MGF2351 Lecture 2 International Business Environment 3 slides (1).pdf

MGF2351 Lecture 2 International Business Environment 3 slides (1).pdf

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1 MGF 2351 Week 2 International Business The International Business Environment (cont.) Legal System, Transition Economies, & Economic Development Objectives 1) Analyse why countries differ in legal systems 2) Explore the influence of legal systems on: a) Contract Law b) Property Rights and Corruption c) Protection of Intellectual Property d) Product Safety and Liability 3) Investigate why countries vary in levels of economic development 4) Discuss transition economies and their movement towards market-based systems 5) Understand the implications of differences in the political economy for international business Legal systems The rules that regulate behavior The processes through which the laws are enforced redress for grievances is obtained Three types of legal systems (legal traditions): Common law: Based on tradition (developed during Middle Age) , precedent [Mabo v Queensland (No 2)] , and custom Civil law: Based on detailed set of laws organized into codes Theocratic law: Based on religious teachings
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2 Legal systems (cont.): Common law System evolved in England over hundreds of years and is used widely in the UK and its former colonies [e.g. USA, Canada (except Quebec), Australia, NZ, Malaysia, and Singapore] Based on court or tribunal decisions, which govern future decisions on similar cases Judges act as neutral referees and have the power to interpret the law so that it applies to the unique circumstances of an individual case Supplemented by Statutory Laws Legal systems (cont.): Civil law Most common form of law Traced back to Roman law Prevalent in more than 80 countries (i.e. Germany, France, Russia etc.) Based on codification of a very detailed set of laws Judges have less flexibility than those in a common law system as they can only apply the law rather than interpret it Legal systems (cont.): Theocratic law/Theocracy Most prevalent in the Middle East (i.e., Iran, Oman and Saudi Arabia) and in some African countries (i.e., Somalia and Nigeria) following strong Islamic faith official religious teachings: laws of God moral behaviour that governs faith and practice Islamic law is the most widely practiced theocratic legal system in the modern world Jewish, Hindu, and Catholic law are still practiced
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3 Legal systems (cont.) Why is a country s legal system important for IB? Regulates business practice Defines how business transactions can occur Sets out rights and obligations of parties to a business transaction Four important legal system implications for IB Contract Law Property Rights and Corruption Protection of Intellectual Properties (IPR) > Trademarks, copyrights, patents etc.
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