International Business - Chapter 3

Front 1

Political System

Back 1

The structural dimensions and power dynamics of a country's prevailing government. This defines the institutions, organizations, and interest groups long with the political norms and rules that govern the activities of political actors.

Front 2

Individualism

Back 2

Refers to the primacy of the rights and role of the individual. This champions the exercise of one's ambitions and desires, while opposing most of the external interference posed by the political system that constrain individual choice.

Front 3

Collectivism

Back 3

Refers to the primacy of the rights and role of the group. This stresses human interdependence and the primacy of the group.

Front 4

Political Ideology

Back 4

Encapsulates the doctrine of political behavior and change and outlines the procedures for converting ideas into actions. This is the system of ideas that expresses the goals, theories, and aims of a sociopolitical program, thereby stipulating how society ought to function and outlining the methods by which it will work.

Front 5

Pluralism

Back 5

Holds the belief that there are multiple opinions about an issue, each of which contains part of the truth, but none that contain the entire truth.

Front 6

Democracy

Back 6

A government "of the people, by the people, and for the people." This calls for wide participation by citizens in a fair and just decision-making process.

Front 7

Parliamentary Democracy

Back 7

A government system in which citizens exercise political power by electing representatives to a legislative branch of government called a parliament. There is an independent judiciary but no formal separation of powers between the executive and legislative branches. e.g. India, Australia

Front 8

Liberal Democracy

Back 8

A government system that originates in a constitution that protects certain individual freedoms and certain individual liberties. All citizens are treated equally before the law and receive due process under it. All liberal democracies are representative democracies. e.g. Japan, New Zealand

Front 9

Multiparty Democracy

Back 9

A government system whereby three or more political parties, whether separately or as a part of a coalition, govern. This prevents leadership of a single party from setting policy without negotiating compromises among the opposition parties. e.g. Canada, Germany, Italy, Israel

Front 10

Representative Democracy

Back 10

A government system in which the people's elected representatives hold ultimate sovereignty. Reps are charged with the responsibility of acting in the people's interest and not merely as their proxy representatives.

Front 11

Social Democracy

Back 11

A government system that advocates the use of democratic means to achieve a gradual transition from capitalism to socialism. This rests on the belief that society must regulate and reform capitalism to control its intrinsic tendency toward injustice and opportunism. e.g. Norway, Sweden

Front 12

Freedom

Back 12

The defining feature of democracy. Factors for evaluating freedom include political rights and civil liberties.

Front 13

Totalitarian System

Back 13

A government system that subordinates the individual to the interests of the collective. A single agent monopolizes political power and uses this power to regulate many, if not all, aspects of public and private life.

Front 14

Authoritarianism

Back 14

A type of totalitarian system in which the regime tolerates no deviation from state ideology. This regime confines itself to political control of the state.

Front 15

Fascism

Back 15

A type of totalitarian system that is all-encompassing - outside of it no human or spiritual value may exist. The fascist ideal is the control of people's minds, souls, and daily existence.

Front 16

Secular Totalitarianism

Back 16

A type of totalitarianism system in which a single political party forms a government in which only party members hold office, elections are controlled through unfair laws, dissent is tolerated as long as it does not challenge the state, and organized religions are suppressed. e.g. China

Front 17

Three things powering the rise of democracy

Back 17

1. Failure of totalitarian regimes to deliver economic progress.
2. Improving communication technology
3. Economic dividends of increasing political freedom

Front 18

Political Risk

Back 18

The risk that political decisions or events in a country will negatively affect the profitability or sustainability of an investment.

Front 19

National Sovereignty

Back 19

A nation's freedom from external control and right to act in its own interests.

Front 20

Primary types of political risk, from least to most disruptive

Back 20

1. Systemic
2. Procedural
3. Distributive
4. Catastrophic

Front 21

Systemic Political Risk

Back 21

These are risks that impact all firms that operate in the particular political system. They can be the result of new political leadership and a resulting change in policies, or a public policy initiative that targets a sector dominated by foreign interests.

Front 22

Procedural Political Risk

Back 22

These are risks that involve the movement of people, products, and funds from one point to another in the global market. Political actions can sometimes interfere with these transactions and potentially lower a company's rate of return.

Front 23

Distributive Political Risk

Back 23

These are risks associated with a company when it begins to become very profitable. The government of the host country may believe they are not receiving their "fair" share of the profits, and enact legislation or taxes that negatively affect the company. This is called creeping expropriation.

Front 24

Catastrophic Political Risk

Back 24

These risks include random political developments that adversely affect the operations of every company in a country. Typically, it arises from flash points, such as ethnic discord, illegal regime change, civil disorder, or insurrection.

Front 25

Legal System

Back 25

The mechanism for creating, interpreting, and enforcing the laws in a specified jurisdiction. Legal systems aim to establish a comprehensive set of rules that support business formation, regulate transactions, and stabilize relationships.

Front 26

Constitutional Law Component of the Modern Legal System

Back 26

The part of the legal system that translates the constitution of the country into an open and just legal system. Constitutional law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations.

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Criminal Law Component of the Modern Legal System

Back 27

The part of the legal system that safeguards society by specifying what conduct is criminal and prescribing punishment to those who breach these standards.

Front 28

Civil and Commercial Law Component of the Modern Legal System

Back 28

The part of the legal system that ensures fairness and efficiency in business transactions. It speaks to private rights and remedies in dealing with relations and conduct between individuals and/or organizations.

Front 29

Five Type of Legal Systems

Back 29

1. Common Law
2. Civil Law
3. Theocratic Law
4. Customary Law
5. Mixed

Front 30

Common Law Legal System

Back 30

A legal system of jurisprudence based on judicial precedents. e.g. Canada, US, India, Hong Kong, England, New Zealand, Australia

Front 31

Civil Law Legal System

Back 31

A legal system of jurisprudence based on statutory laws. This system charges political officials with responsibility for specifying accessible, detailed, and written law that applies to all citizens.

Front 32

Theocratic Law Legal System

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A legal system of jurisprudence based on religious teachings. The theocracy regulates public and private matters and, as a result, government, law and religion are one. e.g. Shari'a Law

Front 33

Customary Law Legal System

Back 33

A legal system based on norms of behavior practiced over a long period. This type of legal system prevails in many developing countries, particularly those in Africa.

Front 34

Mixed Legal System

Back 34

A mixed legal system emerges when a nation uses two or more of the preceding legal systems. e.g. Nigeria's legal system is comprised of common law, Islamic law, and customary law.

Front 35

Rule of Man

Back 35

Holds that ultimate power resides in a person. His word and whim, no matter how unfair or unjust, is law.

Front 36

Rule of Law

Back 36

a hallmark of a democracy. Holds that no individual is above laws that are clearly specified, commonly understood, and fairly enforced.

Front 37

Operational concerns that face managers worldwide

Back 37

1. Starting a business
2. Entering and enforcing contracts
3. Hiring and firing local workers
4. Closing down the business

Front 38

Strategic concerns that face managers worldwide

Back 38

1. Product safety and liability
2. Marketplace behavior
3. Product origin and local content
4. Legal jurisdiction
5. Arbitration

Front 39

Country of Origin

Back 39

The county of manufacture, production, or growth where a product comes from.

Front 40

Intellectual Property

Back 40

The general term for creative ideas, innovation expertise, or intangible insights that give owners a competitive advantage.

Front 41

Intellectual Property RIghts (IPRs)

Back 41

Refer to the right to control and derive the benefits from writing (copyright), inventions (patents), processes (trade secrets), and identifiers (trademarks).