Chapter Two Powerpoint Presentation

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Chapter Two Powerpoint Presentation

  1. 1. Chapter 2 Learning Objectives <ul><li>After studying this chapter, you should be able to: </li></ul><ul><li>Explain the concept of institutions and their key role in reducing uncertainty </li></ul><ul><li>Articulate the two core propositions underpinning an institution-based view of global business </li></ul><ul><li>Identify the basic differences between democracy and totalitarianism </li></ul><ul><li>Outline the differences among civil law, common law, and theocratic law </li></ul><ul><li>Understand the importance of property rights and intellectual property rights </li></ul><ul><li>Appreciate the differences among market economy, command economy, and mixed economy </li></ul><ul><li>Participate in three leading debates on politics, laws, and economics </li></ul><ul><li>Draw managerial implications </li></ul>
  2. 4. POLITICAL SYSTEMS <ul><li>Democracy - political system in which citizens elect representatives to govern the country on their behalf; an individual’s right to freedom of expression and organization is a fundamental aspect of democracy that is relevant to the effective conduct of global business </li></ul><ul><li>totalitarianism (or dictatorship) - political system in which one person or party exercises absolute political control over the population </li></ul><ul><li>Communist totalitarianism centers on a communist party </li></ul><ul><li>Right-wing totalitarianism characterized by intense hatred of communism with one party, typically backed by the military, restricts political freedom, arguing that such freedom would lead to communism </li></ul><ul><li>Theocratic totalitarianism - monopolization of political power in the hands of one religious party or group </li></ul><ul><li>Tribal totalitarianism - one tribe or ethnic group (which may or may not be the majority of the population) monopolizes political power and oppresses other tribes or ethnic groups </li></ul>
  3. 5. LEGAL SYSTEMS <ul><li>legal system - rules of the game on how a country’s laws are enacted and enforced </li></ul><ul><li>civil law - derived from Roman law and strengthened by Napoleon’s France, it is the oldest, most influential, and most widely distributed law around the world </li></ul><ul><li>common law - shaped by precedents and traditions, English in origin, based on previous judicial decisions </li></ul><ul><li>theocratic law - based on religious teachings </li></ul>
  4. 6. PROPERTY RIGHTS <ul><li>intellectual property - intangible property that results from intellectual activity (such as books, videos, and websites) </li></ul><ul><li>intellectual property rights - rights associated with the ownership of intellectual property </li></ul><ul><li>copyrights - exclusive legal rights of authors and publishers to publish and disseminate their work </li></ul><ul><li>trademarks - exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others </li></ul><ul><li>piracy - unauthorized use of intellectual property rights </li></ul>
  5. 7. ECONOMIC SYSTEMS <ul><li>economic system - rules of the game on how a country is governed economically </li></ul><ul><li>market economy - characterized by the “invisible hand” of market forces </li></ul><ul><li>command economy - all factors of production are government- or state-owned and controlled, and all supply, demand, and pricing are planned by the government </li></ul><ul><li>mixed economy - characterized by elements of both a market economy and a command economy </li></ul>

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