CHAPTER 4 Government and Global Business 4 1

CHAPTER 4 Government and Global Business 4 -1 Political Environment and Global Business 4 -2 How Government Discourages Global Business 4 -3 How Government Encourages Global Business © 2011 South-Western | Cengage Learning

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 LESSON 4 -1 Political Environment and Global Business GOALS l Discuss various political systems around the world. l Explain the political environment for a company’s host and home countries. © 2011 South-Western | Cengage Learning 2

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Types of Political Systems l Democracy—all citizens take part in making the rules that govern them l Totalitarianism—political control is held by one person or a small group l Mixed systems—characteristics of both systems © 2011 South-Western | Cengage Learning 3

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Political Relations with Host and Home Countries l Global companies operating in host countries l Global companies’ relationships with home countries © 2011 South-Western | Cengage Learning 4

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 LESSON 4 -2 How Government Discourages Global Business GOALS l Describe laws and trade barriers that can discourage global business. l Explain how political risks can disrupt global business activities. l Identify the major types of taxes that governments impose around the world. © 2011 South-Western | Cengage Learning 5

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Government Activities Influence Business l Laws that protect workers and consumers l Trade barriers l Tariffs l Quotas l Boycotts l Licensing requirements © 2011 South-Western | Cengage Learning 6

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Political Risks in International Business l Trade sanctions l Expropriation l Economic nationalism l Civil unrest or war © 2011 South-Western | Cengage Learning 7

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 International Taxes l Customs duty l Sales tax l Excise tax l Payroll-related tax l Value-added tax (VAT) l Income taxes © 2011 South-Western | Cengage Learning 8

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 LESSON 4 -3 How Government Encourages Global Business GOALS l Explain government actions that can encourage global business activities. l Discuss U. S. government agencies that can help reduce international risk. l Describe how tax incentives encourage global business. © 2011 South-Western | Cengage Learning 9

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Encouraging International Business l Free-trade zones l Most favored nation (MFN) l Free-trade agreements l Common markets © 2011 South-Western | Cengage Learning 10

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Government Protection from International Risk l Export-Import Bank of the United States (EXIM) l Overseas Private Investment Corporation (OPIC) © 2011 South-Western | Cengage Learning 11

CHAPTER INTERNATIONAL BUSINESS, 4 e 4 Tax Incentives l Corporate tax deduction on income earned by foreign subsidiaries l Double-taxation avoidance treaties l Tax holiday © 2011 South-Western | Cengage Learning 12