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International Business-Lecture 3
International Business-Lecture 3
OVERVIEW
ANALYSIS OF POLITICAL, ECONOMIC AND LEGAL SYSTEMS
u Introduction
u Political Economy
u Political Systems
u Economic Systems
u Legal Systems
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Introduction
u International business is much more complex and dynamic than
domestic business
Political Economy
u Countries differs in many ways from one another Political
System
u Economic development,
u Education and skill level,
Introduction u Resources and knowledge
u Cultural practices
u Politics and political orientations,
u Laws and rules and regulations.
Political
Economy
u These effect the international business
u Benefits and cost;
Economic
u Risks associated with doing business in different countries; System Legal System
u The way in which operations in different countries should be
managed;
u The strategy international firms should pursue in different
countries.
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u Political Economy-
Refers to country’s
1. Political System
1. Economic,
2. Legal and u It refers to the structure
and system of government
3. Political systems. in a country, state or
nation.
A. Emphasize collectivism as
Political Economy u A country political
economy has major
opposed to individualism
implication for the
international business B. Democratic or totalitarian.
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u Collectivism focused on the needs of society as a u Social Democrats- Those committed to achieving
whole and consider society more important than
individual freedoms.
socialism by democratic means. Norway, Sweden,
Austria, France, Germany
u Modern forms of collectivist system exist in shape
of Socialism
u Many state-owned enterprises perform poor and
u Socialists- Those who believe in public ownership
of the means of production for the common good
failed to succeed, and many nations implement
of society rather than an individual. privatization.
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2. Economic System
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2. Economic System
2. Economic System Market Economy
2. Economic System
2. Economic System
Command Economy
u The goods and services that a country produces, and
the quantity in which they are produced, and the
prices at which they are sold are determined by the
government.
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2. Economy
Mixed Economic System 3. Legal System
Legal system refers to
u the rules and regulation that devise and regulate
u It consist elements of Market economy and behaviors, and the mechanism through which we
Command economy. enforced the law and redress for grievances is
obtained
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3. Legal System
3. Legal System Civil Law Theocratic Law
u A theocratic law system is one in which the law
is based on religious teachings.
u A civil law system is
u Islamic law (Sharia), Hindu law, Jewish law
based on a detailed set of
laws organized into codes.
u The foundation for Islamic law is the Quran,
the Sunnah, or Ijtihad (Ijma)
u Courts interpret civil law
with regard to these codes.
u There is no pure Sharia law (Muslim countries
have a blend of Sharia and Common law)
u Judges decisions in the
civil law are stick to the
code(s). u Exp- Pakistan, UAE, Gulf countries, Iran, Egypt
and Malaysia etc. (Pakistan Shariat Court)
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