Тopic 6

Legal, Technological and Political Aspects

of International Business

1. Legal Aspects of International Business

What are the principles of international business?

• Principles of International Business examines different cultural, legal, political, ethical, and
economic environments in a comparative and interpretive framework, emphasizing business
practices and outcomes for producers, employees, and consumers.

The four main elements of international business environment

• 1) Political Environment.

• 2) Economic Environment.

• 3)Technological Environment.

• 4) Cultural Environment.

Six factors that affect international business

• Legal liabilities. Cross-country businesses have to deal with the legal framework of two or more
countries. ...

• Political factors. ...

• Technological factors. ...

• Economic factors. ...

• Social factors. ...

• Environmental factors.

International business risk factors to consider

• The usual suspects: market and economic forces.

• Cultural differences.

• Extreme weather events and natural disasters.

• Legal challenges.

• Political risk factors.

• Purchasing power parities.

What are the aspects of international law?

International Law includes the basic, classic concepts of law in national legal systems (i.e. statutes, property
law, tort law, etc). It also includes substantive law, procedural law, due process, and remedies.

Legal issues in international business

• Correct company structure. Are you a company? ...

• Employment laws. ...

• Company share options. ...

• IP (Intellectual Property) ...

• Contracts. ...
 • Acquiring an overseas business. ...

• Tax Obligations. ...

• Data protection.

What are the legal aspects of business?

• Scope of business.

• Number of partners.

• Quantum of compliances.

• Applicable taxes.

Effective managers must accurately assess the legal ramifications of complex business transactions. This
requires familiarity with the basic principles of comparative and international law, including trade, and
an understanding of the importance of culturally diverse ethical traditions in all business relationships.

Legal Aspects of International Business in International Trade

International Trade is expanding day by day, small and big countries of the world are engaged in transfer
of huge quantum of goods and services. The mutual contact between the parties, at time, creates legal
problems. These problems arise from the first act of offer made by a trading partner and its acceptance
by the other trading partner. The contracts created between the traders are generally binding on the
parties.

Goods are sold against letter of credits, guarantees, and post arrival payments or through barter trade.
All these segments of trade processes create legal bindings. Where the legal instruments are properly
made nothing happens, but where there are mistakes errors or short comings in the trade instruments,
the fact may lead to dispute and litigation. These disputes create problem of jurisdiction, applicability of
law, enforcement of judgments obtained and the interpretation of actions of the parties in arriving at
trade contracts.

• The issues not only relate to individual parties but also include conflict with states on the issues
relating to promises made by the states before the investment was made by the investor. Generally
such conflicts are related to legal aspects of business transactions and are settled through legal
mechanism either through municipal course or through international tribunals. These disputes as
such may be settled through arbitration or through International Chamber of Commerce

• Particular reference is invited towards Bilateral Investment Treaties (BIT’s). There are thousands of
such treaties between different countries which govern the rules for Foreign Direct Investments
(FDI).

2. Political Aspects of International Business

They include, but are not limited to:

• Political regime and stability.

• Freedom of the press, rule of law, bureaucracy, corruption.

• Existing legislation around employment, environment and property protection.

• Security control.

Basically, all the influences that a government has on a business can include:

• government policy,

• political stability or instability,

• corruption,

• foreign trade policy,

 • tax policy,

• labor law,

• environmental law,

• trade restrictions.

How can political factors affect international trade?

• National security issues can impact both the import and exports of a country, as some governments
may not want advanced technological information to be sold to unfriendly foreign interests. Some
governments use trade as a retaliatory measure if another country is politically or economically
unfair.

Modern political science can generally be divided into the three subdisciplines of comparative politics,
international relations, and political theory.

Functions of a Political System:

• To maintain integration of society by determining norms.

• To adapt and change elements of social, economic, religious systems necessary for achieving
collective (political) goals.

• To protect the integrity of the political system from outside threats.

To theorize and understand corruption in a political context, Johnston (2005) reclassifies the three main
political systems (i.e. democratic, hybrid and authoritarian) into regime types: Developed liberal
democracies. New or reforming democracies.

The major types of political systems are democracies, monarchies, oligarchies, and authoritarian and
totalitarian regimes.

3. Technological Aspects of International Business

How is technology affecting the growth of international business
• In the past decade, technology has grown exponentially and has affected our everyday way of life
and impacted almost every industry, including international business. Technology is ultimately
what makes thriving international trade and businesses possible, and without technology,
international business would be slow, tedious and time-consuming.

• Technology is no longer reserved for specific countries or certain groups of people. These days, even
the average person has access to some form of technology, which has aided the technological and
international business revolution.

The ways in which technology affects international business

The ways in which technology affects international business