The Policy Wonks

Team Members
No. Name ID
01 Md. Mirajul Islam 20133023

02 Partho Saha 20133024

03 Hasibul Hossen Shanto 20133025

04 Kazi Mujtoba Shahria 20133026

05 Ausaf Al Adib 20133027

06 Monika Rani 20133028

07 Omar Faruk Rifat 20133029

08 Md. Nur Uddin 20133030

 Political and Legal Environment
Serial No. Topic
01 Political Similarity and Political Diversity
02 Democracy Vs Totalitarianism

03 Perspective of Home Country &Host Country

04 Meaning And Form Of Political Risk

05 Evaluation of Political Risk
06 Management of Political Risk
07 Legal System And The Principle of International Business Law
08 Wide Variance In National Business Laws And The Issue of
Legal Standardisation
Monika Rani
ID :20133028
Political Similarity and Political Diversity

 Political similarity refers to the degree of resemblance or compatibility

between the political systems, ideologies, and policies of different
countries. It implies that countries share similar political structures, values,
and approaches to governance.

 On the other hand, political diversity refers to the existence of significant

differences in the political systems, ideologies, and policies among
countries.

 Political similarity can facilitate trade, investment, and regulatory

alignment, while political diversity can offer market opportunities, risk
diversification, and innovation. Both aspects play a role in shaping the
international business landscape, and understanding their implications
helps businesses navigate and succeed in different political contexts.
Md. Mirajul Islam
ID :20133023
 Democracy vs Totalitarianism
 In democracy power is decentralized and distributed among citizens through free
and fair election whereas in totalitarianism power is centralized in the hands of a
single leader or ruling party.

 In case of democracy, citizens have the right to participate in the political

process, express their opinions and engage in public debate. Totalitarianism is
feasible when political participation is limited or non existent. Citizens have
little to no say in the decision making process and dissenting opinions are often
suppressed or punished.

 Democracy is based on the principle of the role of law. The government

including elected officials, is subject to the law and operates within its
boundaries. Independent Judiciary ensure fairness and Justice.

Where the rule of law may be manipulated or ignored to serve the interests of the
ruling party or leader in totalitarianism.
Hasibul Hossen Shanto
ID :20133025
Perspective of Home Country &Host Country
Home country perspective :
Home country perspective can manifest in various ways. Individuals may have a
particular political ideology or affiliation that aligns with the dominant or prevailing
political parties or movements in their home country. They may be invested in the
political processes and developments within their country, such as elections, policy-
making, and civic participation.
Host country perspective :
The host country perspective in the political and legal environment refers to how
individuals perceive and navigate the political and legal systems of the country in
which they currently reside or where they have temporarily relocated. It involves
understanding and adapting to the political and legal norms, institutions, and processes
of the host country.
Omar Faruk Rifat
ID :20133029
 Definition of Legal System
The legal system refers to the set of laws, rules, and procedures that govern how a
society resolves disputes and enforces laws. It includes various institutions, such as
courts, law enforcement agencies, and legal professionals, they use to interpret and
apply the law.
Example: Common law system(used in the United States, Canada, and the United
Kingdom).The civil law system(used in France, Germany, and Japan)

Definition of International Business Law

International business law refers to the legal framework that governs commercial
transactions and interactions between different countries.

Example: Contracts for the International Sale of Goods (CISG).

 Some Key Principles of International Business Law

(1)
(3) (5)
National
Fair Dispute
Sovereignty.
competition resolution.
.
(2)
(4) (6)
International
Protection Compliance
agreements.
of with
intellectual internationa
property. l standards.
 National sovereignty: Every country has the right to govern its own affairs, including its
economic policies and laws.

 International treaties and agreements: Countries can enter into agreements and treaties with
other nations to regulate their economic and business activities.

 Fair competition: International business law seeks to promote fair competition between
businesses from different countries, while also preventing anti-competitive practices such as
monopolies and price fixing.

 Protection of intellectual property: International business law provides protection for intellectual
property, such as patents, trademarks, and copyrights, to encourage innovation and creativity.

 Dispute resolution: International business law includes mechanisms for resolving disputes
between parties from different countries, such as arbitration and mediation.

 Compliance with international standards: International business law requires businesses to

comply with international standards and regulations, such as those related to environmental
protection, labor standards, and human rights.
Ausaf Al Adib
ID :20133027
 Wide Variance in National Business Laws and the
Issue of Legal Standardisation
Wide variance in national business law refers to the significant differences in regulations,
requirements, and legal frameworks that govern businesses across different countries.
Examples of such variance include variations in company formation procedures, licensing
and permits, labor laws, intellectual property rights, taxation, and contractual and
commercial laws. Understanding and complying with these diverse laws are crucial for
businesses operating internationally.
Problems of Wide Variance in National Business
Laws in international business
There are many areas where the national business law differs widely and that causes problems to
the international business. For example :
 The provisions of anti-trust law and financial law differ widely from one country to the other.
 In some cases where the majority of the assets of a company lie in one country but a large share
of the liabilities is related to some other country. If the law of the two countries differs, there
will be a serious problem for the company while managing liquidation.
 It is difficult to protect intellectual property rights in a country where the laws are implemented
loosely.
Legal Standardisation
These problems can be controlled with the standardisation of legal issue across countries.
Such efforts are afoot, although it is a very lengthy process and moreover, the political and the
business environment in different countries are different with the result that many
governments may not reach a consensus. Sometimes legal issues of global importance are
dealt with differently in different countries, and they have an adverse impact on international
business.
Two of the more important of these legal issues are intellectual property rights and taxation.
 Intellectual Property Rights: It is very important for international business. Intellectual
property is a property that is the outcome of the people’s intellectual talent and abilities, for
example, specific designs, formula, and so forth. Since this type of property helps generate
income, those developing the designs and formula need some sort of protection under the
law so that they are able to generate income over a long period of time.
Several kind of intellectual property rights are:
 A patent is a sort of protection granted to the inventor of the product or the process that does
not allow others to make use of such inventions.
 Trademark is a symbol that differentiates a product from similar products. So long as the
symbol is there, the product continues to remain differentiated.
 Copyrights are related to published material and they protect the publication from being copied.
Taxation:
Taxation is another aspect where efforts are afoot to standardise rates. International firms move to a
country where, among other things, the tax rate is low. In case the tax rate is high, these firms
adopt transfer pricing in order to siphon off the before-tax profits to a country where tax rate is
low. Alternatively, they transfer their dividends to be received from subsidiaries to tax haven
countries.
Kazi Mujtoba Shahria
ID :20133026
 Meaning of Political Risk?
There is no single definition but in broad terms
political risk:
The risk that businesses, investors and governments may
face when there is a change in the politics or political
outcomes. As such, if there is a change in the politics of
a country that negatively affects your goals such as
business or investor, then that is known as political risk.
Political risk is hard to measure and anticipate, because it
is often the result of people’s decisions.

Political risk is said to exist when sudden and

unanticipated changes in political set-up in the host
country lead to unexpected discontinuities that bring
about changes in the very business environment and
corporate performance.
- Thunell (1977)
Why Do We Care?
A political risk is important, because it helps understand what the risk are associated
with an investment into a particular country. For example:
1. A mining company wants to invest in Mongolia to produce copper for next 20
years .
2. A food company may be operating in Venezuela .
3. High levels of unemployment and reserving food prices in the Middle East .

Political risk can affect each and every of us either declaring directly.
 Classification of Political Risk
According to Czinkota (1999),
 Ownership Risk: Ownership risk exposes property and life.
 Operating Risk: Operating risk includes interference of the host
government with the ongoing operations of the firm.
 Transfer Risk: Transfer risk concerns the transfer of funds, either to
home country or to any other country.
According to Stephen Kobrin (1982),
 Macro risk or country-specific risk: Macro risk is a type of political
risk that can impact all businesses operating within a country. Common
examples of macro risk include changes in monetary policy, shifts in
the regulatory or tax regime, and political or civil unrest
 Micro risk or firm-specific risk: Micro risk is a type of political risk
that refers to actions in a host country that can adversely affect selected
foreign operations of a company that does business internationally.
Md. Nur Uddin
ID :20133030
 Management of Political Risk

Defensive Approach Integrative Approach

◾The aim is to protect and preserve the ◾The aim is to make the foreign unit an integral
firm’s strength by reducing dependence on a part of the host country.
single subsidiary. ◾Employment in large measure of local personnel.
◾Borrowing from the host country sources. ◾Developing proximity with the political elite.
◾Minimizing the role of host country ◾Use of local distributors and professionals.
nationals in the management. ◾Typically, a multi-domestic company adopts
◾Focusing on R&D in the home country. more of this approach.
◾Maintaining a single global trademark.
◾Basically, a global farm puts emphasis on
this approach.
Depending on the type and level of risk the investment entails, a political risk management technique is employed. The time
of the steps taken also affects the outcome.
 
 Time of the Action

1 Management Prior to Investment

2 Risk Management during the Lifetime of the Project

3 Risk Management following Nationalism

Partho Saha
ID :20133024
Evaluation of Political Risk
Evaluating political risk is essential for decision-making in various areas, including
international business, investment, and government policy. While I can provide you
with a general framework for evaluating political risk, it is important to note that
specific assessments may vary depending on the context and region under
consideration.

Here are some key factors to consider:

 Stability of the Political System
 Government Policies and Regulations
 Political Leadership and Competence
 Socioeconomic Factors
Qualitative Approach
A qualitative approach to evaluating political risk involves assessing subjective factors
and gathering qualitative information to form judgments and opinions about the potential
impact of political factors. This approach relies on qualitative data, such as interviews,
expert opinions, case studies, and historical analysis, to gain a deeper understanding of the
political landscape and its potential risks.

Here are some key components of a qualitative approach to evaluating political risk:

 Expert Interviews
 Case Studies and Historical Analysis
 Stakeholder Analysis
 Country and Regional Studies
Quantitative Model
A quantitative model for evaluating political risk involves using statistical and
numerical data to measure and quantify various political risk factors. This
approach relies on quantitative indicators, metrics, and statistical analysis to
assess the likelihood and potential impact of political risks.

Here are some key components of a quantitative model for evaluating political
risk:

 Data Collection
 Risk Index Construction
 Time-Series Analysis
 Regression Analysis
THANK YOU
Any Questions?