POLITICAL SYSTEMS DEMOCRACY TOTALITARIANISM DEMOCRACY Presidential Form Parliamentary

POLITICAL SYSTEMS • DEMOCRACY • TOTALITARIANISM

DEMOCRACY • Presidential Form • Parliamentary System • Various Combinations

Basic Political Ideologies • Democracy – Democratic systems involve wide participation by citizens in the decisionmaking process – In representative democracy, majority rule is achieved through periodic elections – Factors for evaluating freedom are • Political rights • Civil liberties – Political rights include • • Fair and competitive elections Power for elected representatives Ability to organize Safeguards on rights of minorities

TOTALITARIANISM • SECULAR • THEOCRATIC

Basic Political Ideologies • Totalitarianism – In a totalitarian system, decision making is restricted to a few individuals – Theocratic totalitarianism is the form prevalent in Muslim countries. With secular totalitarianism, control is often enforced through military power – Communism is a form of secular totalitarianism that relates political and economic systems

The Impact of the Political System on Management Decisions • There is a dichotomy between governmental control and consumer control of the political system and the economy • Managers need to understand the critical functions that a government performs in the economy • The political process affects international business through regulation of cross-border transactions

Secular Totalitarianism • Fascism • Authoritarianism • Communism

POLITICAL RISK • Changes in the Political Climate that might adversely affect business operations

CAUSES of POLITICAL RISK • Opinions of Political Leadership • Civil Disorder • External Relations