International Business Ch3

International Business

Sixteenth Edition, Global Edition

Chapter 3

Governmental and

Legal Systems

Learning Objectives

3-1 Explain how politics and laws influence business

3-2 Appraise the principles and practices of the political

environment

3-3 Discuss the contemporary state of political freedom

3-4 Interpret political risk

3-5 Appraise the principles and practices of the legal

environment

3-6 Describe key legal issues facing international companies

3-7 Relate the ideas of politics, law, and the business

environment

Political and Legal Forces

Objective 3-1

Figure 3.1 Political and Legal Factors Influencing IB Operations

Political Risk Map

Objective 3-2

Map 3.1 Map of Political Risk, 2015

Source: Based on Marsh Political Risk Map 2015; and AON Political Risk, http://www.aon.com/2016politicalriskmap

Political Definitions

Objective 3-2

•Political System

•Political Freedom

•Individualism

•Collectivism

3-6

The Political Environment

•Managers evaluate, monitor, and forecast

political environments

•A country’s political system refers to the

structural dimensions and power dynamics

of its government that specify institutions,

organizations, and interest groups, and

define the norms that govern political

activities

3-7

Individualism vs. Collectivism

•Individualism

–primacy of the rights and role of the