Book · January 012 citation reads 15,521 2

Type
Impact on firms
Expropriation	– loss of future profits
Confiscation	– loss of assets, loss of future profits
– campaigns against foreign goods	– loss of sales, increased costs of public relations efforts to improve public image
– manadatory labor benefits legislation	– increased operating costs
– kidnapping, terrorist threats, and other forms of violence	– disrupted prodduction, increased security costs, increased managerial costs, lower productivity
– civil wars	– destruction of property, lost sales, disruption of production, lower productivity
Inflation	– higher operating costs
Repatriation	– inability to transfer funds freely
– currency devaluations	– reduced value of repariated earnings
– increased taxation	– lower after - tax profits

Source: Griffin, W.R. – Pustay, W.M. (2007): International business – a managerial perspective.
New Jersey: Pearson Education, Inc., Upper Saddle River, 2007, p.71

2. Legal Environment

One reason why there are so many diffrent laws and regulations is that today´s international environment is so confusing and challenging for MNCs. According to Hodgetts - Luthans (2000), there are four fundations on which laws are based around the world:

1. 
   Islamic law. This is law derived from interpretation of the Qur´an and the teachings of the Prophet Mohammed. It is found in most Islamic countries in the Middle East and Central Europe.
   

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2. 
   Socialist law. This law comes from the Marxist socialist system and continues to
   

influence regalations in former communist countries, especially those from the former Soviet Union as well as present day China, Vietnam, North Korea, and Cuba.

3. 
   Common law. This comes from English law, and it is the foundation of the legal system in the United States, Canada, England, Australia, New Zealand, and others,
   
4. 
   Civil or code law. This is derived from Roman law and is found in the non-Islamic and non-socialist countries such as France, some countries in Latin America, and even Louisiana in the United States.
   

1. 
   Basic Principles of International Law
   

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When compared with domestic law, international law is less coherent because its sources embody not only the laws of individual countries concerned with any dispute but also treaties (universal, multilateral, or bilateral) and convections (such as Geneva Convection on Human Rights or the Vienna Convention of Diplomatic Security). In addition, international law contains unwritten understandings that arise from repeated interactions among nations. Conforming to all the different rules and regulations can create a major problem for MNCs. Fortunately, much of what they need to know can be subsumed under several broad and related principles that govern the conduct of international law.