Business and

CLASS 4 Management in A
Global Context
Dr. Howaida M. Barakat
 where do you stand on the globalization debate?

• Make a list of the advantages that arise for your

country, and its citizens, and for multinationals.
• Now make a list of how globalization works against
the interests of your country and its citizens, but also
multinationals.

2
CASE STUDY: GE Healthcare in India

• What are the similarities and differences between traditional and reverse
innovation?

• Why is GE so interested in reverse innovation?

• What are the main concerns that prevent western MNEs from
aggressively investing in emerging economies? What are the costs of not
doing so?

• Why is a leading US multinational like GE afraid of emerging

multinationals from emerging economies?

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Topic one:
Introduction to the global
business environment
2. Political, Economic and Legal
Environments

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CLASS 4
Learning Outcomes
2.1., 2.2., 2.3

• Define the concept of institutions and

delineate their key role in reducing
uncertainty
• Explain the basic differences between
political systems

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One Fundamental Question
Laws,
Regulations,
Rules

Culture,
Ethics,
Norms

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 Transaction Cost is the costs of doing business (i.e.,
negotiation, contract, supplies, monitoring ….etc.,)

Uncertainty increases transaction costs

Understanding the business context, minimizes costs
Oliver Williamson,
1979, 1986

Can institutional frameworks reduce any opportunistic behavior?

Is institutional frameworks important for international business (IB)? Why?

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 Centrally Planned
What is Economies

Institutional Macroeconomic control by

the government.
transition?
Changes in the formal and informal
rules that affect organizations.
Marketing
Decisions of individuals and businesses Competition

firms have to compete for

customers, it leads to lower
prices, higher quality goods and
services, greater variety, and
Decisions of countries and governments
more innovation.
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 DO POLITICAL SYSTEMS MATTER FOR
INTERNATIONAL BUSINESS?

• Set the rules and whose interests are served by the rules

• Determine whether and how businesses can formally

influence (mostly legal) or informally influence (usually
corruption)

• When and how the rules change, affecting negatively or

positively domestic and foreign businesses.

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Political systems

During the late 1970s, Communism was a

Two key concepts: dominant force in the world.
1. Individual freedom and self-
expression are guaranteed. The needs of the society are more important
than individual freedoms.
2. People are allowed to pursue their
own self-interest within the rule of Socialism and state ownership of production,
law and that this will achieve the and distribution.
best overall good for society.
(Soviet Union, Eastern European, …etc.,)

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Political systems
TOTALITARIANISM
One person or political party exercises absolute control

Communist Theocratic Tribal Right-wing

totalitarianism totalitarianism totalitarianism totalitarianism
Allow individual
Socialism through Monopoly by Particular tribe
economic
dictatorship . governing monopolizes
freedom, but
(Vietnam, Cuba according to power .
individual political
and North Korea) religious (Zimbabwe,
freedom is
principles. Uganda and
restricted.
(Iran, Saudi Tanzania.)
(Military
Arabia)
dictatorships)
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Political systems

DEMOCRACY
To the people, by the people, for the people

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Week 3 Question
PLEASE TRY TO CITE

• Willcocks, L. ‘Can business recover from

the crisis? Assessing scenarios, riding
trends.’ Journal of Financial
Q U EST I ON Transformation, 2021, January, 52, 1,
pp.94–101

View the video on COVID and globalization

https://www.youtube.com/watch?v=KJhlo6DtJIk REMEMBER

Answer the following question:

• Use ‘TurnItIn’ to check for plagiarism,
Has the pandemic contributed to the slowing down produce the report and send it along with
of globalization? Why is this, what are the most trends impacting on your submission.
international businesses and what is the future of globalization? • Cite your references using APA style

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 Topic 1: Introduction to the global business environment
Chapter 2: Political, economic and legal environments

2.4 Economic Systems

Next Class 2.5 Legal systems
2.6 Country development: political, economic and legal issues

Reading pages: 34 - 38

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Thank You
Dr. Howaida M. Barakat
Howaida.barakat@eue.edu.eg

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