
groups and trade unions. eg COSATO. ANC
- A political system defines how groups interact with each other.
- The principle function of these groups are to provide
protection from external threat, establish stability in
laws, govern the allocation of resources .
- A legal system is a system for interpreting and enforcing laws. The laws regulations,
rules establish norms for conduct. Incorporates institutions and procedures for
ensuring order and resolving disputes in commercial activities . They are dynamic and
constantly changing and are interdependent on each other .Taxing economic output
and protecting the intellectual property.
- Political system is a set of formal institutions
that constitutes a government. Includes
legislative bodies, political parties, lobbying
groups and trade unions. eg COSATO. ANC
- Discuss the different types Of Legal systems:
- 1.Common law: is a tradition , previous cases, legal precedents set by the national court
through the interpretation of status, legislation and past rulings. Judges in common law systems
have substantial power to interpret law based on unique circumstances of individual and
commercial cases, Disputes and other business situations... relatively flexible.
- 2. Civil law: based on all the inclusive systems of laws
that have been "codified" the laws are clearly written and
accessible. commercial ,civil and criminal rules and
principles form the strating point for legal reasoning
- 3) Mixed systems: consists of two or more
legal systems operating together. legal
systems evolve and adapt over time. civil and
common laws are often combined. eg. SA
- 4) Religious Law:
influenced by religious
beliefs , ethical codes
and moral values
viewed as mandated by
supreme being.
- 1.Common law: is a tradition , previous cases, legal precedents set by the national court
through the interpretation of status, legislation and past rulings. Judges in common law systems
have substantial power to interpret law based on unique circumstances of individual and
commercial cases, Disputes and other business situations... relatively flexible.
- Discuss the 5 participants in the Political and Legal system:
- 1) Government: Public sector most important actor, operating national state and local levels.
Has the power to enact and enforce laws. Influence how business is conducted, Hoe firms
enter host countries and how business is conducted there. Regulate International business
activity through institutions , agencies and public officials
- 1) Government: Public sector most important actor, operating national state and local levels.
Has the power to enact and enforce laws. Influence how business is conducted, Hoe firms
enter host countries and how business is conducted there. Regulate International business
activity through institutions , agencies and public officials
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