There is no consensus on how to measure democracy, definitions of democracy are controversial and there is a lively debate going on on the issue. Although the terms “freedom” and “democracy” are often used interchangeably, the two are not synonymous. Democracy can be seen as a set of practices and principles that institutionalize and thus ultimately protect freedom. Although consensus on precise definitions has proved elusive, most observers now agree that the fundamental characteristics of a democracy include at least majority rule and the consent of the governed, free and fair elections, protection of minorities, and respect for fundamental human rights. Democracy presupposes equality before the law, the rule of law and political pluralism. Freedom and Justice for Some,” The Economist, p. 22. August 2007, accessed December 21, 2010, www.economist.com/node/8908438. Q: Only international companies should conduct a social environment study before entering the market.
True or false? The legal environment includes the courts as well as the government agencies responsible for issuing regulations. As we have seen, a company has no control over the different elements that make up its macro environment. But it`s important to study them, as it allows companies to prepare for change. Let`s find out a little more about the political-legal environment and the social environment and its impact on a company. How do political and legal realities affect international trade and what should companies think about when developing their global strategy? Governments have a long history of intervening in international trade through a variety of mechanisms. First, let`s briefly discuss some of the reasons for these interventions. Many external environmental factors can impact your business. It is common for managers to carefully evaluate each of these factors.
The goal is always to make better decisions for the progress of the company. There are more than thirteen main types of governments, each consisting of several variants. Let`s focus on global modern political philosophies. At one extreme of political philosophies or ideologies is anarchism, a political ideology that claims that individuals should control political activity and that public government is both useless and undesirable, that individuals should control political activity, and that public government is both useless and undesirable. At the other extreme is totalitarianism, a political ideology that claims that every aspect of an individual`s life should be controlled and dictated by a strong central government that claims that every aspect of an individual`s life should be controlled and dictated by a strong central government. In reality, neither extreme exists in its purest form. Instead, most countries have a combination of both, the balance of which often reflects the country`s history, culture, and religion. This combination is called pluralism, a political ideology that claims that public and private groups are important in a well-functioning political system, that claims that public and private groups are important in a well-functioning political system.
Although most countries are politically pluralistic, they may be more inclined to one extreme than the other. In a country, a company can be created, regulated, controlled, expanded, within the legal framework of a country that determines the legal environment. Since political systems vary from one area to another, the policy implications differ. The people of the country democratically elect an open system of government. In totalitarian regimes, governmental power emanates from a small group. Common LawA legal system based on tradition and primacy. In this system, judges interpret the law and court decisions can set precedents. is based on tradition and primacy. In common law systems, judges interpret the law and court decisions can set precedents. Why should companies care about the different political and legal systems of the world? First, despite the globalization of the economy, companies must comply with the local rules and regulations of the countries in which they operate.
In the case study in Chapter 1 “Introduction,” you discovered how U.S. Google had to deal with Chinese government restrictions on free speech to do business in China. China`s various policies and legal policies have led Google to discontinue its mainland Chinese version of its website and direct users in mainland China to a Hong Kong version. Religious lawAlso known as theocratic law; This legal system is based on religious guidelines. is also known as theocratic law and is based on religious guidelines. The best-known example of religious law is Islamic law, also known as Islamic Sharia religious law, which deals with all aspects of daily life; In terms of economics and finance, the law prohibits charging interest on money and other usual investment activities, including hedging and short selling. Islamic law governs a number of Islamic nations and communities around the world and is the most widely used religious legal system. Two other religious legal systems are the Jewish halacha and the Christian canon system, neither of which is practiced nationally in any country. The Christian canon system is observed in Vatican City. All these factors will shape the political and legal environment in which the firm must operate and be competitive. There are three main elements of a political-legal environment.
Let`s take a look. What companies need to focus on is how a country`s political system affects the economy, as well as the business and industry in question. Companies need to assess the balance to determine how local policies, rules, and regulations affect their business. Depending on how long a company is expected to operate in a country and how easily it enters and leaves a country, a company can also assess the political risk and stability of the country. A company may ask the government of a potential country several questions to assess possible risks: the political environment and the economic environment are closely linked. Some important factors that influence the cultural and social environment of a country are as follows: companies, especially international companies, always study the cultural and social environment of a country before entering the market.