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* * Chapter 4 Political Environment Facing International Business Learning objectives gain an understanding of political decision-making structures in different national systems and how they interact with business assess the processes of building democracy and how democratic institutions affect the international business environment appreciate the dimensions of political risk in business decision-making understand the changing role of transnational and regional forces in political processes worldwide Text: The Changing Political Environment Introduction How political factors affect business Political risk Transitional democracies and international business Global politics Introduction Business, from global corporations down to family-run enterprises, desire a stable and reasonably predictable environment in which to carry on their activities. People everywhere wish to see public order to be maintained, public services function effectively and government officers carry out their duties. But they want more besides. How political factors affect business Politics has been defined in numerous different ways, but all highlight the function of conflict resolution in society. Broadly, politics refers to processes by which a social group allocates the exercise of power and authority for the group as a whole. Breaking down the definition into three elements First there is the existence of a social group—the word ‘politics’ derives from the Greek word polis, meaning city-state, a political community. Second, politics concerns power relations. The third element is the terrain of politics, the social group as a whole. Political risk There is virtually no country which has not been the target of foreign attack or invasion at some point in its history. States must also concerned with threats such as terrorism, whether originating from disenchanted groups within society or from outside the state. Transitional democracies and international business Transitional democr
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