The Political and Legal Environments Facing Business

4014 Words Jan 27th, 2011 17 Pages
CHAPTER THREE
THE POLITICAL AND LEGAL ENVIRONMENTS FACING BUSINESS

OBJECTIVES

• To discuss the different goals and functions of political systems
• To profile trends in the emergence and diffusion of political systems
• To identify the idea of political risk and approaches to managing it
• To understand how different political and legal systems affect the conduct of business
• To profile trends in the evolution and diffusion of legal systems
• To examine the major legal issues facing international business companies
• To profile the idea of intellectual property and the basis of concern and controversy

Chapter Overview

When firms source, produce, and/or market products in foreign countries, they encounter dynamic and
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Under an individualistic paradigm (e.g., the United States), political officials and agencies play a limited role in society. The relationship between government and business tends to be adversarial; government may intervene in the economy to deal with market defects, but generally it promotes marketplace competition. Under a collectivist paradigm, whether democratic (Japanese) or authoritarian (Chinese) in nature, the government defines economic needs and priorities, and it partners with business in major ways. Government is highly connected to and interdependent with business; the relationship is cooperative. B. Political Ideology A political ideology is the body of constructs, theories, and aims that constitute a sociopolitical program (e.g., liberalism or conservatism). Pluralism indicates the coexistence of a variety of ideologies within a particular society. Although shared ideologies create bonds within and between countries, differing ideol-ogies tend to split societies apart. The two extremes on the political spectrum are democracy and totalitarianism. [See Fig. 3.2.]

C. Democracy. A democracy represents a political system in which citizens participate in the decision-making and governance process, either directly or through elected representatives. Contemporary democracies share the following characteristics: freedom of opinion, expression, and the press; freedom to organize; free elections; an independent and fair