chapter 2

although MNC's need to be responsive to the political environment of individual countries, due in part to the persistence of cultural differences, there are also significant interdependencies. For example, the recent economic crisis in Greece, Spain, Portugal, Cypress, and Ireland have prompted Germany and France to mobilize public and private financial support, even though the two largest economies in the eurozone have residual distrust from earlier eras of conflict and disagreement. Europe is no longer a group of fragmented countries; it is a giant and expanding, interwoven region in which international managers must be aware of what is happening politically, not only in the immediate area of operations but also throughout the continent. what is it explained?

Collectivism views the needs and goals of society at large as more important than individual desires. The reason there is no one rigid form of collectivism is that societal goals and the decision of how to keep people focused on them differ greatly among national cultures. The Greek philosopher Plato (427-347 BC) believed that individual rights should be sacrificed an property should be commonly owned. While on the surface one may assume that this would lead to a classless society, Plato believed that classes should still exist and that the best suited should rule over the people. Many forms of collectivism do not adhere to that idea. - collectivism emerged in Germany and Italy as national socialism, or fascism. Fascism is an authoritarian political ideology (generally tied to a mass movement) that considers individual and other societal interests inferior to the needs of the state and seeks to forge a type of national unity, usually based on ethnic, religious, cultural, or racial attributes. Various scholars attribute different characteristics to fascism, but the following elements are usually seen as it's integral parts: nationalism, authoritarianism, militarism, corporatism, collectivism, totalitarianism, anti communism, and opposition to economic and political liberalism. Socialism directly refers to a society in which there is government ownership of institutions but profit is not the ultimate goal. In addition to historically communist states such as China, North Korea, and Cuba, socialism has been practiced to varying degrees in recent years in a more moderate form , Democratic socialism, by great Britain's Labor Party and Germany's left party, as well as in France, Spain, Bolivia, and Portugal. - Modern socialism draws on the philosophes of Karl Marx (1818-1883), Friedrich Engels (1820-1895), and Vladimir Ilyich Lenin (1870-1924). Marx believed that governments should own businesses because in a capitalist society only a few would benefit, and it would probably be at the expense of others in the form of not paying wages due to laborers. He advocated a classless society where everything was essentially communal. Socialism is a broad political movement, and forms of it are unstable period in modern times, it branched off into two extremes: communism and social democracy. - - Communism is an extreme form of socialism that was realized through violent revolution and was committed to the idea of a worldwide communist state. During the 1970s, most of the world's population lived in communist states . The Communist Party encompassed the former Soviet Union, China, and nations in Eastern Europe, Southeast Asia, Africa, and Latin America. Cuba, Nicaragua, Cambodia, Laos, and Vietnam headed a notorious list. Today much of the communist collective has disintegrated. Though China still exhibits communism in the form of limiting individual political freedom, it has begun to move away from communism in the economic and business realms because it has discovered the failure of communism as an economic system due to the tendency of common goals to start economic progress and individual creativity. - - - Some transition countries, such as Russia, are post communist but retain aspects of an authoratarian government. Russia presents one of the most extreme examples of how the political environment affects international management. Poorly managed approaches to the economic and political transition resulted in neglect, corruption, and confusing changes and economic policy. Devoid of funds and experiencing regular gas pipeline leaks, toxic drinking water, pitted roads, and electricity shutoffs, Russia did not present attractive investment opportunities as it initially moved away from communism. Today, actions by the Russian government in the international arena (including the annexation of Crimea in 2014, the attempted interference in the 2016 US presidential election, in the poisoning of former Russian/U.K. double agent Sergei skripal in Salisbury, UK, in 2018) have added increased risk for MNC's and investors. Major companies including BP, Exxon Mobil, and IKEA, have each encountered de facto expropriation, corruption, and state directed industrialization. Furthermore, sanctions issued by the EU and US have directly impacted the ability of foreign investors to conduct business. Despite these challenges, many companies have taken the risk of investing in Russia. Hey large population, abundant natural resources, increasing wealth, privatization of the unified energy system, and the movement by the Kremlin to begin government funding for the good of society (including education, housing, and health care) all make Russia a potentially lucrative place to do business. - - - - One of the biggest problems in Russia and in other transition economies is corruption. the 2018 corruption perception index from Transparency International ranked Russia 138th out of 180 countries, following behind Egypt in Columbia. Brazil, China, and India, part of the BRIC emerging markets bloc, consistently score higher than Russia. In the 2018 heritage foundation's index of economic freedom, Russia scored an overall 58.2 out of a possible 100 and the measurement of economic openness, regulatory efficiency, the rule of law, and government size, categorizing the country as mostly unfree. - - - - As more MNC's invest in Russia, unethical practices will face increasing scrutiny if political forces can be contained period to date, some multinationals have felt that the risk was too great, especially with corruption continuing to spread throughout the country. Despite the kremlin's support of its citizens, Russia is in danger of becoming a unified, corrupt system. Still, most view Russia as they do China: both are markets that are too large and potentially too lucrative to ignore. - - Social democracy refers to a socialist movement that achieved its goals through nonviolent revolution. This system was pervasive in such Western nations as Australia, France, Germany, Great Britain, Norway, Spain, and Sweden, as well as in India and Brazil. Well social democracy was a great influence on these nations at one time, in practice it was not as viable as anticipated. Businesses that were nationalized were quite inefficient due to the guarantee of funding and the monopolistic structure. Citizens suffered a hike in both taxes and prices, which was contrary to the public interest and the good of the people. The 1970s and 1980s witnessed a response to this unfair structure with the success of Britain's conservative party and Germany's Christian Democratic Party, both of which adopted free market ideals. Margaret Thatcher, was a great leader in this movement towards privatization. In recent years, Britain has continued the trend away from social democracy, further altering its longstanding commitment to broad social support programs. On going austerity measures, first implemented in 2010 due to severe budget shortfalls in the wake of the Great Recession, have resulted in a comprehensive restructuring of Britain's public services. Military spending, social program spending, and financial support of local governments have been reduced dramatically. Despite a budget Sir plus in 2018, on going uncertainty over the economic consequences from the Brexit process have led many to believe that the austerity measures will continue for years to come. - - It is important to note the difference between the nationalization of businesses and nationalism. the nationalization of businesses is the transference of ownership of a business from individuals or groups of individuals to the government. This may be done for several reasons: the ideologies of the country encouraged the government to extract more money from the firm, the government believes the firm is hiding money, the government has a large investment in the company, or the government wants to secure wages and employment status because jobs would otherwise be lost. Nationalism, on the other hand, is an ideal in and of itself whereby an individual is completely loyal to his or her nation. People who are a part of this mindset gather under a common flag for such reasons as language or culture. The confusing thing for the international business person is that it can be associated with both individualism and collectivism. Nationalism exists in the United States, but there is a national anthem and all citizens gather under a common flag , even though individualism is practiced in the midst of a myriad of cultures and extensive diversity. Nationalism also exists in China, exemplified in the movement against Japan in the mid 1930s and the communist victory in 1949 when communist leader Mao Tes-tung gathered communists and peasants to fight for a common goal. This ultimately led to the People's Republic of China. In the case of modern China, nationalism presupposes collectivism.

Both domestic and international political environments have a major impact on what?

MNC's. As government policy's change, MNC's must adjust their strategies and practices to accommodate the new perspectives and actual requirements. Moreover, and a growing number of regions and countries, governments appear to be less stable; therefore, these areas carry more risk than they have in the past.

what is Individualism?

The political philosophy that people should be free to pursue economic and political endeavors without constraint; the tendency of people to look after themselves and their immediate family only

what is Collectivism?

The political philosophy that views the needs and goals of society as a whole as more important than individual desires; the tendency of people to belong to groups, or collectives, and to look after each other in exchange for loyalty

There is also a great potential for disruptions, both accidental and intentional, as the world relies more and more on digital communication and imaging. The world is connected by a vast network of fiber optic cables that we do not see, why?

because they are buried either underground or underwater. Roughly the width of a garden hose, 200 sets of these cables carry 99% of all trans Oceanic communication, leading to a great deal of system vulnerability. In 2018, 10 W African countries experienced Internet and communication outages one a fishing boat damaged one cable off the coast of Mauritania. in some places, outages lasted for more than two days. The fact that so many people were reliant on a mere 4 inch thick cable shows the potential risks associated with greater global connectivity.

The precise impact that the advanced technological environment will have on international management over the next decade is difficult to forecast. One thing is certain, however; there is no turning back the technological Clock. MNC's and nations alike must evaluate the impact of these changes what?

carefully and realize that their economic performance is closely tide to keeping up with, or ahead of, rapidly advancing technology.

One reason today's international environment is so confusing and challenging for MNC's is that they face so many different what?

laws and regulations in their global business operations. These factors affect the way businesses are developed and managed within host nations, so special consideration must be paid to the subtle differences in the legal codes from one country to another period adhering to disparate legal frameworks sometimes prevents large MNC's from capitalizing on manufacturing economies of scale and scope within these attention. This, intern, results in slower time to market and greater costs. MNC's must take time to carefully evaluate the legal framework in each market in which they do business before launching products or services in those markets.

When compared with domestic law, international law is less coherent because its sources embody not only the laws of individual countries concerned with any dispute but also treaties (universal, multilateral, or bilateral) and conventions (such as the Geneva convention on human rights or the Vienna Convention of diplomatic security). in addition, international law contains unwritten understandings that arise from repeated interactions among nations. Conforming to all the different rules and regulations can create a major problem for MNC's. Fortunately, much of what they need to know can be subsumed under several broad and related principles that govern the conduct of international law. what are they?

sovereignty and sovereign immunity - The principle of sovereignty holds that governments have the right to rule themselves as they see fit. In turn, this implies that one country's court system cannot be used to rectify injustices or impose penalties in another country unless that country agrees. First, while US laws require equality in the workplace for all employees, US citizens who take a job in Japan cannot Sue their Japanese employer under the provisions of US law for failure to provide equal opportunity for them. international jurisdiction - International law provides for three types of jurisdictional principles. - - The first is the nationality principle, which holds that every country has jurisdiction (authority or power) over its citizens no matter where they are located. Therefore, a US manager who violates the American Foreign Corrupt Practices act while traveling abroad can be found guilty in the United States. - - The second is the territoriality principle, which holds that every nation has the right of jurisdiction within its legal territory. Therefore, a German firm that sells a defective product in England can be suit under English law, even though the company is headquartered outside of England. - - The third is the protective principle, which holds that every country has jurisdiction over behavior that adversely affects its national security, even if that conduct occurs outside the country. Therefore, a French firm that sells secret US government blueprints for a satellite system can be subjected to US laws doctrine of comity - the doctrine of comity holds that there must be mutual respect for the last, institutions, and governments of other countries in the matter of jurisdiction over their own citizens. Although this doctrine is not part of international law, it is part of international custom and tradition act of state doctrine - under the act of state doctrine, all acts of other governments are considered to be valid by US courts, even if such acts are inappropriate in the United States. As a result, for example, foreign governments have the right to set limits on the repatriation of MNC profits and to forbid companies from sending more than this amount out of the host country back to the United States treatment and rights of aliens - countries have the legal right to refuse the admission of foreign citizens and to impose special restrictions on their conduct, their right of travel, where they can stay, and what business they may conduct. Nations also can't deport aliens. For example, the United Kingdom has the right to limit the travel of foreign scientists coming into the United Kingdom to attend a scientific convention and can insist they remain within 5 miles of their hotel. A recent example of this can be seen in the United States, where the trump administration implemented a controversial executive order limiting travel to the United States by citizens of certain countries. Commonly referred to as a travel band, the executive order was most recently updated in 2019 and prohibits most citizens from Iran, Libya, North Korea, Syria, Venezuela, Yemen, and Somalia from legally entering the United States for immigration purposes. The admission of refugees from Syria and Venezuela has also been severely limited, and restrictions have been placed on travel for business or tourism purposes. forum for hearing and settling disputes - This is a principle of US justice as it applies to international law. At their discretion, US courts can dismiss cases brought before them by foreigners; however, the courts are bound to examine issues such as where the plaintiffs are located, where the evidence must be gathered, and where the property to be used in restitution is located. One of the best examples of this principle is the 1984 union carbide pesticide plant disaster in Bhopal, India. Over 2000 people were killed and thousands left permanently injured when a toxic gas enveloped 40 square kilometers around the plant. The New York Court of Appeals sent the case back to India for resolution

what is Foreign corrupt practices act (FCPA)?

An act that makes it illegal to influence foreign officials through personal payment or political contributions. It became U.S. law in 1977 because of concerns over bribes in the international business arena

what is Principle of sovereignty?

An international principle of law that holds that governments have the right to rule themselves as they see fit

In addition to the trends mentioned previously, other specific ways in which technology will affect international management in the next decade include the following what?

- The Internet of things refers to the equipping of physical objects, such as cars, televisions, and buildings, with sensors, software, and network connectivity , allowing them to share information and data with each other period in the near future, the Internet of things will interconnect nearly every device that is sold, giving businesses the ability to gather real time user data and transmit new information such as software upgrades back to the devices. This technology is already used heavily in the automobile industry, where self driving cars transmit data between other cars and the manufacturer. - blockchain technology, which is the idea of using an open Ledger to record transactions and ownership, is perhaps best known today for its use in Bitcoin. However, blockchain technology is poised to transform the financial services industry, along with the entire concept of contracts and transactions of both financial assets and physical property. - Rapid advancements in artificial intelligence or AI, have led many to speculate that it will be the next major technological disruptor. Machine learning, which is a subset of AI, is the concept that computers and other devices will be able to learn, complete, and improve upon tasks they were never taught how to do. Every sector of the global economy, including healthcare, manufacturing, and retail, will see transformative changes due to AI. - the field of robotics, they are not new, is being coupled with the latest technological developments to improve processes in the manufacturing, medical, and scientific communities. For example, the widespread availability of small Motors, GPS technology, and flying drones is opening the door to increased robotic use in remote, hard to access areas.

what is telecommunications?

- one of the most important dimensions of the technological environment facing international management is telecommunications and the impact of mobile devices. Because of the quick and relatively inexpensive installation of cellular infrastructure compared to traditional landline telephones, a technological leapfrogging is occurring in many developing economies, in which regions of the world are moving from a situation where landline phones were completely unavailable to one where mobile phones are available everywhere, including rural areas. This is especially true in sub saharan Africa, where landline phones are virtually nonexistent but cell phone penetration is growing at nearly 5% annually. Through increased productivity and E-Commerce, cell phone access is now generating over 7% of GDP in sub saharan Africa annually. - In addition, smartphone technology has emerged two previously discrete methods of communication: the telephone and the Internet. Internet access through cell phones has, in many ways, replaced access via computers. By 2018, a majority of all emails had been opened on mobile phones. Social networking sites have seen an even larger shift to mobile; by 2017 / 1.15 billion people were checking Facebook daily via their smartphones, and 93% of all video views on Twitter occur on mobile devices. In less developed countries, such as South America, Africa, and Eastern Europe, customers once waited years to get a telephone installed and Internet access was not existent; today, wireless technology is proving to be a financial boom for these regions. - One reason for this rapid increase in telecommunications services is that many countries believe that, without an efficient communication system, their economic growth may stall. Additionally, governments are accepting the belief that the only way to attract foreign investment and know how in telecommunications is to cede control to private industry. Many governments are reluctant to allow so much private and foreign ownership of such a vital industry; However, they also are aware that foreign investors will go elsewhere if the deal is not satisfactory. As a result, while most telecommunications operations in the Asia Pacific region were state run a few decades ago, a growing number are now in private hands. Singapore telecommunications, Thailand's telecom Asia, Korea's KT Corporation, and Globe Telecom and the Philippines all have been privatized, and MNC's have helped in this process by providing investment funds. Today, the Hong Kong based investment management company first Pacific holds a 25% stake in the Philippine long distance telephone company (PLDT), and the Japanese government has privatized nearly 2/3 of Nippon Telegraph and telephone (NTT). at the same time, Thailand is loosening regulations on foreign investment in telecom, and KT Corporation has established operations in Brunei, Mongolia, Poland, and Uzbekistan. - Developing countries are eager to attract telecommunications firms and offer liberal terms. This liberalization has resulted in rapid increases in wireless penetration. Between 2005 and 2017, the total number of mobile subscriptions in developing countries grew drastically from 1.2 billion to nearly 6.1 billion. Apple and Samsung, two of the largest mobile phone producers globally, have been aggressively penetrating emerging markets with smartphone technology. According to the international telecommunications union, mobile phone penetration in developing economies now stands at over 98%. Nearly half of these mobile subscriptions are broadband connections. Growth was rapid in all regions but fastest and Africa; it is estimated that mobile phone penetration in Africa stands at over 78%. This represents a nearly one to one ratio of people to mobile devices. African mobile users are increasingly relying on their devices for Commerce and payment. Transactions are conducted via text message, and users are not even required to hold a bank account. As of 2018, M-Pesa, one of the more popular mobile money transferring services, had over 23 million subscribers in Kenya alone, both daily transfers in excess of 162,000,000 US dollars. Asia remains the largest smartphone market globally, with almost 1.5 billion cellular service subscriptions in China and about 1.1 billion in India in 2018. - Counterfeit smartphones remain an issue in many emerging markets, where it is estimated that 20% of all smartphones are fake. However, there are signs that some effort is being taken to protect authentic products. In 2018, the US Justice Department convicted a 43 year old Chinese national I'm smuggling over 40,000 counterfeit phones into the United States, and in 2015, place in Beijing busted a large scale counterfeiting operation that included hundreds of employees and six production lines.

what is Biotechnology?

- the digital age has given rise to such innovations ask computers, smartphones, and wireless technology. Advancements within this realm allow for more efficient communication and productivity to the point where the digital world has extended its effect from information systems to biology. Biotechnology is the integration of science and technology, but more specifically it is the creation of agricultural and medical product through industrial use and manipulation of living organisms. At first glance, it appears that the Fusion of these two disciplines could breed a modern bionic human immune to disease, especially with movements towards technologically advanced prosthetics, cell regeneration through stem cell research, or laboratory engineered drugs to help prevent or cure diseases such as HIV or cancer. - pharmaceutical competition is also prevalent on the global scale with China's raw material reserves and the emergence of biotech companies such as Genentech and Gilead. India is emerging as a major player, but Mumbai based sun pharmaceutical producing effective, affordable, and mostly generic drugs. Well pharmaceutical companies mainly manufacture drugs through a process similar to that of organic chemistry, biotech companies attempt to discover genetic abnormalities or medical solutions through exploring organisms at the molecular level or by formulating compounds from inorganic materials that mirror organic substances. DNA manipulation in the laboratory extends beyond human research. As mentioned earlier, another aspect of biotech research is geared towards agriculture. In the United States and Brazil, ethanol production has increased substantially, with corn and sugar cane serving as feedstock. Automobile gasoline in Brazil is mandated to consist of nearly 25% ethanol, and blended gasoline is encouraged in the United States through tax subsidies. However, some have raised concerns regarding increased food prices caused by using sugar cane and corn as a fuel alternative. For this and many other reasons, global companies like Bayer AG and BASF AG have invested in agricultural biotechnology to create genetically modified seeds such as drought tolerant corn and herbicide-tolerant soybeans. Advancements in this industry include nutritionally advanced crops that may help alleviate world hunger. - Aside from crops, the meat industry has also benefited from biotechnology. The outbreak of mad cow disease, which affected close to 200,000 cows in the United Kingdom, sparked concern when evidence of the disease spread throughout Western Europe; however, researchers in the United States in Japan bioengineered a solution to the problem by eliminating the gene that is the predecessor to making the animals susceptible to this ailment. Today, mad cow disease is nearly eradicated. Another bio technological advancement, cultured meat, could radically change the way that meat products are produced. Cultured meat refers to authentic meat products that are grown in a lab, using animal stem cells. Although the technology is still in its infancy, cultured meat could provide a more environmentally friendly, widely available, and safer alternative to farm grown livestock. The world is certainly changing, and the trend towards technological integration is far from over. Whether one desires laser surgery to correct eyesight, a vaccine for emerging viruses, or more nutritious food, there is a biotechnology firm competing to be the first to achieve these goals. Hunger and poor health care are worldwide issues, and advancement in global biotechnology is working to raise the standards

what is E-business?

- the widespread use of the Internet around the globe has had a dramatic effect on international Commerce. Africa has exhibited the highest growth rate, at more than 10,000%. - hundreds of millions of people around the world have purchased goods from Amazon.com, and the company now maintains operations in 16 countries around the world. A host of other electronic retailers (e-tailers), discovering that their homegrown retailing expertise can be easily transferred and adapted for the international market, have followed suit. Dell technologies has been offering B2C electronic business to consumer goods and services in Europe for a number of years, and the Chinese conglomerate Alibaba offers a variety of products, including retail goods, cloud computing, and artificial intelligence or AI, to customers in nearly every country. Even automakers have adopted new, digital strategies; Tesla sells most of its cars directly to consumers or customers through the Internet, and Toyota is testing a similar model. Other firms are looking to use e-business to improve their current operations. For example, Deutsch bank has overhauled its entire retail network with the goal of winning affluent customers across the continent. Yet the most popular form of e-business is for B2B or business to business dealings, such as placing orders and interacting with suppliers worldwide. B2C transactions will not be as large, but this is an area where many MNC's are trying to improve their operations. - The area of e-business that continues to have the biggest impact for customers is e-retailing and financial services. With just a mobile device and a credit card, customers can conduct business with retailers and entrepreneurs across the globe. However, with so much personal information being transferred and stored digitally, information security remains a problem. A number of high profile data breaches in recent years have impacted hundreds and millions of consumers. For example, in 2018, hospitality company Marriott international revealed that digitally stored information for as many as 500,000,000 customers was compromised, including passport numbers and credit cards. - some companies, such as ally bank and Capital One 360, are completely disintermediating banking by eliminating the branches and other bricks and mortar facilities altogether. Through these direct banks, customers complete all transactions on line, with higher interest rates often offered to those who agreed to paperless statements and communication. In the decade plus since the global financial crisis, not one of these 300 plus bank failures in the US has been an online bank.

what is Act of state doctrine?

A jurisdictional principle of international law that holds that all acts of other governments are considered to be valid by U.S. courts, even if such acts are illegal or inappropriate under U.S. law

what is Protective principle?

A jurisdictional principle of international law that holds that every country has jurisdiction over behavior that adversely affects its national security, even if the conduct occurred outside that country

what is Nationality principle?

A jurisdictional principle of international law that holds that every country has jurisdiction over its citizens no matter where they are located

what is Territoriality principle?

A jurisdictional principle of international law that holds that every nation has the right of jurisdiction within its legal territory

what is Doctrine of comity?

A jurisdictional principle of international law that holds that there must be mutual respect for the laws, institutions, and governments of other countries in the matter of jurisdiction over their own citizens

what is Socialism?

A moderate form of collectivism in which there is government ownership of institutions but profit is not the ultimate goal

what is Democracy?

A political system in which the government is controlled by the citizens either directly or through elections

what is Totalitarianism?

A political system in which there is only one representative party, which exhibits control over every facet of political and human life

No pure form of government exists in any category, so we can assume that there are many creations along the two extremes. The observed correlation suggests that Democratic societies emphasize individualism, while totalitarian societies lean towards collectivism. what are they explained?

Adopters of individualism adhere to the philosophy that people should be free to pursue economic and political endeavors without constraint. This means that government interests should not solely influence individual behavior. In a business context, this is synonymous with capitalism and is connected to a free market society, which encourages diversity and competition, compounded with private ownership, to stimulate productivity. - It has been argued that private property is more successful, progressive, and productive than communal property due to increased incentives for maintenance and the focus on care for individually owned property. - The idea is that working in a group requires less energy per person to achieve the same goal, but an individual will work as hard as he or she has to in order to survive in a competitive environment. - Simply following the status quo will stunt progress, while competing will increase creativity and progress. Modern managers may witness this when dealing with those who adopt an individualist philosophy and then must work in a team situation. Research has shown that team performance is negatively influenced by those who consider themselves individualistic; however, competition stimulates motivation and encourages increased efforts to achieve goals.

There are four foundations on which laws are based around the world. Briefly summarized, these are what?

Islamic law - this is law derived from interpretation of the Qur'an in the teachings of the Prophet Mohammed. It is found in most Islamic countries in the Middle East and Central Asia. socialist law - this law comes from the Marxist socialist system and continues to influence regulations in former communist countries, especially those from the former Soviet Union, as well as present date China, Vietnam, North Korea, and Cuba. Since socialist law requires most property to be owned by the state or state owned enterprises, MNC's have traditionally shied away from these countries. common law - This comes from English law, and it is the foundation of the legal system in the United States, Canada, England, Australia, New Zealand, and other nations. civil or code law - This law is derived from Roman law and is found in the non Islamic and non socialist countries such as France, some countries in Latin America, and even Louisiana in the United States.

what is Socialist law?

Law that comes from the Marxist socialist system and continues to influence regulations in countries formerly associated with the Soviet Union as well as China

what is Common law?

Law that derives from English law and is the foundation of legislation in the United States, Canada, and England, among other nations

what is Civil or code law?

Law that is derived from Roman law and is found in the non-Islamic and nonsocialist countries

what is Islamic law?

Law that is derived from interpretation of the Qur'an and the teachings of the prophet Muhammad and is found in most Islamic countries

some experts predict that, in the future, technology has the potential to displace employees and all industries, from those doing low skilled jobs to those holding positions traditionally associated with what?

knowledge work. For example, voice recognition is helping replace telephone operators; The demand for Postal workers has been reduced substantially by the use of email; and online banking is quickly creating a cashless economy where in person bank tellers are not needed. Also, AI systems can eliminate human thinking completely. For example, American Express has an expert system that performs credit analysis formally completed by college graduate financial analysts. In the medical field, AI can diagnose some illnesses as well as doctors can, and robots capable of performing certain operations are starting to be used.

There are two basic anchors two political systems, each of which represents an ideal type that may not exist in pure form. what are they?

democracy, with its European roots and strong presence in northern and Western Europe, refers to the system in which the government is controlled by the citizens either directly or through elections. Essentially, every citizen should be involved in decision-making processes. The representative government insures individual freedom since anyone who is eligible may have a voice in the choices made. A Democratic society cannot exist without at least a two party system. Once elected, the representative is held accountable to the electorate for his or her actions, and this ultimately limits governmental power. Individual freedoms, such as freedom of expression and assembly, or secured. Further protections of citizens include impartial public service, such as police force and court systems that also serve the government and, intern, the electorate, though they are not directly affiliated with any political party. Finally, while representatives may be re elected, the number of terms is often limited, and an elected representative may be voted out during the next election if he or she does not sufficiently adherence goals of the majority ruling. A social democracy combines a socialist ideology with a Democratic political system, a situation that has characterized many modern European states as well as some in Latin America and other regions. totalitarianism refers to a political system in which there is only one representative party, which exhibits control over every facet of political and human life. Power is often maintained by the suppression of the opposition, which can be violent. Media censorship, political repression, and denial of rights and civil liberties are dominant ideals. If there is opposition to the government, the response is imprisonment or even worse tactics, often torture. This may be used as a form of rehabilitation or simply a warning to others who may question the government. The most common form of totalitarianism is communist totalitarianism. Most dictatorships under the Communist Party had disintegrated by 1989, aspects and degrees of this form of government are still found in Cuba, North Korea, Laos Vietnam, and China. The evolution of modern global business has substantially altered the political systems in Vietnam, Laos, and China, each of which has moved towards a more market based and pluralistic environment. However, each still exhibits some oppression of citizens through the denial of civil liberties. - The political environment in China is very complex because of the government's desire to balance national, immediate needs with the challenge of a free market economy and globalization. Since joining the WTO in 2001, China has made trade liberalization a top priority. Additionally, an 2018, China took several steps to open its automobile, financial, power grid, shipping, and railway industries to more private, foreign investment. However, MNC's still face a host of major obstacles when doing business with and in China. for example, government regulations are applied inconsistently, severely hamper multi national activity, and still favorite domestic companies. This makes the increasingly difficult for MNC's to gain the proper legal footing. The biggest problem may well be that the government does not know what it wants from multinational investors, and this is what accounts for the mixed signals and changes in direction that it continually sends. All this obviously increases the importance of knowledgeable international managers. China may be moving further away from its communist tendencies as it begins supporting a more open, Democratic society, at least in the economic sphere. China continues to monitor what it considers anti government actions and practices, but there is still a discernible shift towards greater tolerance of individual freedoms. For now, China continues to challenge the capabilities of current international business theory as it transitions through a unique system favoring high governmental control yet striving to unleash a more dynamic market economy. - Though the most common, the totalitarian form of government exhibited in China is not the only one period other forms of totalitarianism exhibit other forms of oppression as well. Parties are governments that govern an entity based on religious principles ultimately oppress the religious and political expansion of its citizens. Examples are Iran and Saudi Arabia, or the laws and government are based on Islamic principles. Conducting business in the Middle East is, in many ways, similar to operating a business in the western world. The Arab countries have been a generally positive place to do business, as many of these nations are seeking modern technology in most have the financial ability to pay for quality services. World wide fallout from the war on terrorism; the rise of ISIS; the Afghanistan, Iraq, and Syrian wars; and the ongoing Israel-Arab conflicts, however, have raised tensions in the Middle East considerably, making the business environment they are risky and potentially dangerous. The 2011 Arab Spring uprisings affected business dealings in the authoritarian and/or totalitarian countries across northern Africa in the Middle East. Reasons for the political unrest varied, but the most commonly included factors for oppressive government rule, economic decline, high unemployment, and human rights violations. Protesters successfully overthrew 4 government regimes and forest reforms and almost a dozen others. The political and economic fallout from the Arab Spring, including the Syrian civil war discussed the opening, has left the business environment with much continued uncertainty. Production and GDP were negatively affected almost overnight, and fuel prices spiked globally. Supply chain routes were disrupted for months, increasing the shipping and logistical cost of goods passing through the region. in Egypt, a military coup overthrew democratically elected Egyptian President Morsi in 2013, and a military general was elected president in a suspect election in 2014. in Libya, the fall of Gaddafi resulted in a power vacuum, inviting increased acts of terrorism. Unemployment in Egypt and Tunisia has not recovered since the uprisings, and inflation remains around 10%. According to a late 2011 study by Grant Thornton, 26% of businesses in North America, and 22% of businesses globally, reported negative effects from the uprisings. Though many countries in the region have somewhat stabilized, the fallout from the revolutions will continue to impact international business. One final form of totalitarianism, sometimes referred to as right wing, allows for some economic but not political freedoms. While it directly opposes socialist and communist ideas, this form may gain power and support from the military, often in the form of a military leader imposing a government for the good of the people. This results in military officers filling most government positions. Such military regimes ruled in Germany and Italy from the 1930s to the 1940s and persisted in Latin America and Asia until the 1980s, when the latter moved towards Democratic forms. Recent examples include Myanmar, where the military ruled as a dictatorship from 1962 to 2011, and Thailand, where a military coup d'etat overthrew the constitutional monarchy in 2014.

The innovation of the microprocessor could be considered the foundation of much of the technological and computing advances seen today. The creation of a digital framework allowed high power computer performance at low cost, leading to breakthroughs such as what?

enhanced telecommunications systems. today, computers, telephones, televisions, and wireless forms of communication have merged to create multimedia products and allow users anywhere in the world to communicate with one another. The Internet, coupled with smartphone technology, allows one to obtain information instantaneously from billions of sources, all from the palm of 1's hand.

the principles described in the previous section help form the international legal and regulatory framework within which the MNC's must operate. Some examples of specific laws and situations that can have a direct impact on international business are what?

financial services regulation - the global financial crisis of 2008 to 2010 underscored the integrated nature of financial markets around the world and the reality that regulatory failure in one jurisdiction can have severe an immediate impacts on others. The global contagion that enveloped the world was exacerbated, in part, by the availability of global derivatives trading and clearing and the relatively lightly regulated private equity and hedge fund industries. The crisis and its broad economic effects have prompted regulators around the world to consider tightening aspects of financial services regulation, especially those related to the risks associated with the derivatives activities of banks and their involvement in trading for their own account. In the United States, financial reform legislation was approved in July 2010, although the degree to which that legislation will prevent another crisis remains hotly debated. Foreign Corrupt Practices act - during the special prosecutor's investigation of the Watergate scandal in the early 1970s, a number of questionable payments made by US corporations to public officials abroad were uncovered. These bribes became the focal point of investigations by the US Internal Revenue Service, Securities and Exchange Commission or SEC, and Justice Department. This concern over bribes in the international arena eventually culminated in the 1977 passage of the foreign corrupt policies act or FCPA, which makes it illegal to influence foreign officials through personal payment or political contributions. The objectives of the FCPA where to stop US MNC's from initiating or perpetuating corruption in foreign governments into upgrade the image of both the United States and its businesses abroad. Critics of the FCPA feared the loss of sales to foreign competitors, especially in those countries where bribery is an accepted way of doing business. Nevertheless, the US government pushed ahead and attempted to enforce the act. Some of the countries that were named in early bribery cases under the law included Algeria, Kuwait, Saudi Arabia, and Turkey. The US state Department tried to convince the SEC and Justice Department not to reveal countries or foreign officials who were involved in its investigations for fear of creating internal political problems for US allies. Although this political sensitivity was justified for the most part, several interesting developments occurred: - - 1: MNC's found that they could live within the guidelines set down by the FCPA - - 2: many foreign governments actually applauded these investigations under the FCPA because it helped them - One analysis reported that since passage of the FCPA, US exports to bribe prone countries actually increased. Investigations revealed that once bribes were removed as a key competitive tool, more MNC's were willing to do business in that country. This proved to be true even in the Middle East, or many USMNC's always assumed that bribes were required to ensure contracts. Evidence shows that this is no longer true in most cases; and in cases where it is true, those companies that engage in bribery face a strengthened FCPA that now allows the courts to both find and imprison guilty parties. In addition, stepped up enforcement appears to be having an impact. A report from the law firm Jones Day found that FCPA actions are increasingly targeting individual executives, not just corporations; that penalties imposed under the FCPA have skyrocketed; And that violations have spurred a number of collateral civil actions. Bureaucratization - Very restrictive foreign bureaucracies are one of the biggest problems facing MNC's. This is particularly true when bureaucratic government controls are inefficient and left uncorrected. A good example is Japan, whose political parties feel more beholden to their local interests than to those in the rest of the country. As a result, it is extremely difficult to reorganize the Japanese bureaucracy and streamline the ways things are done because so many politicians are more interested in the well being of their own districts than in the long term well being of the nation as a whole. In turn, parochial actions create problems for MNC's trying to do business there. The administration of Prime Minister Shinzo Abe of Japan tried to reduce some of this bureaucracy, although the fact that Japan has had seven different prime ministers from 2006 to 2019 has not helped these efforts. Certainly, the long running recessionary economy of the country is inspiring reforms in the nations antiquated banking system, opening up the Japanese market to more competition. Japanese businesses are also becoming more aware of the fact that they are dependent on the world market for many goods and services and that one bureaucratic red tape drives up the costs of these purchases, local consumers pay the price. These businesses are also beginning to realize that government bureaucracy can create a false sense of security and leave them unprepared to face the harsh competitive realities of the international marketplace. In many developing and emerging markets, bureaucratic red tape impedes business growth and innovation. The road bank conducts an annual survey to determine the ease of doing business in a variety of countries around the world. The survey includes individual items related to starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. A compile ranking on the ease of doing business in each country, from 1 to 190, is that compiled. A high ranking on the ease of doing business index means the regulatory environment is conductive to the operation of business. This index averages the countries percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. Although developed countries generally rank better or higher, there are some developing countries such as Thailand and Malaysia that do well and some developed economies such as Greece that do poorly. Privatization - another example of the changing international regulatory environment is the current move towards privatization by an increasing number of countries. Privatization opens a host of opportunities for MNC's looking to invest in domestic industries or create joint ventures with local firms. The communist government in Vietnam, where a third of the economy consists of state owned enterprises, provides a good example. Due to operational inefficiencies, low profitability, and increased foreign competition, the Vietnamese government has implemented an aggressive approach to selling off portions of its many and nationalized companies. In 2018, dozens of businesses in a variety of industries, including energy giant PetroVietnam and rice exporter Vinafood II, where partially divested through public stock offerings. This strategy has allowed the Vietnamese government to maintain some ownership in these companies while giving MNC's and investors the ability to influence operations and improve profitability. The trend towards privatization of state owned enterprises can be seen in developed and developing countries alike. Germany and France embraced the privatization of their telecom industries in the 1990s. In the 2000s, Poland, transitioning from a state planned economy to a free market economy, underwent extensive privatization of its state owned insurance and coal mining industries, boosting the Warsaw Stock Exchange into one of the top 10 European markets by value. More recently, Turkey issued various privatization tenders in the energy and electricity sectors, And Nigeria finalized the privatization of three of the power holding company of Nigeria successor companies. Brazil privatized many of its state owned companies to provide greater competition and access to service. Even the communist Chinese government, despite maintaining strong control over 80,000 small scale businesses operating within its borders, has embraced reforms allowing some private investment in state owned enterprises. These reforms are likely aimed at increasing the profitability of the approximately 115 largest state owned conglomerates. regulation of trade and investment - The regulation of international trade and investment is another area in which individual countries use their legal and regulatory policy's to affect the international management environment. The rapid increase in trade and investment has raised concerns among countries that others are not engaging in fair trade, based on the fundamental principles of international trade as specified in the WTO and other trade and investment agreements. Specifically, international trade rules require countries to provide national treatment, which means that they will not discriminate against others in their trade relations. Unfortunately, many countries engage in government support or subsidies and other types of practices that distort trade. For example, many developing countries require that foreign MNC's take on local partners in order to do business. Others mandate that MNC's employ a certain percentage of local workers or produce a specific amount in their country. These practices are not limited to developing countries. Japan, the United States, and many European countries use product standards, buy local regulations, tariffs on specific goods, and other policies to protect domestic industries and restrict trade. For example, in 2018, the United States imposed new tariffs on steel, aluminum, and solar panel imports in an effort to protect domestic jobs in those industries. As a result, many trading partners, including China, Canada, Mexico, and the EU, implemented retaliatory tariffs of their own. Most trade agreements require that countries extend most favored nation status such that trade benefits accorded one country such as tariff reductions under the WTO, are accorded all other countries that are parties to that agreement. The emergence of regional trade arrangements has called into question this commitment because, by definition, agreements among a few countries (NAFTA/USMCA, EU), Give preference to those specific members over those who are not part of the trading blocs. many countries engage in anti dumping actions intended to offset the practice of trading partners dumping products at below cost or home market price, as well as countervailing duty actions intended to offset foreign government subsidization. In each case, there is evidence that many countries abuse these laws to protect domestic industries, something in the WTO has been more vigilant in monitoring in recent years.

Political, legal, and technological environments can alter the landscape for global companies. It has allowed political groups to organize, journalists to communicate and report on political developments, and citizens to mobilize and build support for political movements. This situation underscores the increasing uncertainty in the global business environment and the rapidity and extent of political and legal change. It also highlights what?

how technology is contributing to accelerating change and how traditional legal systems have difficulty keeping pace with these changes. International managers need to be aware of how differing political, legal, and technological environments are affecting their business and how globalization, security concerns, and other developments influenced these environments. Changes in political, legal, and environmental conditions also open up new business opportunities but close some old ones.

the development and subsequent use of these technologies have greatly benefited the most developed countries in which they were first deployed. However, the most positive effects should be seen in developing countries where what?

inefficiencies in labor and production impede growth. Although all these technological innovations will affect international management, specific technologies will have especially pronounced effects in transforming economies and business practices.

International managers must remain alert to how political changes may impact their business, as a continuous struggle for a foothold in government power often affects what?

leaders in office. The recent referendum in the United Kingdom to leave the EU, a process termed Brexit, provides a strong example of this. Fueled by increased concerns about immigration and the role of the EU in managing affairs in member states, the Brexit referendum achieved a slim majority of yes voters. The conservative party leaders and Theresa May, first elected Prime Minister in 2016 shortly after the vote, or originally opposed to the Brexit referendum, citing the economic consequences that would result from losing trading partners. However, once the referendum passed, Prime Minister may change her position, fully supported a complete withdrawal from the EU, and took the lead in guiding the separation process. Depending on the terms of the final Brexit agreement, the flow of goods and services between the United Kingdom and mainland Europe could be increasingly complicated and costly for companies that do business in the region. Government policy, in its attempt to control the economic environment, waxes and wanes, something the international manager must be keenly sensitive to

The political system or system of government in a country greatly influences how its people what?

manage and conduct business. Political systems vary greatly among nation states across the world. The issue with understanding how to conduct international management extends beyond general knowledge of the governmental practices to the specifics of the legal and regulatory frameworks in place. Underlying the actions of a government is the ideology in forming the beliefs, values, behavior, and culture of the nation and its political system. Effective management occurs when these different ideologies and philosophes are recognized and understood.

The groundwork for this ideology was founded long ago. Philosophers such as David Hume (1711-1776), Adam Smith (1723-1790), and even Aristotle (384-322 BC) contributed to these principles. While philosophers created the foundation for this belief system long ago, it can be witnessed playing out through what?

modern practice. Eastern Europe, the former Soviet Union, areas of Latin America, Great Britain, and Sweden all have moved towards the idea that the betterment of society is related to the level of freedom individuals have in pursuing economic goals, along with general individual freedoms and self expression without government constraint. The well known movement in Britain towards privatization was led by Prime Minister Margaret Thatcher during her eleven years in office (1979-1990), when she successfully transferred ownership of many companies from the state to individuals and reduced the government owned portion of the gross national product from 10 to 3.9%. She was truly a pioneer in the movement towards a capitalist society, which has since spread across Europe.

Furthermore, concepts like the open source model allow for free and legal sharing of software and code, which may be utilized by underdeveloped countries in an attempt to gain competitive advantage while minimizing costs. India exemplifies this practice, as several of its state and local governments have adopted the what?

open source Linux operating systems or OS, in place of the global standard Microsoft Windows. For example, Kerala, switched to the Linux OS in all 2,600 of its high schools, enabling each user to configure the system to his or her needs, with the goal of creating a new generation of adept programmers. More broadly, a number of for profit and nonprofit firms have been aggressively working to put low-cost computers into the hands of the hundreds of millions of children in the developing world who have not benefited from the information and computing revolution.

technological advancements not Only Connect the world at incredible speed but also aid in the increased quality of products, information gathering, and R&D. Manufacturing, information processing, and transportation are just a few examples of where technology improves what?

organizational and personal business. Instant communication and connectivity have become a necessity for MNC's when conducting business globally; this is becoming increasingly easier as technology contributes to flattening the world. Thomas Friedman, in his book the world is flat, writes that such events as the introduction of the Internet, along with mobile technologies, open sourcing, and workflow software distribution, not only enable businesses and individuals to access fast amounts of information at their fingertips in real time but also are resulting in the world flattening into a more level playing field.

Emerging information technology also makes work more portable. As a result, MNC's have been able to move certain production activities overseas to capitalize on cheap labor resources. This is especially true for work that can be easily contracted with what?

overseas locations. For example, low paid workers in India and other Asian countries are now subcontracted to work on labor intensive software development and code writing jobs. A restructuring of the nature of work and of employment is a result of such information technology.

The new technological environment has both positives and negatives for MNC's in societies as a whole. On the positive side, the cost of doing business worldwide should decline, thanks to the opportunities that technology offers in substituting lower cost machines for higher priced labor. Overtime, productivity should go up, and prices should go down. On the negative side, many employees will find either their jobs eliminated or their wages and salaries what?

reduced because they have been replaced by machines and their skills are no longer in high demand. By some estimates, nearly 800,000,000 jobs could be replaced by AI by the year 2030. This job loss from technology can be especially devastating in developing countries. However, it doesn't have to be this way. A case in point is SA showcase for automotive productivity as represented by the Delta motor corporation's Opel Corsa plant in Port Elizabeth. To provide as many jobs as possible, this world class operation automated only 23%, compared to more than 85% auto assembly in Europe and North America. Toyota Georgetown, Kentucky, plant test followed a similar model. well automation now plays major role in the manufacturing process at the facility, Toyota's workers have shifted their focus to quality control, resulting in a better finished product with the same number of employees. Some industries can also add jobs. For example, the positive has outweighed the negative in the computer and information technology industry, Despite its ups and downs. Specifically, employment in the US computer software industry has increased over the last decade. In less developed countries such as India, a high tech boom in recent years has created jobs and opportunities for a growing number of people. Even though developed countries such as Japan and the United States are most affected by technological displacement of workers, both nations still lead the world in creating new jobs and shifting their traditional industrial structure towards a high tech, knowledge based economy.

As MNC's use advanced technology to help them communicate, produced, and deliver their goods and services internationally, they face a new challenge: how technology will affect the nature and number of their employees. Some informed observers note that what?

technology already has illuminated much of the work being done by middle management and white collar staff. Mounting cost pressures resulting from increased globalization of competition and profit expectations exerted by investors have placed pressure on MNC's to outsource or offshore production to take advantage of lower labor and other costs. In the past century, machines replaced millions of manual laborers, but those who worked with their minds were able to thrive and survive. During the past three decades in particular, employees in blue collar, smokestack industries such as steel and autos have been downsized by technology, and the result has been a permanent restructuring of the number of employees needed to run factories efficiently. In the 1990s, a similar trend unfolded in the white collar service industries such as insurance, banks, and even government. Most recently, this trend affected high tech companies in the late 1990s and early 2000s, when, afterthe.com bubble burst, hundreds of thousands of jobs were lost, and again in 2008 to 2010 how many jobs were lost in finance and related industries as a result of the financial crises and global recession. Furthermore, job recovery in the wake of the financial crisis has been largely dependent on lower wage jobs.

A political system can be evaluated along 2 dimensions: the ideology of this system and the degree of individualism or collectivism within the system. The first, ideological dimension focuses on what?

the rights of citizens under government, ranging from fully Democratic to totalitarian. The second dimension measures whether the focus of the political system is on individuals or the broader collective.