Legal, Technological, and Political Forces

The Legal Environment
While domestic firms must follow laws and customs of home country, international businesses must obey laws of home country and all host country.

Legal Systems

• Common Law
• Civil Law
• Religious Law
• Bureaucratic Law

Common Law

• Based on wisdom of judges decisions on individual cases through history.
• Cases create legal precedents.

Countries Using Common Law

• United States
• Canada
• Australia
• India
• New Zealand
• Barbados
• Saint Kitts
• Nevis
• Malasysia

Civil Law

• Based on codification of what is and is not permissible.
• Originated on biblical times with the Romans.
• Reinforced by French Napoleonic code.
• Judge detemines scope of evidence collected and presented.

Religious Law

• Based on the officialy established rules governing faith and practice of a particular religion.
• A country that applies religious law to civil and criminal conduct is called a theocracy.

Bureaucratic Law
Bureaucratic Law is a legal system in communist countries and in dictatorships.

The Technological Environment

• Infrastructure
• Agricultural land
• Low-cost labor
• Resources
• Rich natural resources
• Skilled labor

Political Risk Assessment 

• Ownership risk
• Operator risk
• Transfer risk