Government and Global Business CHAPTER 4 5/21/2019 CHAPTER 4 Government and Global Business 4-1 Political Environment and Global Business 4-2 How Government Discourages Global Business 4-3 How Government Encourages Global Business INTERNATIONAL BUSINESS

LESSON 4-1 Political Environment and Global Business GOALS Discuss various political systems around the world. Explain the political environment for a company’s host and home countries.

Types of Political Systems 4 Types of Political Systems Democracy—all citizens take part in making the rules that govern them Totalitarianism—political control is held by one person or a small group Mixed systems—characteristics of both systems

Political Relations with Host and Home Countries 4 Political Relations with Host and Home Countries Global companies operating in host countries Global companies’ relationships with home countries

LESSON 4-2 How Government Discourages Global Business GOALS Describe laws and trade barriers that can discourage global business. Explain how political risks can disrupt global business activities. Identify the major types of taxes that governments impose around the world.

Government Activities Influence Business 4 Government Activities Influence Business Laws that protect workers and consumers Trade barriers Tariffs Quotas Boycotts Licensing requirements

Political Risks in International Business 4 Political Risks in International Business Trade sanctions Expropriation Economic nationalism Civil unrest or war

International Taxes 4 Customs duty Sales tax Excise tax Payroll-related tax Value-added tax (VAT) Income taxes

LESSON 4-3 How Government Encourages Global Business GOALS Explain government actions that can encourage global business activities. Discuss U.S. government agencies that can help reduce international risk. Describe how tax incentives encourage global business.

Encouraging International Business 4 Encouraging International Business Free-trade zones Most favored nation (MFN) Free-trade agreements Common markets

Government Protection from International Risk 4 Government Protection from International Risk Export-Import Bank of the United States (EXIM) Overseas Private Investment Corporation (OPIC)

4 Tax Incentives Corporate tax deduction on income earned by foreign subsidiaries Double-taxation avoidance treaties Tax holiday