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. 4

Types of Political Systems Political system-is the means by which people in a society make the rules that control and influence their lives. Types of Political Systems: Democracy Totalitarianism Mixed System 4

Democracy All citizens have the opportunity to take part in making the rules that govern them Emphasizes importance of individuals wants and needs Equal rights, right to vote, freedoms (speech and religion) Extends to economic system freedom to own and operate your own business Tend to have market economies Ex. United States 4

Totalitarianism Most people are excluded from making the rules by which they live Political control is held by one person or a small group of individuals Monarchy and Dictatorship People’s right and freedoms are restricted People may not be able to travel outside of the country or to practice a religion of their choosing Command Economies Ex. Cuba and North Korea 4

Mixed Systems Most political systems are considered mixed Characteristics that fall into both categories Most European countries are mixed economies 4

Political Relations with Host Countries Host Country-is a country in which a multinational enterprise is a guest. Multinational enterprises fulfill a number of positive roles in host countries while operating within the existing economic, social, and legal environment. Multinational enterprises simulate economic activity. They also: Provide employment for the host country Introduce advanced technology Comply with societal expectations and responsibilities 4

Political Relations with Host Countries Social responsibility-is the process whereby people function as good citizens and are sensitive to their surroundings. 4

Political Relations with Home Countries Home country-is the country where a multinational enterprise is headquartered. A multinational enterprise is expected to comply with home country’s social, economic, and legal mandates. Host Country and Companies Each group of 3 will choose a company and research any host country compliances they must meet while operating there. 4