Chapter 2 National Differences In Political Systems Legal Environment Economic Development Cultural...
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Transcript of Chapter 2 National Differences In Political Systems Legal Environment Economic Development Cultural...
Chapter 2
National Differences In
Political Systems
Legal Environment
Economic Development
Cultural Environment
Learning Objectives
Deregulation, Privatization
Country Attractiveness Benefits CostsFirst Mover vs. Last Mover Advantages
Learning Objectives
Business Environment Political Economic Legal Cultural
Chapter Focus
The term Political Economy is used to stressthat the political, economic, and legal systems of a country are not independent of each other.
This chapter will review these systems and explore how differences in political economy influence the benefits, costs, and risks associated with doing business in different countries.
Political Systems
Collectivism vs Individualism
Totalitarianism vs Democracy
Economic/Political Systems
Market EconomyCommand Economy
Mixed EconomyState Directed Economy
Market economy encourages innovation and economic growth. Current trend is toward marketization.
CommandEconomy
MixedEconomy
MarketEconomy
Legal EnvironmentProvides a structure for laws and regulations forbusiness transactions.
Private Actions: bribes, piracy
Public Actions: taxes, incentives, licensing, permits, fees,
protection of intellectual property rights, product safety, product liability
Intellectual Property Rights Patents, Trademarks, Copyrights
New products, new ideas, new process or technology.Original works: music, plays, books
SoftwareParis Convention for the Protection of Industrial PropertyWeak implementation is costly Pirated copies of software, Rolex watches, Levi Blue Jeans, etc.China, ThailandViolations cost computer software industry $11.2 billion in 1996, 43% of the software applications are pirated. China’s piracy rate is 96% and cost the industry $704 million in lost sales (1996)
GATT, WTO enforce stricter regulations.
Implications for Business
National differences can affect the attractiveness of the country as an investment site. The overall attractiveness is determined by the benefits, costs, and risks of doing business. National differences also raise some ethical issues.
