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entails lobbying activ-ities. Finally, the CEO may voice thecompany’s stance on policies once they have been implemented.The key is to make sure that the company doesn’t look as if it’strying to influ-ence laws inappropriately. Sometimes a CEO willtry to influence the home-country govern-ment on policies thataffect countries in which the firm is operating. Prior to 2000,when the United States granted permanent normal traderelations to China, that decision had to be made annually. TheUnited States-China Business Council, an organization of over250 companies doing business in China, lobbies on behalf of its members for stable and expanded U.S.-China economiclinks.3 The council includes companies such as Philip Morris,AT&T, Federal Express, BellSouth, and Lockheed MartinCompany.
FIGURE 5.1 Political and Legal Influences on Interna-tional Business
Figure 5.2 The Political System And Its FunctionsGovernments formulate policy alternatives based on the inputsof different foreign and domestic entities and then implementthe policies. T place then tests the outputs of these policies andrevises them as necessary.Source: From Comparative Politics Today: A World View, 3rded., by Gabriel A. Almond and G. Bingham Powell, Jr.Copyright © 1984 Gabriel A. Almond and G. Bingham PcReprinted by permission Addison-Wesley Educational Publish-ers.
Basic Political Ideologies
A political ideology is the body of constructs (complex ideas),theories, and aims that consti-tute a sociopolitical program. Theliberal ideology of the Democratic Party and the conservativeideology of the Republican Party in the United States areexamples of political ideologies. Most modern societies arepluralistic politically, meaning that different ideologies coexistwithin them because there is no one ideology that everyoneaccepts. Pluralism arises because groups within countries oftendiffer significantly from each other in language (e.g., India),ethnic back-ground (e.g., South Africa), tribal groups (e.g.,Afghanistan), or religion (e.g., the former Yugoslavia). Theseand other cultural dimensions strongly influence the politicalsystem. Managers from the United States, where there are onlytwo key political parties, might find it difficult to understandthe political environment in a country where there are manydifferent ideologies even within the political parties themselves.This makes it difficult for the manager to determine how toarticulate the firm’s interests and how to influence policymaking,The ultimate test of any political system is its ability to hold asociety together despite pressures from different ideologies thattend to split it apart. The more different and strongly held theideas are, the more difficult it is for a government to formulatepolicies that every-one can accept. Differing ideologies incountries such as Yugoslavia and the Soviet Union already brokethose countries apart during the 1990s. The resulting politicalinstability has made it difficult for them to attract foreigninvestment and for managers to feel comfortable operating inand committing resources to them.However, ideologies also help to bring countries together. Onereason China wants Hong Kong back is because of ethnicChinese ties. The belief is that a common Chinese heritage willenable Hong Kong and China to merge together faster thancountries with very different eth-nic ties. In fact, the U.S.government calls mainland China, Taiwan, Hong Kong, andSingapore the Chinese Economic Area. Foreign companies thathave had experience in Taiwan, Hong Kong, and Singapore canuse that experience-and local management-to help them operatesuccessfully in mainland China. Nike, for example, usesTaiwanese shoe manufacturers to invest in China and tomanufacture shoes using Chinese labor. Because of the strongethnic Chinese ties between Taiwan and China, politicaldisagreements notwithstanding, it is easier for Nike to use itsTaiwanese partners than to manufacture shoes on its own.
The Impact of Ideological Differences on NationalBoundaries
Differences in history, culture, language, religion, and politicalideology have greatly affected national boundaries. In Europe,for example, the Austro-Hungarian Empire broke up intoAustria, Czechoslovakia, Hungary, Romania, and Yugoslaviaafter World War I. With the advent of communist rule afterWorld War II, countries often were formed from differentethnic groups held together by totalitarian rule. Yugoslavia, forexample, comprised peoples that were ethnically and religiouslyvery different from each other (Roman Catholic Croats, Greek Orthodox Serbs, Muslim Bosnians, and ethnic Albanians wholived in the southern Yugoslav province of Kosovo). Thecountry’s Croats and Serbs were on opposite sides duringWorld War II, and Croats were accused of murdering thou-sands of Serbs. The Muslims in Bosnia and Kosovo wereholdovers from the Ottoman Empire. The breakup of thecommu-nist bloc in 1989 resulted in the disintegration of countries such as Czechoslovakia, the Soviet Union, and