© 2011 South-Western | Cengage Learning Government and Global Business Political Environment and Global Business How Government Discourages Global Business How Government Encourages Global Business CHAPTER 4

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 2 4 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.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 3 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

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 4 4 Political Relations with Host and Home Countries Global companies operating in host countries Global companies’ relationships with home countries

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 5 4 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.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 6 4 Government Activities Influence Business Laws that protect workers and consumers Trade barriers Tariffs Quotas Boycotts Licensing requirements

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 7 4 Political Risks in International Business Trade sanctions Expropriation Economic nationalism Civil unrest or war

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 8 4 International Taxes Customs duty Sales tax Excise tax Payroll-related tax Value-added tax (VAT) Income taxes

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 9 4 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.

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 10 4 Encouraging International Business Free-trade zones Most favored nation (MFN) Free-trade agreements Common markets

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 11 4 Government Protection from International Risk Export-Import Bank of the United States (EXIM) Overseas Private Investment Corporation (OPIC)

INTERNATIONAL BUSINESS, 4e CHAPTER © 2011 South-Western | Cengage Learning SLIDE 12 4 Tax Incentives Corporate tax deduction on income earned by foreign subsidiaries Double-taxation avoidance treaties Tax holiday