1. AOF Business in a Global Economy Unit 2, Lesson 4 Political and Economic Systems Copyright © 2009–2012 National Academy Foundation. All rights reserved.

2. Risks are inherent in the global marketplace S ocial aspects T echnology E conomic development P olitics and laws What other things must one consider when analyzing a foreign market?

3. Global businesses face political risks Ownership risks Loss of business property Operating risks Disruption of business Transfer risks Problems moving goods or money Risk Political Stability Risk vs. Political Stability

4. Attorneys are an essential part of a global team Contracts Property rights o Intellectual property Product safety Do people own their ideas? Why or why not?

5. Other factors contribute to business success Geography o Location o Resources Education o Literacy rate What influence does a country’s GDP have on its literacy rate, and vice versa? Highest National Literacy Rates 1Sweden 2Norway 3Denmark 4Finland 5Canada 6Netherlands 7Czech Republic 8United Kingdom 9USA 10Germany

6. Economic policies can benefit business Taxes pay for public services. Education Infrastructure Governments may try to protect local businesses… Tariffs Quotas Subsidies …but this can reduce choice, raise prices, and make local businesses uncompetitive. How do protectionist policies affect economic development? Percentage of GDP Spent on Education

7. Economic development indicators measure production, consumption, or quality of life GDP: Gross Domestic Product Goods and services produced and consumed PPP: Purchasing Power Parity Adjusts for cost of living HDI: Human Development Index Quality of life How could an increasing level of economic development influence a firm’s decision to expand to a country? 1USA 2Japan 3Germany 4China 5United Kingdom Highest GDP 2007

8. Risk analyses protect global businesses Social factors: language, customs Technological factors: energy, transportation, communications Economic factors: capital, resources Political factors: protectionism, conflicts What other factors could be included in a risk analysis? STEPSTEP