The Political Environment - PowerPoint by HC12110615425

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									The Political Environment

        Trevor Hunter
   King’s University College
   What is the political environment

The political environment comprises
institutions that:
• influence the political environment through
  their policies
• pass laws and establish regulations
• implement and enforce laws and regulations



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       Levels of Decision Making

Decisions affecting the political environment
are made at the:

•   international level – EU, UN
•   national level – federal governments
•   regional level – provincial or state
•   local level - municipal


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        National Decision-Making

  Unitary systems:
• decision-making power is centralized in hands
  of central government - the regions have little
  or no autonomy

  Federal systems:
• power is shared between the centre and the
  regions

                                                    4
     Political and Legal Institutions

Countries usually have institutions, backed up by
coercion that make decisions that implement
rules to enforce or support the society’s norms
and values:
• Legislative branch: comes up with laws
• Executive branch: implements laws and
  advises on policy
• Judicial branch: interprets and applies laws

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       Different Political Systems

• Liberal democracy (less than half of 191 UN
  members)
• Authoritarian or absolutist (Burma; Saudi
  Arabia)
• Communist (China; Cuba; Vietnam; N.
  Korea)

• Theocratic (Iran; Vatican)

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            Liberal democracy

Characteristics:
• Right of citizens to elect governments to
  represent their interests
• Governmental institutions based on majority
  rule
• Members drawn from a variety of political
  parties
• Free elections

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            Liberal democracy

• a permanent, skilled and impartial public/civil
  service responsible to government applies and
  enforces laws
• the right to personal freedom and to express
  views freely
• state institutions which are constrained in
  their powers by other institutions e.g. an
  independent judiciary

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             Liberal democracy

Checks, balance and conflict:
•In liberal democracies conflict can occur
 between different branches of the state:
  –Politicians and judiciary
  –Politicians and bureaucrats
•Conflicts are resolved via rule of law, the court
 system or compromise – not violence or illegal
 activities


                                                     9
 Authoritarian and Absolutist Systems

• Characteristics:
   – Restrictions on operations of political
     parties
   – Power in hands of one or a few people
   – No checks or balances on those holding
     power
   – Power retained through patronage

                                               10
 Authoritarian and Absolutist Systems

• Characteristics:
   – Citizens unable to elect governments – if
     there are elections they are rigged
   – Governmental institutions based on whim
     and maintaining power for those who rule
   – Members drawn from rulers’ political party
   – Limited (if any) rights to citizens
   – No free speech

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           Theocratic Systems

• Characteristics:
  – Religion/faith plays the dominant role
  – Religious leaders and political rulers are the same
    people
  – Political decisions derived from principles of the
    dominant religion
  – Tend to be sexist and misogynistic
  – Low tolerance for non-believers
  – Limited (if any) citizens’ rights
  – No tolerance for dissent

                                                          12
                Communism

• Characteristics:
  – Means of production owned by the State
  – Domination by one political party
  – The party controls the legislative, executive
    and judicial branches of the State as well as
    trade unions and the media
  – Limited citizens’ rights
  – No private ownership
  – Distribution of wealth
  – Not “true” Marxist communism
                                                    13
          Functions of the State

The State performs some very important functions
with major implications for business:
• Establishes the legal framework
• Regulator and deregulator
• Public expenditure and taxation
• International negotiator
• Internal and external security
• Arbitrator/judge
• Currency and taxation
                                                   14
          State as Arbitrator
         Apple versus Samsung
Companies sometimes look to the judicial
  system to act as arbitrator in business
  disputes.
In 2011
• Apple sued Samsung for infringing its
  patents in courts in the US, S.Korea, Japan,
  Germany and Australia
• Samsung responded by suing Apple in
  Germany, France, Japan and S. Korea for
  patent infringement

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         Functions of the State

The State also plays a role in the business
environment of a given country as a:
• Subsidiser
• Competitor
• Customer and supplier




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   How Business Influences the Political
             Environment

• The relative comparative advantage of a
  country can be influenced by firms - done to
  make their situation better than that of
  competitors:
  – Pressure group – lobbying
  – Promises or threats
  – State consultation with business
  – Representation on government bodies
  – Giving money or gifts
  – Employment and exchange of personnel

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