International Business Management
READING 1
THE POLITICAL AND LEGAL ENVIRONMENTS FACING BUSINESS
I. INTRODUCTION For a multinational enterprise to succeed in countries with different political and legal environments, its management must carefully analyze the fit between its corporate policies and the political and legal conditions of each particular nation in which it operates. Then its must determine how these factors affect the ways in which the firm can capture opportunities and deflect threats.
II. THE POLITICAL ENVIRONMENT
A political system is the complete set of institutions, political organizations, and interest groups, the relationships among those institutions, and the political norms and rules that govern their functions. Thus, it integrates the various parts of a society into a viable, functioning entity. It also influences the extent to which government intervenes in business and the way in which business is conducted both domestically and internationally. The ultimate test of any political system is its ability to hold a society together.
A. Individualism and Collectivism
It is useful to profile the similarities and differences among political systems according to the general orientation within a society about the primacy of the rights and role of the individual versus that of the larger community. 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 POLITICAL AND LEGAL ENVIRONMENTS FACING BUSINESS
I. INTRODUCTION For a multinational enterprise to succeed in countries with different political and legal environments, its management must carefully analyze the fit between its corporate policies and the political and legal conditions of each particular nation in which it operates. Then its must determine how these factors affect the ways in which the firm can capture opportunities and deflect threats.
II. THE POLITICAL ENVIRONMENT
A political system is the complete set of institutions, political organizations, and interest groups, the relationships among those institutions, and the political norms and rules that govern their functions. Thus, it integrates the various parts of a society into a viable, functioning entity. It also influences the extent to which government intervenes in business and the way in which business is conducted both domestically and internationally. The ultimate test of any political system is its ability to hold a society together.
A. Individualism and Collectivism
It is useful to profile the similarities and differences among political systems according to the general orientation within a society about the primacy of the rights and role of the individual versus that of the larger community. 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