Global Business Today Chapter 2 Quiz

Study Notes

Economic Transformation in Vietnam: Transitioned from a centrally planned socialist economy to a market-oriented system since 1986, enhancing living standards and productivity while reducing state enterprise dominance to 40%.
Complexities of International Business: International business involves diverse economic developments, cultures, educational backgrounds, and political economies, interrelating societal culture with political frameworks.

Definition: Political systems refer to the governance structure of a nation, assessed by collectivism vs. individualism and democracy vs. totalitarianism.
Collectivism: Prioritizes collective goals over individual freedoms, historically linked to socialism and rooted in Plato's philosophy. Advocated by Karl Marx for state ownership of productive resources.
Individualism: Stresses personal freedom and self-expression rooted in Aristotle's philosophy, promoting free markets and democratic systems.
Democracy vs. Totalitarianism: Democracy involves government by the populace, whereas totalitarianism denotes absolute control by one party or individual, leading to repression, censorship, and denied civil liberties.
Four Forms of Totalitarianism:
- Communist: Achieves socialism through dictatorship.
- Theocratic: Governed by religious laws.
- Tribal: Power held by a political party representing a tribe.
- Right-Wing: Limits political freedom while allowing economic freedom.

Connection to Political Ideology: Economic systems are directly influenced by political ideologies, classified as market, command, or mixed economies.
Market Economy: Operates on supply and demand, promoting competition and minimal government interference.
Command Economy: Government plans and controls production and pricing, leading to inefficiency and lack of consumer focus.
Mixed Economy: Combines elements of both market and command economies, with governments intervening in critical industries.

Definition: Legal systems consist of the rules governing behavior and processes for enforcement and grievance redress.
Types of Legal Systems:
- Common Law: Based on traditions and precedents (e.g., USA).
- Civil Law: Founded on organized legal codes (e.g., Germany, Japan).
- Theocratic Law: Governed by religious doctrines.
Contract Law Differences: Varying levels of detail in contracts exist between common and civil law systems, with international conventions like CISG facilitating business transactions.

Property Rights Importance: They define resource usage and economic incentives; threats arise from private and public actions, hindering investment and growth in corrupt environments.
Foreign Corrupt Practices Act: U.S. law prohibiting bribery of foreign officials and requiring companies to maintain transparent financial records.

Intellectual Property Types: Includes patents, copyrights, and trademarks, which differ significantly in protection across countries.
Global IP Enforcement Challenges: Despite international treaties, enforcement can be lax, particularly in certain regions like China and Thailand.
Strategies for Protecting IP: Involves lobbying for better laws, legal action, and avoiding regions with poor protections.

Understanding national differences aid in strategizing international operations, ensuring compliance with local political, economic, and legal norms, thereby enhancing business success.### Product Safety and Product Liability
Product safety laws establish required safety standards for products.
Product liability holds companies and their executives accountable for any injuries, deaths, or damages caused by their products.
Liability laws tend to be less extensive in less developed countries.
Companies face a decision between following home country standards or aligning with host country regulations.

The political, economic, and legal systems of a country shape ethical considerations and impact international business operations.
A country's attractiveness as a market or investment site is influenced by its political stability, economic conditions, and legal framework.
Democratic nations with market economies, strong property rights, and low corruption levels are more appealing for business activities.

The chapter covers differences in the political systems of various countries.
Examination of how economic systems vary across nations.
Analysis of distinctions in legal systems among countries.
Implications of national differences in political economy for management practices are discussed.