1. Political Environment

2. Definition
>The political environment of the company includes national and international political factors which can affect its operations. >This category also includes the methods of thinking, and beliefs of all natures which can influence the behavior of governments and citizens opposing the company without them emanating directly from a government example: nationalism).

3. The Political Environment
SYSTEM
STABILITY
POLICIES
Legal and Political
Environment

4. SYSTEM Political System
Includes the structures, processes, and activities by which a nation governs itself.
Political
System
Totalitarian state
Democratic state

5. SYSTEM Totalitarian state Imposed authority
Lack of constitutional guarantees
Restricted participation
Companies might need to pay
bribes to government
The business law is vague
(Vogue = Uncertain )
Democratic state
Freedom
Rights
Stable business environment
thanks to laws
 Freedom and no censorship
Doing business seems
to be a risky proposition
Doing business in a democratic
state seems to be safer
than in a totalitarian state

6. SYSTEM Political Ideology Capitalist system Socialist system
Private ownership of business
is encouraged
Socialist System
Public ownership of business
is the norm
The political ideology affects
- foreign government attitude towards profit repatriation(Return).
- foreign government attitude towards foreign direct investment

7. Political relationships
SYSTEM
Political relationships
Favourable political relationships
foster(promote) 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.

8. 4 types of political risk
STABILITY
Political Stability : « A subjective governance indicator aggregated from a variety of sources and measuring perceptions of the likelihood of destabilization. »
Political Risk
« The risk that political decisions or events in a country negatively affect the profitability or sustainability of an investment. »
4 types of political risk

9. STABILITY Distributive Political Risks
« When countries revise their distribution policies to capture greater benefits from foreign companies. »
Catastrophique(horrible) Political Risks
« This is the Political developments that adversely affect the operations of all companies in a country. »

10. POLICIES
TAXATION
Governments use income and sales taxes which can vary from country to country.

11. POLICIES Intellectual Property
« Property that results from people’s intellectual talent and abilitie. »
Industrial Property
« Industrial property includes patents and trademarks. »
Copyrights
« Copyrights give creators of original works the freedom to publish or dispose of them as they choose. »
The problem is that laws in some countries are softer than in others

12. PRODUCT SAFETY AND LIABILITY
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. 
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.

13. Three Institutions
The political system under democratic dispensation, like ours, comprises three vital institutins.
Legislature
Government
Judiciary

14. Business Responsibility to Government
Taxes
Voluntary programmes
Providing Information
Government contracts
Government service
Political activity

15. Government Responsibility to Business
1. Establishment and Enforcement of Laws 2. Maintenance of Order 3. Money and credit 4. Orderly Growth 5. Infrastructure 6. Information 7. Small industries 8. Technology

16. Example

22. 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.)

23. 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

24. 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"

25. 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