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Political Environment

Political Environment






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    Political Environment Political Environment Presentation Transcript

    • The Political Environment of International Business Anne-Charlotte Bazoud Gabrielle Colombier Franziska Guehlcke Marcus Bormann Arnaud Katz
    • Contents
      • I. Context
      • II. Aims - Objectives
      • III. Political Environment of Business
      • IV. Political Environment of Business in Hong Kong
      • V. Conclusion
    • Context
      • Globalisation, liberalization of the World Economy
      • Set up in new markets, with different politic
      • Hong-Kong, English from 1842 to 1997
      • culture, laws, justice close from England,
      • Very different politic from the rest of China
    • Aims - Objectives
      • Aim :
      • describe the most important political factors for companies which set up overseas
      • + focus on the political environment of Hong-Kong.
      • Objectives:
      • make a clear distinction between totalitarism and democracy, capitalism and socialism
      • Demonstrate that the political environment is important in choosing the country to set up (for example war, corruption, economy opened to the other countries?)
      • Analyse the political environment of Hong Kong
    • Elements of the political environment that a business must consider in order to expand overseas
    • The Political Environment Relatively uncontrollable factors outside the firm that influence its decision-making Legal and Political Environment Factors in government, the law and the regulatory system that affect the way an organisation operates External Environment Socio-Cultural Environment Environment Economic Technological Environment
    • The Political Environment Legal and Political Environment SYSTEM STABILITY POLICIES
    • SYSTEM Includes the structures, processes, and activities by which a nation governs itself. Political System
      • Totalitarian state
      • Democratic state
    • SYSTEM Doing business seems to be a risky proposition Doing business in a democratic state seems to be safer than in a totalitarian state Totalitarian state Imposed authority Lack of constitutional guarantees Restricted participation
      • Companies might need to pay
      • bribes to government
      •  The business law is vague
      Democratic state Freedom Rights
      • Stable business environment
      • thanks to laws
      •  Freedom and no censorship
    • SYSTEM Political Ideology
      • Capitalist system
      • Socialist system
      The political ideology affects - foreign government attitude towards profit repatriation. - foreign government attitude towards foreign direct investment Capitalist System
      • Private ownership of business
      • is encouraged
      Socialist System
      • Public ownership of business
      • is the norm
    • SYSTEM Political relationships
      • Favorable political relationships
      • foster stable business environments
      • increase international cooperation in many areas
      • lead to increase business opportunities and lower risk
      • The World Trade Organisation can facilitate political relationships
      • The WTO ensures that trade flows as smoothly, predictably and freely as possible.
    • STABILITY Political Stability : « A subjective governance indicator aggregated from a variety of sources and measuring perceptions of the likelihood of destabilization. » (United Nations Development Programme web site) Political Risk « The risk that political decisions or events in a country negatively affect the profitability or sustainability of an investment. » (International Business environments and operations) 4 types of political risk
    • STABILITY Systemic Political Risks « When Political processes within a country do not routinely subject foreign operations to unfair treatment. » (International Business environments and operations) Procedural Political Risks « It’s Political actions which create frictions that interfere with people, products or funds transactions between a company or a country. » (International Business environments and operations)
    • STABILITY Distributive Political Risks « When countries revise their distribution policies to capture greater benefits from foreign companies. » (International Business environments and operations) Catastrophic Political Risks « This is the Political developments that adversely affect the operations of all companies in a country. » (International Business environments and operations)
    • POLICIES TAXATION Governments use income and sales taxes which can vary from country to country.
      • Intellectual Property
      • « Property that results from people’s intellectual talent and abilitie. » (International Business An integrated approach)
      • The problem is that laws in some countries are softer than in others
      • Industrial Property
      • « Industrial property includes patents and trademarks. »
      • (International Business An integrated approach)
      • Copyrights
      • « Copyrights give creators of original works the freedom to publish or dispose of them as they choose. » (International Business An integrated approach)
    • POLICIES PRODUCT SAFETY AND LIABILITY «  Product liability holds manufacturers, sellers, and others, including individual company officers, responsible for damage, injury, or death caused by defective products. » (International Business An integrated approach) The United States has the toughest product liability laws in the world following by Europe.
      • Enforcement of product liability laws differs from nation to nation.
    • Hong Kong Facts
      • British crown colony became Chinese territory in 1997
      • China is a Communist nation that values stability over individual freedoms
      • Hong Kong is a Special Administrative Region
      • Population: 6,980,412 (July 2007 est.)
    • Hong Kong Political Environment
      • Capitalist System or Socialist System
          • China has signed the "one country, two systems" formula
          • 50 years contract until 2047
          • Relatively high political stability
    • Hong Kong Political Environment
      • Totalitarian state or Democratic state
          • Limited democracy
          • The legal system based on the English common law
          • Basic Law which approved in 1990
            • “ Mini-Constitution"
    • Conclusion
      • The political environment has an important impact on the business
      • There is a large field with many factors which the companies have to consider if they want to expand overseas
      • Political environment is not stable and can change quickly
      • The political environment creates advantages and disadvantages
    • Sources
      • http://www.pearsoncourses.com/
      • http://www.nytimes.com/specials/hongkong/
      • https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html
      • International business, environments and operations , Daniels, Radebaugh, Sullivan
      • International business : an integrated approach , John J. WILD, Kenneth L. WILD, Jerry C.Y. HAN