Learning Objectives And Definitions From Chapter 2 Of Global Business Today, 7Th Ed.

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Political economy

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The political, legal, and economic systems of a country

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Political system

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The system of a government in action

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Understand how the political systems of countries differ

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Collectivism: A political system that emphasizes collective goals over individual goals
Socialism: A political philosophy advocating substantial public involvement, through government ownership, in the means of production and distribution
Individualism: An emphasis on the importance of guaranteeing individual freedom and self-expression
Democracy: Political system in which gov’t is by the people, exercised either directly or through elected representatives
Representative Democracy: A democracy in which citizens periodically elect individuals to represent them
Totalitarianism: Form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties
Communist Totalitarianism: A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship
Theocratic Totalitarianism: Political power is monopolized by a party, group, or individual that governs according to religious principles
Tribal Totalitarianism: monopolized by a particular tribe
Right-Wing Totalitarianism: Generally permits individual freedom but restricts individual political freedom, thinking that it would lead to communism

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Communists

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Those that believe that socialism can be achieved only through revolution and totalitarian dictatorship

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Social Democrats

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Those committed to achieving socialism by democratic means

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Privatization

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The sale of state-owned enterprises to private investors

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Recognize how the economic systems of countries differ

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Market Economy: An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced
Command economy: The government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold.
Mixed economy: Characteristics of both

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Understand how the legal systems of countries differ

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Common law: A system of law based on tradition, precedent, and custom
Civil law system: A system of law based on a detailed set of written laws and codes
Theocratic law system: A system of law based on religious teachings

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United Nations Convention on Contracts for the Int'l Sale of Goods (CIGS)

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A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of business in different nations

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Property rights

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The bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived by that resource

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Private Action

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The theft, privacy, blackmail, and the like by private individuals or groups

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Public Action

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The extortion of income or resources of property holders by public officials

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Foreign Corrupt Practices Act

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US law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions

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Intellectual Property

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Products of the mind, such as computer software, a screenplay, a music score, etc.

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World Intellectual Property Organization

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An international organization whose members sign treaties designed to protect intellectual property.

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Paris Convention for the Protection of Industrial Property

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International agreement to protect intellectual property; dates back to 1983 and has been signed by some 170 nations

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Product Safety Laws

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Set certain safety standards to which a product must adhere

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Product Liability

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Involves holding a firm and its officers responsible when a product causes injury, death, or damages.

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Explain what determines the level of economic development of a nation

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Gross National Income (GNI): The yardstick for measuring the economic activity of a country; it measures the total annual income received by a nation's residents
Purchasing Power Parity (PPP): An adjustment in GDP per capita to reflect differences in the cost of living
Human Development Index (HDI): An attempt by the UN to assess the impact of a number of factors on the quality of human life in a country.

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Identify the macro-political and economic changes taking place worldwide.

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Many countries are now in a state of transition. there is a marked shift away from totalitarian governments and command or mixed economies and toward democratic political institutions and free market economic systems

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Describe how transition economies are moving toward market-based systems

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Deregulation: removal of gov't restrictions concerning the conduct of business
Privatization
Legal systems

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Explain the implications for management practice of national differences in political economy

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The risks of doing business in a country tend to be greater in countries that are politically unstable, subject to economic mismanagement, and lacking a legal system to provide adequate safeguards in the case of contract or property rights violations.