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POLITICS AND GLOBAL BUSINESS

4-1. LESSON. GOALS. POLITICS AND GLOBAL BUSINESS. Discuss various political systems around the world. Explain the political environment for a company’s host and home countries. Types of Political Systems. Democracy —all citizens take part in making the rules that govern them

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POLITICS AND GLOBAL BUSINESS

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  1. 4-1 LESSON GOALS POLITICS AND GLOBAL BUSINESS Discuss various political systems around the world. Explain the political environment for a company’s host and home countries.

  2. Types of Political Systems • Democracy—all citizens take part in making the rules that govern them • Totalitarianism—political control is held by one person or a small group • Mixed systems—characteristics of both systems

  3. Political Relationships in Business • Global companies operating in host countries • Global companies’ relationships with home countries

  4. 4-2 LESSON GOALS HOW GOVERNMENT DISCOURAGES GLOBAL BUSINESS Describe laws and trade barriers that can discourage global business. Explain how political risks can disrupt global business activities. Identify the major types of taxes that governments impose around the world.

  5. Government Activities Influence Business • Laws that protect workers and consumers • Trade barriers • Tariffs • Quotas • Boycotts • Licensing requirements

  6. Political Risks in International Business • Trade sanctions • Expropriation • Economic nationalism • Civil unrest or war

  7. International Taxes • Customs duty • Sales tax • Excise tax • Payroll-related tax • Value-added tax (VAT) • Income taxes

  8. 4-3 LESSON GOALS HOW GOVERNMENT ENCOURAGES GLOBAL BUSINESS Explain government actions that can encourage global business activities. Discuss U.S. government agencies that can help reduce international risk. Describe how tax incentives encourage global business.

  9. Encouraging International Business • Free-trade zones • Most favored nation (MFN) • Free-trade agreements • Common markets

  10. Government Protection From International Risk • Export-Import Bank of the United States (EXIM) • Overseas Private Investment Corporation (OPIC)

  11. Tax Incentives • Corporate tax deduction on income earned by foreign subsidiaries • Double-taxation avoidance treaties

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