POLITICAL SYSTEMS
• DEMOCRACY
• TOTALITARIANISM
DEMOCRACY
• Presidential Form
• Parliamentary System
• Various Combinations
Basic Political Ideologies
•
Democracy
– Democratic systems involve wide participation by citizens in the decisionmaking process
– In representative democracy, majority rule is achieved through periodic
elections
– Factors for evaluating freedom are
• Political rights
• Civil liberties
– Political rights include
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Fair and competitive elections
Power for elected representatives
Ability to organize
Safeguards on rights of minorities
TOTALITARIANISM
• SECULAR
• THEOCRATIC
Basic Political Ideologies
• Totalitarianism
– In a totalitarian system, decision making is restricted to
a few individuals
– Theocratic totalitarianism is the form prevalent in
Muslim countries. With secular totalitarianism, control
is often enforced through military power
– Communism is a form of secular totalitarianism that
relates political and economic systems
The Impact of the Political System
on Management Decisions
• There is a dichotomy between governmental control and
consumer control of the political system and the economy
• Managers need to understand the critical functions that a
government performs in the economy
• The political process affects international business through
regulation of cross-border transactions
Secular Totalitarianism
• Fascism
• Authoritarianism
• Communism
POLITICAL RISK
• Changes in the Political Climate that might
adversely affect business operations
CAUSES of POLITICAL RISK
• Opinions of Political Leadership
• Civil Disorder
• External Relations