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Politics and Global Business

Politics and Global Business. Types of Political Systems. A country’s economy usually reflects its political system. A political system is the means by which people in a society make the rules by which they live. Three main types: Democracy Totalitarianism Mixed Systems. Democracy.

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Politics and Global Business

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  1. Politics and Global Business

  2. Types of Political Systems • A country’s economy usually reflects its political system. • A political system is the means by which people in a society make the rules by which they live. • Three main types: • Democracy • Totalitarianism • Mixed Systems

  3. Democracy • All citizens take part in making the rules that govern them. • Government emphasizes individual rights and freedoms. • Usually have a market economy, with little or no government ownership or planning of business and industry. • Companies either succeed or fail on their owner’s ability to compete effectively. • Example: United States

  4. Totalitarianism • Political control is held by one person or a small group of people. • Many kinds of totalitarian systems… • Military dictatorship • Pure monarchy • Political Party • People’s rights and freedoms are restricted. • Command economies. • Example: Cuba

  5. Mixed Systems • In reality, most political systems are considered mixed. • Generally, the economic systems of these countries are also Mixed.

  6. Effect on Global Companies • Where are global businesses located? • Host country: the country in which a multinational enterprise is a guest. • Home country: the country in which a multinational enterprise in headquartered.

  7. Effect on Global Companies • How do global businesses help host countries? • Purchase land, goods and services locally • Provide employment • Introduce advanced technology • What do host countries demand of global businesses? • Social responsibility: people function as good citizens and are sensitive to their surroundings • Must substantially benefit the host country

  8. Global Businesses At Home • In their home countries, global businesses are also expected to comply with the home country’s social, economic, and legal mandates. • Must demonstrate social responsibility, even at home. • Improper actions could jeopardize the right of the multinational enterprise to exist and to be headquartered in the country.

  9. Spread of Democracy • Totalitarian regimes failed to deliver economic progress to the vast bulk of their populations. • New information and communications technologies, Internet, have broken down the ability of the state to control access to uncensored information. • Economic advances of the last quarter century have led to the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms.

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