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LESSONLESSON4-14-1GOALSGOALS

Discuss various political Discuss various political systems around the systems around the world.world.

Explain the political Explain the political environment for a environment for a company’s host and company’s host and home countries.home countries.

POLITICS AND GLOBAL BUSINESS

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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

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Political Relationships in Business

Global companies operating in host countries

Global companies’ relationships with home countries

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LESSONLESSON4-24-2GOALSGOALS

HOW GOVERNMENT DISCOURAGES GLOBAL BUSINESS

Describe laws and trade Describe laws and trade barriers that can barriers that can discourage global discourage global business.business.

Explain how political risks Explain how political risks can disrupt global business can disrupt global business activities.activities.

Identify the major types of Identify the major types of taxes that governments taxes that governments impose around the world.impose around the world.

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Government Activities Influence Business

Laws that protect workers and consumersTrade barriers

TariffsQuotasBoycottsLicensing requirements

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Political Risks in International Business

Trade sanctionsExpropriationEconomic nationalismCivil unrest or war

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International Taxes

Customs dutySales taxExcise taxPayroll-related taxValue-added tax (VAT)Income taxes

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LESSONLESSON4-34-3GOALSGOALS

HOW GOVERNMENT ENCOURAGES GLOBAL BUSINESS

Explain government Explain government actions that can actions that can encourage global encourage global business activities.business activities.

Discuss U.S. Discuss U.S. government agencies government agencies that can help reduce that can help reduce international risk.international risk.

Describe how tax Describe how tax incentives encourage incentives encourage global business.global business.

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Encouraging International Business

Free-trade zonesMost favored nation (MFN)Free-trade agreementsCommon markets

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Government Protection From International Risk

Export-Import Bank of the United States (EXIM)

Overseas Private Investment Corporation (OPIC)

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Tax Incentives

Corporate tax deduction on income earned by foreign subsidiaries

Double-taxation avoidance treaties