1. © 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

2. © 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

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

4. © 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.

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

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

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

8. © 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.

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

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

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