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Political and legal business environment

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Political and legal business environment

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Political and legal business environment

  1. 1. POLITICAL AND LEGAL ENVIRONMENT
  2. 2. Political scenario in a country is the outcome of the interacting influence of various interest groups such as individual households, firms, politicians, and many other groups. Political similarity Political diversity
  3. 3. The ultimate test of any political system is to hold a society together despite pressures from different ideologies The two extremes on the political spectrum are democracy and totalitarianism
  4. 4. Democracy features  Freedom of opinion, expression, press  Elections in which voters decide their representatives  Limited term for elected officials  Independent and fair court system  Non-political bureaucracy and defence infrastructure  Citizen accessibility to decision making
  5. 5. Defining feature of democracy is freedom factors for evaluating freedom  Political rights  Civil liberties
  6. 6. In terms of political freedom a country is rated as  Free egs. Australia, Japan  Partly free egs. Brazil, Malaysia  Not free egs. Egypt, North Korea
  7. 7. Totalitarianism One single agent whether an individual, group or party monopolizes all political power Decision making is restricted to few individuals
  8. 8. TOTALITARIAN SYSTEM AUTHORITARIANISM Eg. CHILE FASCISM Eg. GERMANY UNDER HITLER SECULAR TOTALITARIANISM Eg. CHINA THEOCRATIC TOTALITARIANISM Eg. IRAN, AFGANISTAN UNDER TALIBAN
  9. 9. Trends in political system key drivers  Breakdown of totalitarian regimes  Improved communication technology  Higher standards of living
  10. 10. Political Risk The risk that political decisions or events in any country negatively affect the profitability or sustainability of any investment
  11. 11. Leading sources of political risk  Expropriation or nationalisation  International war or civil strife  Unilateral breach of contract  Destructive government actions  Harmful actions against people  Restrictions on repatriation of profit  Discriminatory taxation policies
  12. 12. LEGAL ENVIRONMENT A legal system is the mechanism for creating, interpreting and enforcing the laws in a specified jurisdiction Legal systems differ from country to country
  13. 13. Legal systems  Common law system  Civil law system  Theocratic law system  Customary law system  Mixed legal system
  14. 14. Common law system is based on tradition, precedent, custom and usage and interpretation by the courts Egs. Canada, US, England, India Civil law system is based on systematic and extensive codification of law. Egs. Germany, France, Japan
  15. 15. Theocratic legal system is based on religious percepts Egs. Islamic law Customary legal system follows the wisdom of daily experience
  16. 16. Mixed legal system combines the elements of other legal systems. Egs. State of Louisiana has mixture of common law system and civil law system Indonesia- theocratic law partly shapes civil law system

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