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31 Cards in this Set
- Front
- Back
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Political Risk
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When perceived ______________ is high, a country will have a difficult time attracting foreign direct investment
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Examples of political risk
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War
Politically Motivated Violence Corruption, Nepotism |
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Causes of Political Risk
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Tension between aspirations and ability
• Primarily occurs in lower and lower-middle income countries • Indonesia and economic crisis ---when politcical risk occurs in high income countries it is generally due to a long conflict.... Northern Ireland. |
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Symptoms of political risk
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Less development = greater the risk
Increased economic uncertainty Increases risk |
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Govnment taxation policies
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High taxation can lead to black market growth and cross boarder shopping
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Corporate Taxation
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High taxes encourage many companies to engage in cash or other transactions that are off the books
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Nationalization
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A government takes control of some or all of the enterprises in s particular industry.
Acceptable if --- satisfies public purpose, include compensation |
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Creeping expropriation
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Limits economic activities of foreign firms
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Common law vs. Civil law
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• The Napoleonic Code of 1804 drew on the Roman legal system and is the basis for continental European law today. Code law is also known as civil law.
• U.S. law is rooted in English common law. |
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Common Law
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• Disputes are decided by reliance on the authority of past judicial decisions
• Code law is used in few areas; the U.S. Uniform Commercial Code • Companies are legally incorporated by state authority |
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Civil Law
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- Legal system reflects the structural concepts and principles of the Roman Empire
- Companies are formed by contract between two or more parties who are fully liable for the actions of the company |
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Islamic Law
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Lewfsl system in many Middle Eastern Countries
- based on the sharia -Koran-- holy book -Hadith |
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Sharia
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A comprehensive code governing Muslim conduct in all areas of life including business
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Hadith
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Based on life, sayings, and practices of Muhammad.
Identifies forbidden practices "horan" |
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Sidestepping legal Issues
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- get expert legal help
- prevent Conflicts - establish Jurisdiction - protect Intellectual Property - avoid bribery |
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Jurisdiction
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Refers to s courts authority to rule on particular type of issues arising outside of a nations boarders or to exercise power over individuals or entities from different countries.
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Intellectual Property
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Must be registered in each country where business is conducted
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Patent
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Gives sn inventor the exclusive right to make, use and sell an invention
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Trademark
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Distinguished mark, motto, device, or emblem used to distinguish it from competing products.
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Copyright
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Establishes ownership of written, recorded, performed, or filmed creative work.
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Counterfeiting
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Unauthorized copying and production of a product
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Associative Counterfeit/Imitation
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Product name differs slightly from a well known brand
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Piracy
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Unauthorized publication or reproduction of copyrighted work.
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Search and Destroy
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Firm hire private investigation agencies to track down fakes in stores and locate counterfeit factories.
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Coding Devices
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Firms encode unique signatures into products ( Levi's microweave patterns, and Microsofts windows 95 tracking codes).
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Protecting Intellectual Property
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- In the united states registration is with the Federal Patent Office
• In Europe, applicants use the European Patent Office or register country by country • The Community Patent Convention is currently being debated - goal is to cover patents in all of EU |
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Protecting Intellectual Property
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- World Intellectual Property Organization
• Governed by the Madrid Agreement and the Madrid Protocol • Allows trademark owners to seek protection in as many as 74 countries with a single application and fee |
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Protcting Intellectual Property
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- Internatioinal convention for the protection of industrial property
• Paris Convention • Honored by 100 countries • Facilitates multi-country patent registration, ensures that once a company files, it has a “right of priority” in other countries for 1 year from that date |
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Bribery
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The corrupt business practice of demanding or offering some type of consideration when negotiating a cross-boarder deal.
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Foreign Corrupt Practices Act
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Requires publicly held companies to institute internal
accounting controls that would 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 payments to third parties when there is reason to believe it may be channeled to foreign officials |
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Omnibus Trade and Competitive Act
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Allows for “grease” payments to cut red tape, such as getting shipments trough customs, getting permits.
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