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Revise-Ibt M2

This module discusses legal, technological, and accounting issues for international businesses. The module has 6 intended learning outcomes related to describing different legal systems, explaining how domestic laws affect international business, listing ways to resolve disputes, and identifying factors influencing accounting systems and political risk. The document provides details on different types of legal systems including common law, civil law, religious law, and bureaucratic law. It also discusses how domestic laws can affect export firms, laws directly impacting international transactions like sanctions and extraterritoriality, and laws against foreign firms through nationalization, expropriation, and constraints on ownership. Assessment tasks include workbook exercises, quizzes, and reflection papers.

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Ramil Villacarlos
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68 views3 pages

Revise-Ibt M2

This module discusses legal, technological, and accounting issues for international businesses. The module has 6 intended learning outcomes related to describing different legal systems, explaining how domestic laws affect international business, listing ways to resolve disputes, and identifying factors influencing accounting systems and political risk. The document provides details on different types of legal systems including common law, civil law, religious law, and bureaucratic law. It also discusses how domestic laws can affect export firms, laws directly impacting international transactions like sanctions and extraterritoriality, and laws against foreign firms through nationalization, expropriation, and constraints on ownership. Assessment tasks include workbook exercises, quizzes, and reflection papers.

Uploaded by

Ramil Villacarlos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module Number: 2 of 10

Lesson Title/Topic: Legal, Technological, and Accounting


Week Number: 2
Intended Learning Outcomes: (specific and measurable, and learner-oriented)

At the end of this unit, the students should be able to:

1. Describe the major types of legal systems confronting international businesses.


2. Explain how domestic laws affect the ability of firms to conduct international
business.
3. List the ways firms can resolve international business disputes.
4. Describe the impact of the host country’s technological environment on
international business.
5. Identify the factors that influence national accounting systems.
6. Explain how firms can protect themselves from political risk.
Learning and Teaching Support Materials
1. Module
2. Google classroom
3.Other books
4.Other websites
Lecture Proper and Discussion

Legal, Technological, Accounting, and Political Environments

III.1 The Legal Environment


A domestic firm must follow the laws and customs of its home country. An
international business faces a more complex task: It must obey the laws not only of its home
country but also the laws of all the host countries in which it operates. Both home and host
country laws can critically affect the way international firms conduct their business. These
laws determine the markets firms may serve the prices they can charge for their goods, and
the cost of necessary inputs such as labor, raw materials, and technology. The laws may also
affect the location of economic activity.

a. Differences in Legal Systems - National legal systems vary dramatically for


historical, cultural, political, and religious reasons. The rule of law, the role of
lawyers, the burden of proof, the right to judicial review, and, of course, the laws
themselves differ from country to country.
 Common Law is based on the cumulative wisdom of judges’ decisions on
individual cases through history. These cases create legal precedents, which
other judges use to decide similar cases. Common law has evolved
differently in each common law country. Thus, laws affecting business
practices vary somewhat among these countries, creating potential problems
for the uninformed international businessperson.
 Civil law another common form of legal system, civil law, is based on a
codification, or detailed listing, of what is and is not permissible. The civil
law system originated in biblical times with the Romans, who spread it
throughout the Western world.

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 Religious law is based on the officially established rules governing the faith
and practice of a particular religion. A country that applies religious law to
civil and criminal conduct is called a theocracy.
 Bureaucratic law. The legal system in communist countries and in
dictatorships is often described as bureaucratic law. Bureaucratic law is
whatever the country’s bureaucrats say it is, regardless of the formal law of
the land. Contracts can be made or broken at the whim of those in power.

b. Domestically Oriented Laws - Domestically oriented laws may also inadvertently


affect the business practices of foreign firms operating outside the country’s
borders. Often firms whose products are geared to the export market alter their
production techniques to meet the regulations of the importing countries, even
though the firms’ operations are legal within their home country.
c. Laws Directly Affecting International Business Transactions - A country may
attempt to induce a second country to change an undesirable policy by imposing
sanctions—restraints against commerce with that country. An embargo—a
comprehensive sanction against all commerce with a given country—may be
imposed by countries acting in unison or alone. Countries may also attempt to
regulate business activities that are conducted outside their borders, a practice
known as extraterritoriality.
d. Laws Directed against Foreign Firms – when leftist governments obtain power,
they choose to transfer ownership of resources from the private to the public
sector, a process known as nationalization. Most vulnerable to such actions are
industries that lack mobility: natural resource industries such as crude oil
production and mining, and capital-intensive industries such as steel, chemicals,
and oil refining. When the host government compensates the private owners for
their losses, the transfer is called expropriation. When the host government offers
no compensation, the transfer is called confiscation.
 Privatization is the opposite of nationalization and creates opportunities
for international businesses. Most state-owned enterprises sold to the
private sector are unprofitable, undercapitalized, and overstaffed.
Nevertheless, they are often attractive to international businesses seeking
to expand their operations into new markets located in key sectors of a
national economy, such as telecommunications, transportation, and
manufacturing.
 Constraints on Foreign Ownership. Many governments limit foreign
ownership of domestic firms to avoid having their economies or key
industries controlled by foreigners.

e. The Impacts of (Multinational Corp. / Company) MNCs on Host Countries -


Firms establishing operations beyond the borders of their home country affect and
are affected by the political, economic, social, and cultural environments of the
host countries in which the firms operate. To compete effectively in these markets
and maintain productive relationships with the governments of the host countries,
managers of MNCs must recognize how they and their firms should interact with
the national and local environments.

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Suggested Teaching-Learning Activities

● Article Critiques
● Inductive Reasoning

Assessment Tasks/Outputs

1)answering workbook exercise


2)quiz through google forms
3)reflection paper

Readings and Other References

Griffin, R. W., & Pustay, M. W. (2015). International Business: A Managerial Perspective


Eight Edition. Texas: Pearson.
Retrieved from: www.freebookslides.com Hult, G. M., & Hill, C. W. (2019).
International
Business: Competing in the Global Market. New York: McGraw-Hill Education.
Retrieved from: www.freebookslides.com

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