how political and legal systems affect international business

How political and legal systems affect
International Business
Introduction
Political and legal systems play a major role in the International businesses for the companies
that source, produce, market and export products in foreign countries. They pose a big challenge
to the companies and the companies need to overcome the factors to become successful in the
international stage. We will see the various political and legal environments available and how
they would affect the international business.
Political Systems
The political system is essentially the government, rules, norms and the political factors that run
the country. The political systems play a major role in the business decisions of the firms. The
different political systems that are present in the world today include
1. Individualism or Anarchism: In this system, individuals control the political activities and
public government is rendered as unimportant and do not play any role in any of the
activities including the international trade and business. The government may intervene
some times to deal with the market defects but otherwise will not affect international
business in any other way.
Risk associated:
The government is powerless and hence the international trade cannot be monitored or
regularized. This will increase competition and also there will be no trade laws.
2. Democracy: This is the system where people elect the government and thus indirectly
participate in the decision making process. This is the most common form of the
government and is present in more than half the countries of the world. Most businesses
prefer the democratic government to do their business as the political system is most
stable in such countries. The companies need to take care of the change in the leadership
during elections which might affect the policies of...