International Business Environment BE2501 – Summary
Globalization – refers to the shift toward a more integrated and interdependent world
Globalization of markets – refers to the merging of historically distinct and separate national
markets into one huge global marketplace.
Globalization of products – refers to the sourcing of goods and services from locations around
the globe to take advantage of national differences in the cost and quality of factors of
production (such as labor, energy, land and capital)
General Agreement on Tariffs and Trade (GATT)
World Trade Organization (WTO) – is primarily responsible for policing the world trading
system and making ...view middle of the document...
Political system – we mean the system of government in a nation. Collectivism vs
Individualism. Democratic vs Totalitarian.
Collectivism – refers to a political system that stresses the primacy of collective goals over
Socialism – Manage state-owned enterprise to benefit society as a whole, rather than
Communists believed that socialism could be achieved only through violent revolution and
Social democrats – achieving socialism by democratic means.
State ownership of the means of production ran counter the public interest and these
companies performed poorly. Inefficiencies ! higher prices & taxes.
Selling state owned enterprises to private investors = privatization.
Individualism - refers to a philosophy that an individual should have freedom in his or her
economic and political pursuits. Interests of the individual should take precedence over the
interests of the state. Built on two central tenets: guaranteeing individual freedom + selfexpression and welfare of society is best served by letting people pursue their own economic
“Invisible hand” theory
Collectivism asserts the primacy of the collective over the individual; individualism asserts
Democracy – refers to apolitical system in which government is by the people, exercised
either directly or through elected representatives.
Totalitarianism – is a form of government in which one person or political party exercises
absolute control over all spheres of human life and prohibits opposing political parties.
Democracy goes hand in hand with individualism.
Totalitarian goes hand in hand with communism.
Representative democracy – citizen select individuals to represent them.
1. Theocratic totalitarianism – is found in states where a party, group, or individual that
governs according to religious principles monopolized political power
2. Communist totalitarianism
3. Tribal totalitarianism – a political party that represents the interest of a particular
tribe monopolizes power.
4. Right-wing totalitarianism – permits some individual economic freedom but restricts
individual political freedom, frequently on the grounds that it would lead to the rise
1. Market economy – all productive activities are privately owned. Market forces.
2. Command economy – the government plans the goods and services that a country
produces, the quantity in which they are produced, and the prices at which they are
3. Mixed economy – certain sectors of the economy are left to private ownership and free
market mechanisms while other sectors have significant state ownership and
Legal systems (differences in legal systems can affect attractiveness of a country as an
investment site or market):
1. Common law – is based on tradition (legal history of a country), precedent (cases that
have come before courts in the country’s...