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ADMS 3960 Final Notes.docx

39 Pages

Administrative Studies
Course Code
ADMS 3960
Ingrid Splettstoesser

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INTERNATIONAL BUSINESSFINAL NOTESName Benjamin D Eyison Date18th July 2013Ch3The Political and Legal Environments Facing BusinessthLecture 6 October 28 2010KEY CONCEPTSDefition of Legal System The mechanism for creating interpreting and enforcing the laws in a specified jurisdictionModern legal systems exhibit elements of constitutional law criminal law and civil and commercial laws Constitutional Lawsets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations Criminal Law safeguards society by specifying what conduct is criminal and prescribing punishment to those who breach these standards Civil and Commercial Lawsensures fairness and efficiency in business transactionsFor example the USUK have a common law systemIncludes institutions and procedures too ensure laworder o Resolve disputes o Protect property including intellectual property o Tax economic outputTypes o Common law is a legal system of jurisprudence based on judicial precedents Also it is based on tradition judgemade precedent and usage o Civil law is a legal system of jurisprudence based on statutory laws Also it is based on the systematic codification of laws and codeso Theocratic law is a legal system of jurisprudence based on religious teachings It relies on religious doctrine precepts and beliefs to define the legal environmento Customary law is based on norms of behavior practiced over a long period Also it is anchored in the wisdom of daily experience o Mixed systems emerges when a nation uses two or more of the preceding legal systemsRule of Manultimate power resides in a personRule of Lawinstitutes a just political and social environment guarantees the enforceability of commercial contracts and business transactions and safeguards personal property and individual freedom The rule of law holds that no individual is above laws that are clearly specified commonly understood and fairly enforcedo Level playing field for all o Predictable and consistent application of laws o Transparency o Generally respected by public Extraterritoriality the extension of national laws beyond the home country 1 Means that companies from that country must abide certain rules no matter where they operateExample US nationals and IranExample proposed Canadian legislation on mining companies2 Depending on the law may even catch those who have no connection to home countryExample HelmsBurton Act in US and effect on Sherritt InternationalExample US Alien Tort Claims Act CorruptionIllegal in all countries but may not be enforcedNumerous international agreements and lawsCan harm business in numerous waysExample SiemensExample BAE and Saudi Arabia thLecture 7 November 04 2010POLITICSPolitical systemstructural dimensionspower dynamics of prevailing government The fundamental goal of a political system is to integrate different groups into a functioning selfsustaining and selfgoverning society The test of a political system uniting a society in the face of divisive viewpoints Success supports peace and prosperity Failure leads to instability insurrection and ultimately national disintegrationIndividualismrights selfexpression and freedomtied to democracy Individualism refers to the primacy of the rights and role of the individual The principle that all men have certain unalienable Rights that among these are Life Liberty and the pursuit of Happiness The business implications of individualism hold that each person commands the right to make economic decisions largely free of rules and regulations Countries with an individualistic orientation shape their marketplace with the idea of laissezfaire meaning leave things alone Collectivism refers to the primacy of the rights and role of the groupThis doctrine emphasizes the primacy of the collectivewhether it is a group party class society nation race etcover the interest of the individual Collectivism in the business world holds that the ownership of assets the structure of industries the conduct of companies and the actions of managers must improve the welfare of society Totalitarianismsingle agent monopolizes political power A totalitarian system subordinates the individual to the interests of the collective A single agent in whatever formsuch as an individual an assembly a committee a junta or a partymonopolizes political power Types of totalitarian systems include Authoritarianism the regime tolerates no deviation from state ideology Fascismthe control of peoples minds souls and daily existence and a social and political ideology with the primary guiding principle that the state or nation is the highest priority rather than personal or individual freedoms Secular totalitarianism a single political party forms a government in which only party members hold office elections are controlled through unfair laws dissent is tolerated as long as it does not challenge the state and organized religions Theocratic totalitarianism Under this system government is an expression of the preferred deity with leaders often claiming to represent the deitys interests on earth Example Taliban and Iran clergy POLITICAL RISK Political Riskis defined as as the potential loss arising from a change in government policy More precisely political risk is the likelihood that political decisions events or conditions will affect a countrys business environment in ways that will cost investors some or all of the value of their investment or force them to accept lower rates of return The global economic crisis had increase political risk in the world The primary types of political risk from least to most disruptive are Systematic Procedural Distributive and Catastrophic DistributiveDistributive political risk is creeping expropriation increased taxes on profits elimination of foreign companies local property rights CatastrophicCatastrophic political risk can devastate companies and countries It disrupts the business environment in a way that affects every firm in the country If such disruptions spiral out of control they devastate companies and countries OPERATIONAL CONCERNS The Rules of the GameGetting Started Starting a business involves many legal activities registering its name choosing the appropriate tax structure getting licenses and permits arranging credit and securing insurance For example starting a business is a straightforward process in Australia requiring one registration procedure that encompasses tax labor and administrative declaration Whereas in Africa 75 days in Chad Making and Enforcing Contracts Once up and running managers turn to entering and enforcing contracts with buyers and sellers A contract is a binding legal agreement that formally exchanges promises the breach of which triggers legal proceedingsHiring and Firing No matter where you are operating you will have to hire and when necessary fire workers Many countries have flexible firing rules however some have very robust rules Necessary terminations are extremely difficult to execute and often involve extensive negotiations and settlements Companies think twice 10 times before they hire new people Hero Group
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