Political environments

The first is that exporters should seek the most favourable classification for their products in order to minimise the duty levied in the importing country. Government actions influence the economic environment. This raises two interesting characteristics of international law. This was a reaction to the social environment.

Winds of change The emergence of Japan in the s and 80s, coupled with more trade between developing countries, harmed the balance of payments of the Western economies.

Ad valorem duties: This duty is expressed as a percentage of the value of goods.

Political environments and business strategy implications for managers

Normally, the applicable rate is the one that yields the higher amount of duty, although there are cases where the lower is specified. Selective monetary controls and discriminatory exchange rate policies Discriminatory exchange rate policies distort trade in much the same way as selective import duties and export subsidies. Tariff systems Tariff systems provide either a single rate of duty for each item applicable to all countries, or two or more rates, applicable to different countries or groups of countries. The three basic principles are: i nondiscrimination - each member country must treat the trade of all other member countries equally ii open markets which are encouraged by GATT through a prohibition of all forms of protection except customs tariffs, and iii fair trade which prohibits export subsidies on manufactured products and limits the use of export subsidies on primary products. When using international trade data, it is important to bear in mind the enormous problems posed by classification and recognize that the numbers in trade reports may often reflect hasty and arbitrary classifications that distort the true picture of the trade flow. The economic environment, in turn, affects the performance of a business organization. Winds of change The emergence of Japan in the s and 80s, coupled with more trade between developing countries, harmed the balance of payments of the Western economies. These disrupt business operations. Non-governmental political risks should also be considered. Mitigation of risk Impact on economy The political situation of a country affects its economic setting. As defined by a European Commission directive, chocolate can only contain cocoa butter, cocoa solids, sugar and, in the case of milk chocolate, milk.

GATT basically stands to defuse trade tension between countries and smaller countries enjoy better access to larger countries' markets through GATT than they could if they had negotiated by themselves.

The legal environment As indicated in the introduction to this section, the international legal framework is somewhat confused.

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What is political environmental? definition and meaning