Posted: July 20th, 2022

Throughout this course, we have looked at different environments which impact international businesses. In this module, we continue our exploration into the political and legal environments.

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Throughout this course, we have looked at different environments which impact international businesses. In this module, we continue our exploration into the political and legal environments.
How might the political environment impact a product launch? Why would it be important to understand the legal environment in international business? Understanding these environments is vital to success in international business operations.
Political Environment
In this external business environment, an international business would look to government policy on international investment and possibly the need for lobbying or political negotiation. The political system in a foreign country can make business difficult on an international scale (Arel-Bundock, Peinhardt, & Pond, 2020).
Some of the factors to review relative to the political environment are:
What is the type of governmental system?
What types of trade agreements are in place?
What trade barriers (tariffs, taxes, and regulations) exist (Asgary, 2019)?
For instance, we want to examine what type of government is in place. Is it a democracy? Is it authoritarian? By looking into these details, one can see how the country is run, and study any political barriers that may become obstacles to placing a corporate product within that country.
As you’ll see next, several of the political factors are closely tied to the legal environment (Arel-Bundock, Peinhardt, & Pond, 2020).
Legal Environment
Another environment to consider is the external legal environment, and it is here that business leadership would review the different laws on companies and possibly the regulation of trade or employment in that external country.
First, we should review a few basic legal definitions pertaining to international business. Companies that engage in international business must be familiar with public, private, and foreign laws because complicated legal affairs can arise.
Public International Law is the system of rules or principles that govern the conduct of, and relationships between, states and international organizations.
Private International Law is the relationship between persons and organizations that are engaged in international transactions (specifically addressing which laws are applicable when parties are in a legal dispute).
Foreign Law is a law enacted by a foreign country.
Some of the more common legal issues that may occur in international business include health and safety standards within the business, environmental practices, customs and duty taxes, employment practices, and intellectual property rights (Asgary, 2019). Businesses must undertake significant legal research, prior to entering an international market.
In conclusion…
So far in this module, we have reviewed how the political and legal environments could affect international business operations. Additionally, we started to examine some specific reasons why businesses would care about global political and legal systems around the world. Even though companies may do well by expanding outside national borders and entering a globalized business world, they still must adhere to the rules, regulations, and economies of the host countries.
Step 1: Consider the scenario…
You work for an American firm that manufactures medical equipment. You are the head of the international division for your firm and have been tasked with investigating the feasibility of launching your product internationally. Your firm will make its launch decision based on your recommendations.
Step 2: Choose two countries that represent very different political systems.
Leveraging our country classification by government type map (Links to an external site.) (which can be zoomed into and hovered over to reveal country names), select one country from each of the democratic and non-democratic groupings below:
Democratic: Republic or Constitutional Monarchy
Non-Democratic: Theocracy, Absolute Monarchy, Semi-constitutional Monarchy or One-Party/Communist
Avoid countries classified as military states/provisional as those would obviously be poor candidates.
Do not choose the United States (as it’s not a foreign market in this scenario). Also do not choose your project country.
Step 3: Research your two chosen countries.
To determine the economic and political climate for your business venture. Analyze how the economic and political environment would impact the potential success of your product expansion. What might aid the expansion’s success? What might hinder it?
Step 4: Complete your initial post and provide a recommendation.
Of the two countries that you researched, which will you recommend to your medical equipment company for their proposed international expansion?
Be sure to justify your recommendation based on both economic and political environment considerations and discuss both advantages and disadvantages.

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