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The Political, Legal, and Technological Environment of Global Business
The Political, Legal, and Technological Environment of Global Business
Chapter 2
Chapter Outline
Political systems Four global foundations of law Principles of international law Legal and regulatory issues Technological environment and global shifts in production
Political Systems
Democracy: government by citizens or by elected officials
Fair and free elections Freedom of the press, speech, assembly, and religion Economic freedom Non-political police and court system Civilian control of the military
Source: www.freedomhouse.org
Partly free countries have some characteristics of a democracy and some characteristics of a dictatorship
Nationalization
Nationalization is the conversion of a private enterprise to government ownership. Almost always initiated by the government.
The government may or may not pay the company's stockholders or investors for the enterprise. When the companies are paid for the property, the price is usually set by the government and is usually far below the market value of the property. When no payment is made, the conversion is called expropriation or confiscation
Nationalization in Russia
Russia has large oil reserves and the world's largest reserve of natural gas. Russia privatized its energy industry in the 1990's and re-nationalized most of it in 2006. In late 2006, Russia forced Shell and several other western companies to sell a controlling interest in a major oil drilling venture to the government energy company (Gazprom), which is now a monopoly. BP had a joint oil venture with several Russian investors. Russia forced BP to give majority control to the Russian investors.
Dumping
Dumping occurs when
a company sells a product in a foreign market for less than the cost of production and shipment or a company sells a product in a foreign market for less than the price charged in the home country
It is often hard to prove that a company has sold a product below cost.
Countervailing Duties
The World Trade Organization allows its members to punish dumping by charging an import tariff, called a countervailing duty. In most countries, these tariffs can be imposed if the government investigates and concludes that dumping has occurred AND domestic producers can show that they have been harmed by dumping Countervailing duties can also be imposed if a domestic producer has been harmed by subsidies.
Biotechnology
Genetically modified crops Biofuels, such as ethanol
E-Business Capabilities
Business-to-business e-commerce: global purchasing, sales, collecting payment, financial services Business-to-consumer:
Online purchasing and payments Online financial services Debit cards and electronic cash Wireless communication, cell phones, and phone cards improve communication in remote areas and poor countries
E-Business Issues
Electronic technology and standardization GSM vs. CDMA technology for telecommunications Microsoft Windows vs. Linux
Linux is open source software that can be modified by users. Ubuntu is a version of Linux that is more suitable for end users than earlier versions.
Reliability of telecommunications Software for language translation Web sites in various languages