Chapter 8. Political, legal and economic environments in global business

• Variety of political systems affecting business
• Legal systems principles and differences
• Differences of economic environment
• Questions for chapter review
• Chapter bibliography

This chapter is intended to introduce the reader to the variety of political, legal, and economics environments in the world that directly affect business processes and relationships (Prieto-Sanchez & Merino, 2022). Different political systems determine the rights and values of the people in the country. The chapter describes the different political systems, the characteristics of each of them and their significance for the chosen business in a specific country. Legal systems vary even more between different countries; there are differences in the detail of business contracts, and different practices of applying the civil code and precedent. When developing a business to other countries, aspects of establishing companies, procedures, rights of owners, as well as threats and risks are very important. It is important for the reader to understand that the differences are not only technical, but often cardinal, and what is normal in one country may be unacceptable in another. Even things like the inviolability of private property, the freedom to do business and to establish companies are limited by various rules across the world and some restrictions that may surprise the reader. Economic differences between countries are important both when evaluating each country as a potential buyer market, but also when evaluating it as a place for organizing a business process. The chapter examines different tax systems, variations of taxes and their types, different tax values. Although global companies are called global, when operating in different countries they must consider local legal systems and local tax systems. This book certainly does not list each country taxes or laws, but it does present key differences, group similar principles, and provide country-specific examples.

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