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

G eography

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
(Charles.W.Hills)
 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 socialists
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

Individualism
an individual should have freedom in his own economic
and political pursuits

“individual diversity and private ownership are desirable”

Aristotle
(384-322 BC) - individual economic and political freedoms are the
ground rules on which a society should be based
- implies democratic political systems and free
market economies
DE
- Democracy refers to a political system
in which government is by the people,
exercised either directly or through
elected representatives

OC
- usually associated with individualism

M
- pure democracy is based on the belief
that citizens should be directly involved
in decision making

AC
- most modern democratic states
practice representative democracy
where citizens periodically elect
individuals to represent them
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)
-Property rights: legal rights over use to
which a resource is put and income derived

-Intellectual Property Rights: 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
Corruption Perceptions Index 2010

Source: Transparency international

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
Google in China
Baidu
Kai-fu Lee