Government
A continuum from “Government in charge of everything” to “Government in charge of nothing”
Most governments are somewhere in the middle where citizens give up some personal rights to the government which dictates behavior in certain circumstances for the betterment of society as a whole
The Role of Government
Leadership- race to the top
Creating business-friendly infrastructure
Inexpensive, reliable utilities (phone, gas, water, waste)
Inexpensive, reliable transport/travel (highways, airports)
Ensure a well-educated workforce
Create a business-friendly regulatory environment
Easy to start a business, higher/fire workers, enforce contracts, get credit, close a business.
Political Risks
Ownership, Approval systems, anti-competition, infrastructure, business related laws (HR, environment, safety), corruption, terrorism.
Financial Risks
Exchange rates, taxes, Money transfer barriers, depreciation and accounting requirements
Managing risk
Be a good citizen of the host country (support charities)
Develop local support
Help local companies improve, but keep proprietary technology to yourself
Treat employees well
Monitor the political environment
Be insured

Chapter 2 key terms

Collectivism
Political system that stresses the primacy of collective goals over individual goals. Needs of society as a whole are generally viewed as being more important than individual freedoms.
Socialism
A political philosophy advocating substantial public involvement through government ownership, in the means of production and distribution
Communist
Those who believe socialism can be achieved only through revolution and totalitarian dictatorship
Privatization
The sale of state-owned enterprises to private investors
Individualism
An emphasis on the importance of guaranteeing individual freedom and self-expression
Totalitarianism
Form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties
Common law
A system of law based on tradition, precedent, and custom
Civil law
A system of law based on a detailed set of written laws and codes
Theocratic law
A system based on religious teachings
Private action
The theft, piracy, blackmail, and the like by private individuals or groups
Public action
The extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats
Foreign Corrupt Practices Act
U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions
Intellectual property
Products of the mind, such as computer software, a screenplay, a music store, or the chemical formula for a new drug; can be patents, copyrights, and trademarks
Purchasing Power Parity
An adjustment in gross domestic product per capita to reflect differences I the cost of living
First-Mover Advantages
Advantages that accrue to the first to enter a market
Late-Mover Disadvantages
Handicaps experienced by being late entrant into a market
Political risk
The likelihood that political forces will cause drastic changes in a country’s business environment that will adversely affect the profit and other goals of a business enterprise
Economic risk
The likelihood that events, including economic mismanagement, will cause drastic changes in a country’s business environment that hurt the profit and other goals of a particular business enterprise

Cross-cultural literacy
An understanding of how cultural differences across and within nations can affect the way business is practiced
Values
Abstract ideas about what a group believes to be good, right, and desirable
Ethics
A set of moral principles, or values, that are used to guide and shape behavior
Power distance
Theory of how a society deals with the fact that people are unequal in physical and intellectual capabilities.
Uncertainty Avoidance
Extent to