POLITICAL SYSTEM

POLITICAL SYSTEM
It is a system of politics & government.

It is compared to the law system, economic system,

cultural environment, etc.

It is a complete set of political organisations ( such as

political parties, trade unions )

Political system can be assessed according to two dimensions :

The degree to which they emphasize collectivism as

opposed to individualism.
The degree to which they are democratic totalitarian

 COLLECTIVISM :

It refers to a political system that stresses the primacy of collective goals over individual goals. Now a days the collectivism has been picked by socialism.
INDIVIDUALISM :

It is the opposite of collectivism. It refers to philosophy that an individual should have freedom in his own economic and political pursuits.

 DEMOCRACY :

It refers to a political system in which government is by the people, exercised either directly or through elected representatives.
TOTALITARIAN :

It is a form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

 To operate in foreign countries, domestic companies

must have to consider following things :

1) They can straightforwardly transfer the principles

and practices of the domestic business environment to foreign markets. 2) Political and legal systems of different countries must vary. 3) These differences affect how companies gain opportunities and deflect threats.

POLITICAL RISK
Four types of political risk : Systematic : a change in public policy that affect everyone. Procedural : bureaucratic delays, labor disputes, etc. Distributive : tax and regulatory risk in respective industries. Catastrophic : random political events.

MANAGING POLITICAL RISK

Be a good corporate citizen (example: participate in

development projects, literacy etc.) Expand power bases through business relationships (example: joint venture, licensing, political payoffs etc.) Study government attitude and participate government incentive programs. Maintain good relationship with political allies, other embassies in the country.