Political Systems:

• Definition: The system of government in a nation that shapes political, economic, and social policies.
• Types:
  • Democracy: Power lies with the people, typically through elected representatives (e.g., U.S., Canada).
  • Totalitarianism: One person or political party holds absolute control (e.g., North Korea, Saudi Arabia).
• Impact on Business:
  • Democracies tend to promote free markets, rule of law, and property rights.
  • Totalitarian regimes may have unpredictable policies and lack transparency.

Economic Systems:

• Definition: How a country organizes its economy to produce, distribute, and consume goods and services.
• Types:
  • Market Economy: Economic decisions are driven by supply and demand with minimal government intervention (e.g., U.S.).
  • Command Economy: The government controls all aspects of economic activity (e.g., North Korea, formerly Soviet Union).
  • Mixed Economy: Combines elements of market and command economies, with significant government involvement in key industries (e.g., France, India).
• Impact on Business:
  • Market economies foster innovation and competition.
  • Command economies may stifle entrepreneurial activity due to strict control.

Legal Systems:

• Definition: The set of laws and regulations that govern business practices and enforce contracts.
• Types:
  • Common Law: Based on tradition, precedent, and custom (e.g., UK, U.S.).
  • Civil Law: Based on a detailed set of written laws and codes (e.g., Germany, Japan).
  • Theocratic Law: Based on religious principles (e.g., Saudi Arabia, Iran).
• Impact on Business:
  • Common law offers flexibility and protection for property rights.
  • Civil law provides more predictable outcomes but less adaptability.
  • Theocratic law can impose restrictions based on religious beliefs.