Political/ Legal environment Flashcards
rule of the game
normative codes that guide, control or change the behaviour of agents with decision making capacities
define what is permissible
formal or informal
social constructs created by interaction and discours of members of society
include: law, norms, standard
laws
public regulations determinded by political process and enforced by state
include acts, executive order, judicial decisions, statutes, delegated authority government agency decison
norms
determined by society & inculcated by socialixation and enforced informally by social pressure
customary, informal
guided by a shared value
standard
set by PRIVATE institutions and associations and self regulated
health standards is the law, not standard bc it’s set by the government
enforcement: can be informal or santionced by state
enforcement of laws
the state exercises a monopoly on the legitimate use of physical force within a given territory
rule of law vs rule of man
rule of law: apply to every member of society, including public official
rule of man- legal rights derive from ruler; the notion that the word and whim of the ruller no matter how arbitrary
common law
cumulative decision by judges on individual cases through history
case create legal precedents
evolutionary differences in case law across countries using common law, emphasize on pattern rather than principles
common law is foundation of UK and therefore effect colonies
civil law
based on codification of what is and is not allowed
relies on delaration of broad, general principles
orginated in bibilical times, reinforced by the french
french cival law adopt the separation of legislature and court
theocratic law
based on the officially established rules governing faith and practice of particular religion
theocracy: country that applies religious law to civil and criminal conduct
IP
IP= creative ideas, expertise or intangible knowledge that gives competitive advantage
IP rights
refer to the right to control and appropriate the benefits from creative work, inventions processes and identifiers
Trade- related intellectual property rights
minimum standard of IP protection
compulsory licensing in emergency situation
right to use patent without of IP holder after asking for right
economic freedom and political freedom
roughly correlates
martime law
law of sale, hire, bailment
ha its own court and own corporate law
constitute mix of civil and common
include international convention
sanction
restraints against commerce wit another country
embargo
comprehensive sanction against all commerce with given country
extraterritoriality
attempt to regulate business activities outside of home country
gov impose domestic legal and ethical practices on person/activities outside of state border
expropriation vs confiscation
nationalization: transfer asset ownership from private sector to public sector
expropriation: goverment takeover with compensation
confiscation: governemnt takeover without compensation to private owners
political risk
any changes in politcal environment that may adversely affect the value of the firm’s business activities
split into
ownership risk: expropriation + confiscation
operating risk: danger to operation/ employee
transfer risk: interference in firm ability to shift fund
politcal risk evaluation
country risk
industry risk
mechanical portfolio approach to evaluat threats and opportunities
result in overlooking firm specific threats
political risk management
longer term commitment
carrot stick involves–> adding or withholding investment
corruption
abuse of entrusted power for private gain