What is a sovereignty?
sovereignty refers to supreme and independent political authority
What are developing countries?
Developing countries tend to exercise control over their nations' economic development by passing protectionist laws to protect their industries
What are economically advanced countries?
When economic development is in more advanced stages, practices or policies that restrain trade are considered illegal (at least in theory)
What is political risk?
Risk of change in political environment or in government policy that would adversely affect a company's ability to operate effectively and profitably
When perceived political risk is high, what tends to happen to foreign direct investment?
foreign investment tends to be low
What are forms of political risk?
- War
- Social unrest, fractionalized by language, ethnic and/or religious groups
- Orderly political transfer
- Politically motivated violence
- International disputes
- Change in government/pro-business orientation
- Social conditions (population densit
What are politically sensitive products?
Products that have or are perceived to have an effect on the...
- Environment
- Exchange rates
- National or economic security
- Welfare of the people (particularly children)
- Health
- Publicly visible
- Subject to public debate
- Associated with their c
What do tax policies effect?
effect corporate policies
What can high taxation lead to?
High taxation can lead to black market growth and cross-border shopping
What is expropriation?
governmental action to dispossess a foreign company or investor; compensation should be provided in a "prompt, effective, and adequate manner
What is confiscation?
occurs when no compensation is provided
What is nationalization?
government takes control of some or all of the enterprises in an entire industry (acceptable if satisfied public purpose and includes compensation)
What is creeping expropriation?
limits economic activities of foreign firms
What are the forms of creeping expropriation?
- Limits on repatriation of profits, dividends, or royalties
- Technical assistance fees
- Increased local content laws
- Quotas for hiring local nationals
- Price controls
- Discriminatory tariff and nontariff barriers
- Discriminatory laws on patents an
What is International Law and International Court of Justice?
International law refers to the rules and principles that nation-states consider binding among themselves pertaining to property, trade, immigration, and other areas
What are characteristics of common law?
- Case law
- Precedent
- Interpretation
- Constant but flexible
- From the people
- Different laws in different jurisdictions make rulings based on precedent set in previous rulings
What us another name for common law?
case law
What are the characteristics of civil law?
- Codified law
- Written law
- Inflexible unless written law changed
- From the government
- Without written law, judges will generally reject the case until a new law is written by the government
- Future governments can rewrite laws
What is another name for civil law?
code law
Common law and acts of god
restricts to nature
code law and acts of god
extends to "unavoidable interference with performance, whether resulting from forces of nature or unforeseeable human acts
What is Islamic law?
- Legal system in Malaysia and many Middle Eastern countries
- Sharia (a/k/a Sharia law, Islamic law) is a comprehensive code governing Muslim conduct in areas of life including religious duties, social behaviors, and economic/business behavior
- Interpre
How can you avoid legal issues?
- Get expert legal help
- Prevent conflicts
- Establish jurisdiction
- Protect intellectual property
- Protect licenses and trade secrets
- Avoid bribery
- Consider differences in advertising and promotion
What does establish jurisdiction mean?
- Jurisdiction refers to a court's authority to rule on particular types of issues arising outside of a nation's borders or to exercise power over individuals or entities from different countries.
- Employees of foreign companies should understand the ext
Intellectual property must be registered in where?
in each country where business is conducted
What is a patent?
gives an inventor exclusive right to make, use, and sell an invention for a specified period of time
What is a trademark?
distinctive mark, motto, device, or emblem used to distinguish it from competing products
What is copyright?
establishes ownership of a written, recorded, performed, or filmed creative work
What is counterfeiting?
unauthorized copying and production of a product
What is associative counterfeit/limitation?
product name differs slightly from a well-known brand
What is piracy?
unauthorized publication or reproduction of copyrighted work
What are antitrust laws?
- Laws designed to combat restrictive business practices and to encourage competition
- The Sherman Antitrust Act of 1890
- Prohibits certain restrictive business practices including price fixing, limiting production, allocating markets, and other schemes
What are licensing and trade secrets?
- Trade secrets are confidential information or knowledge that has commercial value and is not in the public domain and for which steps have been taken to keep it secret
- Examples: recipes, production methods, consumer lists
- Use confidentiality contrac
What is bribery?
is the corrupt business practice of demanding or offering some type of consideration when negotiating a cross-border deal
What is the foreign corrupt practices act?
- Requires publicly held companies to institute internal accounting controls that record all transactions
- Makes it a crime for a U.S. corporation to bribe an official of a foreign government or political party to obtain or retain business
- Prohibits pa
What is the omnibus trade and competitiveness act?
Allows for "grease" payments to cut red tape (e.g., getting shipments through customs, getting permits)
What should a U.S. company do if competitors are willing to offer a bribe?
- Ignore bribery and act as if it doesn't exist
- Recognize bribery and evaluate it as if it were another element of the marketing mix
- Make the overall value of the offering as good as, or better than, competitor's overall offering, bribe included
- Exa
Why is litigation often avoided?
- Fear of creating a poor image or damaging public relations
- Fear of unfair treatment in foreign court
- Difficulty collecting judgment
- High financial and time costs
- Loss of confidentiality
What is arbitration?
a negotiation process
- Settles disputes outside of courts
- Groups agree to abide by the panel's decision
- Contract considerations
important arbitration questions
- Where will arbitration take place?
- In what language?
- By what country's laws will pat
Countries have laws regulating what marketing activities?
promotion, product development, labeling, pricing, distribution, and market research
What is a sovereignty?
sovereignty refers to supreme and independent political authority
What are developing countries?
Developing countries tend to exercise control over their nations' economic development by passing protectionist laws to protect their industries
What are economically advanced countries?
When economic development is in more advanced stages, practices or policies that restrain trade are considered illegal (at least in theory)
What is political risk?
Risk of change in political environment or in government policy that would adversely affect a company's ability to operate effectively and profitably
When perceived political risk is high, what tends to happen to foreign direct investment?
foreign investment tends to be low
What are forms of political risk?
- War
- Social unrest, fractionalized by language, ethnic and/or religious groups
- Orderly political transfer
- Politically motivated violence
- International disputes
- Change in government/pro-business orientation
- Social conditions (population densit
What are politically sensitive products?
Products that have or are perceived to have an effect on the...
- Environment
- Exchange rates
- National or economic security
- Welfare of the people (particularly children)
- Health
- Publicly visible
- Subject to public debate
- Associated with their c
What do tax policies effect?
effect corporate policies
What can high taxation lead to?
High taxation can lead to black market growth and cross-border shopping
What is expropriation?
governmental action to dispossess a foreign company or investor; compensation should be provided in a "prompt, effective, and adequate manner
What is confiscation?
occurs when no compensation is provided
What is nationalization?
government takes control of some or all of the enterprises in an entire industry (acceptable if satisfied public purpose and includes compensation)
What is creeping expropriation?
limits economic activities of foreign firms
What are the forms of creeping expropriation?
#NAME?
What is International Law and International Court of Justice?
International law refers to the rules and principles that nation-states consider binding among themselves pertaining to property, trade, immigration, and other areas
What are characteristics of common law?
#NAME?
What us another name for common law?
case law
What are the characteristics of civil law?
#NAME?
What is another name for civil law?
code law
Common law and acts of god
restricts to nature
code law and acts of god
extends to "unavoidable interference with performance, whether resulting from forces of nature or unforeseeable human acts
What is Islamic law?
- Legal system in Malaysia and many Middle Eastern countries
- Sharia (a/k/a Sharia law, Islamic law) is a comprehensive code governing Muslim conduct in areas of life including religious duties, social behaviors, and economic/business behavior
- Interpre
How can you avoid legal issues?
#NAME?
What does establish jurisdiction mean?
- Jurisdiction refers to a court's authority to rule on particular types of issues arising outside of a nation's borders or to exercise power over individuals or entities from different countries.
- Employees of foreign companies should understand the ext
Intellectual property must be registered in where?
in each country where business is conducted
What is a patent?
gives an inventor exclusive right to make, use, and sell an invention for a specified period of time
What is a trademark?
distinctive mark, motto, device, or emblem used to distinguish it from competing products
What is copyright?
establishes ownership of a written, recorded, performed, or filmed creative work
What is counterfeiting?
unauthorized copying and production of a product
What is associative counterfeit/limitation?
product name differs slightly from a well-known brand
What is piracy?
unauthorized publication or reproduction of copyrighted work
What are antitrust laws?
- Laws designed to combat restrictive business practices and to encourage competition
- The Sherman Antitrust Act of 1890
- Prohibits certain restrictive business practices including price fixing, limiting production, allocating markets, and other schemes
What are licensing and trade secrets?
#NAME?
What is bribery?
is the corrupt business practice of demanding or offering some type of consideration when negotiating a cross-border deal
What is the foreign corrupt practices act?
#NAME?
What is the omnibus trade and competitiveness act?
Allows for "grease" payments to cut red tape (e.g., getting shipments through customs, getting permits)
What should a U.S. company do if competitors are willing to offer a bribe?
- Ignore bribery and act as if it doesn't exist
- Recognize bribery and evaluate it as if it were another element of the marketing mix
- Make the overall value of the offering as good as, or better than, competitor's overall offering, bribe included
- Exa
Why is litigation often avoided?
#NAME?
What is arbitration?
a negotiation process
- Settles disputes outside of courts
- Groups agree to abide by the panel's decision
- Contract considerations
important arbitration questions
- Where will arbitration take place?
- In what language?
- By what country's laws will pat
Countries have laws regulating what marketing activities?
promotion, product development, labeling, pricing, distribution, and market research