Week 10 Flashcards
What is the political environment
IT refers to the political factors that influence a
business or organisation’s operations.
By understanding the political environment, businesses
can more efficiently anticipate and adapt to changes in
government policies and regulations, reduce political
risks, and build relationships with significant
stakeholders.
Key aspects of the political environment (Part 1)?
Laws and Regulations (e.g., labour laws, environmental standards, and trade policies).
Government Stability (It can significantly impact business operations and investment decisions).
Political Systems (e.g., Various political systems can influence the business environment)
Party Politics (e.g., Parties influence policy direction, taxation, and regulations, affecting business operations).
Diplomatic Relations (e.g., the international relations can affect trade agreements, tariffs, and foreign investment).
Key aspects of the political environment (Part 2)?
Geopolitical Risks (e.g., Wars, sanctions, or instability in one country can disrupt global trade and investment).
Social Movements (e.g., environmental regulations and labour rights).
Media Influence (e.g., shape political discourse and public perception, impacting on policies).
Monetary and Trade Policies.
What is a nation-state?
The nation-state (or just state) is the basic unit into
which the world’s peoples are divided
Characteristics of a nation-state?
Territory control
Conflict of boundaries and who controls the resources within the territory
E.g. natural resources
E.g. Africa inheriting historical colonial borders leading to ethnic conflicts
Sovereignty - supreme law-making authority over
inhabitants of its territory
What are different political systems?
Liberal democracy
Authoritarian or absolutist (e.g., Burma; Saudi Arabia)
Communist (e.g., China; Cuba; Vietnam; N. Korea)
What are full democracies?
Basic political freedoms and civil
liberties are respected and encourage a political culture.
The functioning of government is satisfactory and free Media.
There is an effective system of checks and balances, free judicial system.
What is the political sphere?
Politics is about the processes by which
power is exercised in a social group.
Public: institutions of state, government
structures and the individuals who play
roles in political decision-making.
Civil society – private sphere in which
people can pursue their own goals,
including freedom to join groups such as
political parties, trade unions.
What is a flawed democracies?
These countries also have free and fair elections
Mostly free Media (With some restrictions on media freedom).
Basic civil liberties are respected.
However, there are significant weaknesses in
democracy, Such as problems in governance, an
underdeveloped political culture and low levels of
political participation.
What is Hybrid Regimes?
Substantial irregularities in elections.
Government pressure on opposition parties and candidates may be common.
Serious weaknesses are more prevalent than in flawed democracies, Such as political culture, functioning of government and political participation.
Corruption tends to be extensive, and the rule of law is weak.
Civil society is weak and harassment of journalists, and the judiciary is not independent.
What are authoritarian regimes?
The political diversity is absent or limited. (No
opposition) Or Dictatorships.
Some formal institutions of democracy may exist.
Elections, if they do occur, are not free and fair.
There is disregard for abuses and violations of civil
liberties.
Media are typically state-owned or controlled by
groups connected to the ruling regime.
There is no independent judiciary.
What is a unitary system?
In a unitary system, all authority issues out from the
centre including Japan, UK, China, Italy, and France.
What is federal systems?
In a federal system, authority is shared between the
centre and local or regional units including US, Germany, India and Brazil.
What are the advantages of federalism?
Seen as suitable for countries where regional units have strong loyalties and identities
Seen as advantageous to balance the power of central
government
What are political risk?
Political risk – refers to the possibility for losses or damaging effects on an investment or business operation due to political changes or instability in a country.
What are Types of Political Risk?
Government Instability (e.g., coups, revolutions, political
transitions)
Regulatory Changes (e.g., New laws, changes in regulations).
Seize (e.g., seizing foreign assets or nationalizing industries).
Civil Unrest (e.g., protests, strikes, and civil disturbances)
What are causes of Political Risk?
Political Factors (e.g., corruption, lack of
transparency, and inefficient governance).
Economic Factors (e.g., economic declines, high
inflation, or currency fluctuations).
Social Factors (e.g., ethnic tensions, social
inequalities, and public dissatisfaction).
What is the Impact on International Business
Investment Decisions (e.g., Identifying political risk
is crucial for foreign investors and businesses entering
new markets).
Strategic Planning (e.g., firms must incorporate
political risk assessments into their strategic planning
to navigate potential challenges effectively).
