3. POLITICAL IDEOLOGY TOTALITARIANISM DEMOCRACY RADICAL LIBERAL CONSERVATIVE REACTIONARY DICTATORSHIP COMMUNIST THEOCRATIC AUTHORITARIAN

4. POLITICAL RISK Political Risk Explanation Ownership risk Threats to a firm’s property or assets in a foreign country. Operating risk Threats to a firm’s ongoing operations or the safety of its employees Transfer risk Threats to a firm’s ability to repatriate its investments or profits out of the country.

5. Managing Political Risk DIRECT APPROACHES INDIRECT APPROACHES Reactive Approaches Maintain redundant operations in multiple host countries Hire host country employees and especially managers. Use home country government pressure on local host country Secure risk insurance Do contingency planning Proactive Approaches Establish equity joint ventures with host country firms Use local licensing agreements Build collaborative relationships with locals Promote host country goals Lobby home and host governments for support Be a good local corporate citizen

11. Starting a business Country Legal Origin No. of procedures Time Cost(% of income per capita Australia Common 2 2 1.8 China Civil 13 35 9.3 France Civil 7 8 1.1 Germany Civil 9 24 5.1 Japan Civil 8 23 7.5 Korea Civil 12 22 15.2 Russia Socialist 7 28 2.7 United Kingdom Common 6 18 0.7 United States common 5 5 0.7

12. Enforcing Contracts Country Legal Origin No. of procedures Time (days) Cost(% claim) Australia Common 19 181 12.8 China Civil 31 292 26.8 France Civil 21 331 11.8 Germany Civil 30 394 10.5 Japan Civil 20 242 9.5 Korea Civil 29 230 5.5 Russia Socialist 31 178 13.5 United Kingdom Common 19 229 16.8 United States common 17 300 7.7

13. Closing a business Country Legal Origin Time to Insolvency (years) Cost(% of estate) Australia Common 1 8 China Civil 2.4 22 France Civil 1.9 9 Germany Civil 1.2 8 Japan Civil 0.6 4 Korea Civil 1.5 4 Russia Socialist 3.8 9 United Kingdom Common 1 6 United States common 1.5 7