INTERNATIONAL BUSINESS

FTU – Foreign Trade University

 How global are we?

In real estate, the mantra is 'location, location, location.‗For global

brand managers, it might be 'localise, localise, localise.‗
— A consultant-

There is a balance on the spectrum between ―local‖ and ―global‖

that represents the ―sweet spot‖…[and makes for] ―the race to
the middle.
— A manager-

The world got flat…[creating] a global, Web-enabled playing field

that allows for…collaboration on research and work in real time,
without regard to geography, distance or, in the near future, even
language.
-A journalist-
Semi-Globalization
 “There are three ways to add value in a world where
differences still matter: 3A strategies
ADAPTATION,
AGGREGATION and
ARBITRAGE.”
Pankaj Ghemawat
Because…
 C
ulture

Nations have differences in…

A
dministration

Geography

E
conomy
Chapter 2
International business (IB)

National Differences in…

POLITAL SYSTEM
 Political System
=
System of Government in a
Nation
The political economy of a nation refers to how the political,
economic, and legal systems of a country are interdependent
(Hills.C.W)
Collectivism
- stresses the primacy of collective goals
over individual goals

Plato (427-347 BC)

Greek philosopher

Socialism
- advocate the state ownership of the basic means
of production, distribution, and exchange
- benefit society as a whole, rather than individual
capitalists
Karl Marx (1818-1883)
- Communism and social democrats
Individualism
an individual should have freedom in his own economic
and political pursuits
Aristotle - “individual diversity and private ownership are desirable”
(384-322 BC)
- democratic political systems  free market economies

DEM - Government directly voted by nation citizens.

OCR
- Pure democracy is based on the belief that citizens
should be directly involved in decision making.
- Most modern democratic states practice

ACY
representative democracy where citizens periodically
elect individuals to represent them
Totalitarianism is a form of government in which one person or political party
exercises absolute control over all spheres of human life and prohibits opposing political parties

Totalitarianism

Communist totalitarianism – the Theocratic totalitarianism -

communist party monopolizes power monopolized by religious principles

Tribal totalitarianism Right-wing totalitarianism

Legal System?
“the rules that regulate behavior along
with the processes by which the laws
are enforced”
There are three types of legal systems
- Common law - based on tradition,
precedent, and custom (UK,USA)
- Civil law - based on detailed set of laws
organized into codes (80 countries)
- Theocratic law - based on religious
teachings
(*) International Law - Bilateral and
Multilateral treaties)
Question:
Search and give more detail about the Islamic law (especially
applying to the international business)
-Property rights: legal rights over use to
which a resource is put and income derived

-Intellectual Property Rights (IP): patents,

copyrights, trademarks: major bone of
contention especially in info-based economies

-Product safety and liability: standards

protecting consumers

- Enforcement of national and

international laws
Question:
Look for a multinational which troubled which the international
legal issues.
- Summarize the case
- Give your recommendations
Corruption Perceptions Index 2011
Political Risks Sources PRs
- Discontinuities - Xenophobia
- Uncertainty - Social Unrest/disorder
- Political forces - Internal rebellion
-Business impacts - Armed conflicts
- Macro between nations
- Micro
- Local business groups
- Administrations
procedures