© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON4-1 GOALS  Discuss various political systems around the world.  Explain the political environment.

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Presentation transcript:

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON4-1 GOALS  Discuss various political systems around the world.  Explain the political environment for a company’s host and home countries. POLITICS AND GLOBAL BUSINESS

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 2 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

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 3 Political Relationships in Business Global companies operating in host countries Global companies’ relationships with home countries

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON4-2 GOALS HOW GOVERNMENT DISCOURAGES GLOBAL BUSINESS  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.

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 5 Government Activities Influence Business Laws that protect workers and consumers Trade barriers Tariffs Quotas Boycotts Licensing requirements

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 6 Political Risks in International Business Trade sanctions Expropriation Economic nationalism Civil unrest or war

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 7 International Taxes Customs duty Sales tax Excise tax Payroll-related tax Value-added tax (VAT) Income taxes

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS LESSON4-3 GOALS HOW GOVERNMENT ENCOURAGES GLOBAL BUSINESS  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.

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 9 Encouraging International Business Free-trade zones Most favored nation (MFN) Free-trade agreements Common markets

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 10 Government Protection From International Risk Export-Import Bank of the United States (EXIM) Overseas Private Investment Corporation (OPIC)

© SOUTH-WESTERN THOMSONINTERNATIONAL BUSINESS 11 Tax Incentives Corporate tax deduction on income earned by foreign subsidiaries Double-taxation avoidance treaties