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4-International Politics(International Business)

4-International Politics(International Business)

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Published by Asjad Jamshed

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Published by: Asjad Jamshed on Apr 04, 2010
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11/18/2014

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Dr Zain Yusufzai
International Politics
Chapter # 4 (page 96-123).
Objectives:Political and economic systems and linkage between themFive levels of economic integrationsUse of strategic planningImpact of NGOs (Non Governmental Organization)Introduction:Changing political systemsMoving toward democracyFormer communist bloc of Eastern Europe, converting tofree market systems from command economy advocate,ideologyMNEs feel until Government willing to take the stepsnecessary to ensure that promises are kept and they areable to repatriate they funds, these developing economiesproceed with caution, with their investment plansAttract foreign investment: (requires)
Development of high technology
Initiation of many large scale projects
Employee equipped with modern tools. KnowledgePolitical ideologies and economicsIdeology:a set of integrated beliefs, theories, and doctrines thathelps to direct the actions of a society. For example; thepolitical ideology of USA is written in the constitution thatguarantees the rights of private property and the freedomof choice. This ideology helped in laying the economicpolitical system (US Capitalism).Political systems: (two types)1.democracy2.totalitarianismNumber of totalitarianism systems:
communism
theocratic
secular1. Democracy: a system of government in which thepeople either directly or through their elected officials,decide what is to be done2. Totalitarianism: a system of government on which oneindividual or party maintains complete control and eitherrefuses to recognize other parties or suppresses them
International businessAlan M. Rugman, Richard M. Hodgetts
1
 
Dr Zain Yusufzai
International Politics
Chapter # 4 (page 96-123).
Communism: a political system in which the governmentowns all property and makes all decisions regardingproduction and distribution of goods and servicesTheocratic: a system of government in which a religiousgroup exercises total power and represses or persecutednon orthodox factionsSecular: a system of government in which the militarycontrols everything and makes decisions, which it deemsto be in the best interests of the countryEconomic systems: (Three basic economic systems).1. Capitalism2. Socialism3. MixedClassification of these systems in terms of resourceallocations:1.Market driven versus centrally determined2.Property ownership ( private versus public)Market driven economy: An economy in which goodsand services allocated based on consumer demand
Market driven economies are characterizedby private ownership
Assets in the hands of privately ownedcompanies that compete for market shareby offering the best quality product (goodsand services) at competitive prices.Centrally determined economy: An economy in whichgoods and services allocated based on a plan formulatedby a committee that decides what is to be offeredCharacteristics of Centrally determined economies
Owned by public
Asset of production are owned by the state andproduction quotas are set for each organizationMixed economies: Economic systems characterized by acombination of market and centrally driven planningCharacteristics of mixed economies
Combination of market and centrally drivenplanning
Most nations of the world have mixed economiesFor example a leading proponent of market driveneconomic policy:
Provides health care and other social services tomany of its citizens through governmentregulatory agencies
International businessAlan M. Rugman, Richard M. Hodgetts
2
 
Dr Zain Yusufzai
International Politics
Chapter # 4 (page 96-123).
Many market driven economies are makinggreater use of centrally determined ideas such asusing business , government cooperation to fend of external competitors
Most economies moving from central planning tomarket driven and mixed economies
Privatization movement around the3 world is goodexampleGovernment control of assets1. Privatization: The process of selling government assetsto private buyers2. Nationalization: A process by which the governmenttakes control of business assets, sometimes withremuneration of the owners and other times with out suchremuneration (Six steps involved in this process)i.Promoting economic development , for example bycoordinating the assets of many businesses into oneoverall master plan;ii.Earning profits for the national treasury;iii.Preventing companies from going bankrupt andclosing their doors;iv.Enhancing programs that are in the nationalinterest;v.Increasing the political or economic control of those Ipowervi.Ensuring goods and services to all citizens regardlessof their economic statusOpposite situation privatization takes two forms;1. Divestiture: A process by which government orbusiness sells assets2. Contract management: A process by which anorganization (government) transfers operatingresponsibility of an industry without transferring thelegal title and ownershipPrimary reasons for privatization include (7 reasons).i.More efficient to have the goods and services providedby private business than by government runcompanies;ii.Change in the political culture brings about a desire tosell off these assets;iii.Company making money and the government feelsthat there is more to be gained by selling now than byholding on;
International businessAlan M. Rugman, Richard M. Hodgetts
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