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Click to edit Master title style,Click to edit Master text styles,Second Level,Third Level,Fourth Level,Fifth Level,*,*,*,Chapter 4,Political Environment Facing International Business,Learning objectives,gain an understanding of political decision-making structures in different national systems and how they interact with business,assess the processes of building democracy and how democratic institutions affect the international business environment,appreciate the dimensions of political risk in business decision-making,understand the changing role of transnational and regional forces in political processes worldwide,Text: The Changing Political Environment,Introduction,How political factors affect business,Political risk,Transitional democracies and international business,Global politics,Introduction,Business, from global corporations down to family-run enterprises, desire a stable and reasonably predictable environment in which to carry on their activities.,People everywhere wish to see public order to be maintained, public services function effectively and government officers carry out their duties. But they want more besides.,How political factors affect business,Politics has been defined in numerous different ways, but all highlight the function of conflict resolution in society.,Broadly, politics refers to processes by which a social group allocates the exercise of power and authority for the group as a whole.,Breaking down the definition into three elements,First there is the existence of a social groupthe word politics derives from the Greek word polis, meaning city-state, a political community.,Second, politics concerns power relations.,The third element is the terrain of politics, the social group as a whole.,Political risk,There is virtually no country which has not been the target of foreign attack or invasion at some point in its history.,States must also concerned with threats such as terrorism, whether originating from disenchanted groups within society or from outside the state.,Transitional democracies and international business,Transitional democracies are now in the international spotlight, as they represent emerging markets seeking to attract international business.,Global politics,It is increasingly recognized by governments that state no longer have the means to deliver national security and material well-being on their own.,Political leaders of the major industrial democracies, known as the Group of Seven or G7 countries, have been meeting annually since 1975 to discuss important economics and political issues facing their societies and the international community generally.,Key terms,politics,政治,intervention,干预,terrorism,恐怖主义,Transitional democracy,过渡民主,Summary of key points,Different national systems cause different political decision-making structures, and they also interact with business.,Democratic institutions affect the international business environment.,There are several dimensions of political risk such as national security and terrorism in business decision-making which worth global attention.,The role of transnational and regional forces is changing in political processes.,Comprehension Questions,1. What does politics refer to?,2. What are the political risks to international business according to the text?,3. List the main defining features of democracy.,4. What are the sources of possible instability in transitional democracies?,5. What is the trend of global politics?,1. What does politics refer to?,Broadly, politics refers to processes by which a social group allocates the exercise of power and authority for the group as a whole. Breaking down the definition into three elements, first there is the existence of a social groupthe word politics derives from the Greek word polis, meaning city-state, a political community. Second, politics concerns power relations. The third element is the terrain of politics, the social group as a whole.,2. the political risks to international business according to the text?,While the end of the cold war brought an end to the standoff between the two superpower blocs, threats to peace remain all over the globe, often in regional conflicts which can erupt at any time.,States must also concerned with threats such as terrorism, whether originating from disenchanted groups within society or from outside the state. Terrorists have little respect for sovereignty and, indeed, terrorism is used as a political tool by some organizations. Terrorists group with ample funds are able to tap into global arms markets.,3. List the main defining features of democracy.,In some of these states, in Central and Eastern Europe, multipartyism has produced fragile democracies. Because they seem to be on the path to consolidation, they present relative stability for investors. On the other hand, privatization has been subject to political influences of vested interests,At the other extreme are the partial democracies, with elected assemblies, but within single-party states where civil and political right are limited. While these regimes see unity in the single party, their intolerance of opposition makes them closer to authoritarianism.,Transitional democracies look to outside sources to provide economic development, through investment and financial aid, and, increasingly their political systems are brought into the economic equation.,4. What are the sources of possible instability in transitional democracies?,For foreign investors, they represent new markets, but carry considerable political risks, as businesses cannot be insulated from local political life. Indeed, successful operations often hinge on trust and co-operation with host political authorities. However, if the political risk becomes too high, investors will flee. As the example of Costa Rica has shown, stable and transparent political institutions seem the best long-term guarantee of economic development, a more attractive business environment and a better quality of life for citizens.,5. What is the trend of global politics?,It is increasingly recognized by governments that state no longer have the means to deliver national security and material well-being on their own. Interdependence and co-operation have generated numerous alliances and international organizations, the most influential being the UN Organizations, both governmental and non-governmental organizations (NGOs) have gained in political influence and become part of the international institutional process in some areas of global concern, such as human rights (for example Amnesty International) and the environment (for example Greenpeace).,Apply understanding,1. To what extent is the changing economic environment affecting social relations in modern industrial societies?,2. It is often said that class no longer has any meaning in modern society. To what extent is this true?,3. Assess the changes in the structure and nature of work in the new information economy.,Essay writing,What are the links between democratization and economic development? Give two examples and assess what impacts they have brought.,Discussion question,Contribution First, Profits Second?,Case study: Should government be running the railways?,Case-related questions:,Summarize the effects of political ideology on the management and ownership of railways in Britain.,What public interest is served by government involvement in the management and ownership of railways?,What are likely to be the key differences between the objectives of a railway in private ownership and a railway in state ownership?,Point-counterpoint,Is a Milwaukee Smoking Ban needed?,Point,The Common Council has the opportunity and the responsibility to pass strong, smart, simple smoke-free workplace protection .,When tobacco smoke is eliminated, workers are healthier, more productive and absent less .,Everyone has the right to breathe clean air.,Counterpoint,It should be a demand from the consumer that motivates a business to go smoke free, not the government.,No one is forcing employees to work in a smoking environment.,There are other weaknesses to the ban.,Political risk to international business,External threats from terrorist groups who wish to destabilize the country.,Armed groups, such as sections of the military, who have a political power base, and pose a threat to the established government.,In federal or other decentralized countries, strong regional states which can threaten the stability of central government and even assert independence from the centre.,Any government whose basis of control is military power rather than the ballot box, as they are liable to fall by the same means that they acquired power in the first place.,Factionalized, political leadership based on personal ties (cronyism), where government assurances may last only as long as the faction holds the ascendancy.,Generally, countries without established democratic institutions to ensure transparency of processes and stable transition between governments.,Features of contemporary democratic,Freedom of opinion, expression, press, and freedom to organize,Elections in which voters decide who is to represent them,Limited terms for elected officials,An independent and fair court system, with high regard for individual rights and property,A nonpolitical bureaucracy and defense infrastructure,Citizen accessibility to the decision-making process,Some,areas of political decision-making which impact on business,Extent of the welfare state and how it is financed (including health, education, housing, pensions, social security benefits),Regional development policies and funding,Fiscal and monetary policies, such as taxation and currency rules,Environmental policy and how to enforce it,Law and order in society,Reform of the division of power between central, regional and local authorities,Agriculture and food,Defense, military establishment and decision to use armed forces in particular situation,Immigration,Webalert,:/,Internet resources on politics,:/,Internet resources on parties and elections,:/,For elections, parties and parliaments, the above are useful.,:/,International Foundation for Election System,Further reading,Hague, R. and Harrop, M. (2001),Comparative Government and Politics: An Introduction,(Basingstoke: Palgrave),Held, D. (ed.) (1993),Prospects for Democracy,(Cambridge: Polity Press),Heywood, A. (1997),Politics,(Basingstoke: Macmillannow Palgrave),Assignments,Preview Chapter 4,Read more articles about the political environment facing international business,Find out American political systems and their effects on American business.,Thank You!,
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