The document is a simplified summary of political systems of different countries and how these systems influence the complexity of international business.
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TOPIC 2.
The political economies of countries.
Complexity of international business.
In the previous chapter, we looked into complexities that arise to managers of
international business.
The problems arise due to differences in political philosophies, economic setup, social
and cultural ties.
So in this context, firms need to develop strategies that would put them in a better
competitive position.
It is important to note that these factors are interdependent.
They work hand-in-hand as they have spill over effects.
We shall look into these categories separately and in detail.
Political system.
Hill and Hult (2017) assert that political system is the major anchor of all other
systems that follows.
They defined it as the system of government in a country.
This means that, the way the nation is governed shapes the economic and legal
framework of a nation.
Easton and Framework (1965) argue that political systems are different from nation to
nation.
In other words, they believed that political system must be assessed according to
every nation of interest.
These two contented that, there are 2 distinct political systems ie collectivism
individualism.
The 2 degrees is where we can divide and see it is democratic or totalitarianism.
Kellas (1989) believed that collectivism is inclined towards totalitarianism where as
individualism as a brainchild of democracy.
King (1990) argues that collectivism is a political system that views the needs of a
society as a whole.
Hill and Hult (2017) concurred with King (1990) as they referred collectivism as the
primacy of collective goals over individual goals.
On the contrary, individualism means that an individual should have freedom in
his/her economic and political pursuits.
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This means choices must be made individually with respect to what every person
needs.
Collectivism
Triandis (2018) argued that collectivism seek to achieve socialism through violent
revolution and totalitarianism leadership.
This means that the common good is more important than any individual desire.
The mover of the phenomenon, Plato argues that individual rights must be sacrificed
for the good of the society hence property should be owned in common.
Common ownership of property, Plato believed that people must be grouped in
societal classes and that would give a clear indication of which group must lead.
This was further argued by Karl-Max as he opposed ownership of resources by
capitalists thus how socialism gained popularity.
Individualism
This phenomenon was much emphasised by a philosopher called Aristotle.
He argued that, individual diversity and private ownership are desirable.
This phenomenon was pushed much by economists that include Smith, Friedman etc.
They believed that socialism lacks competition and that is a pre-requisite for poor
goods and services.
They further asserts that, companies that are protected by the government and have
financial backing lack the motive of performing for sustainability thus they pushed for
free market systems under privatisation.
Individualism is built on 2 strong tenets.
i. The importance of guaranteeing individual freedom and self expression.
ii. The welfare of society is best served by letting people purse their own
economic self-interest as opposed to some collective body dictating what is in
society`s best interest.
This was further explained by the father of economic, Adam Smith, ie the individual
who intends his own gain is led by an invisible hand to promote an end that was no
hand of his intention.
In short, economic & political freedoms of an individual are the ground rules which
the society should be based on.
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