Evaluating the Political-Legal Environment

Evaluating the Political-Legal Environment

Instructions/Descriptions

Evaluating the Political-Legal Environment

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Learning Goals

1. To assess political and legal influences on international business activities
2. To identify appropriate strategies for operating in various political-legal environments

Purpose

Political stability is commonly related to the type of government and degree of corruption present in a country. In addition, a company may face various business regulations when conducting international business. In this module, your goal is to identify political and legal factors that could affect global business decisions.

Resources

Web links:

• Global Edge CyberSite: http://globaledge.msu.edu/
• Business Around the World Atlas: https://highered.mcgraw-hill.com/sites/0078137217/student_view0/business_around_the_world.html

Conduct research (1 page and half for this section)

Based on the country (Germany) you are analyzing for your global business enterprise (BMW), research information related to the following areas:

1. Government and politics

Describe the type of government and recent political developments that could influence the economic and business environment of the country for BMW. (For example, various events in recent years in the middle east have contributed to an uncertainty when doing business with some countries.)

2. Formal trade barriers

Identify formal trade barriers (tariffs and other taxes, foreign exchange controls, ownership restrictions) that might require a company to adapt its business strategy.

3. Promoting global business

Analyze host government efforts to attract foreign investment. (Some nations offer tax incentives to attract foreign capital.)

4. Intellectual property

Discuss the Germany’s regulations to protect intellectual property, such as brand names, copyrights, patents, software, music, videos. (Some countries do not enforce these laws resulting in the pirating of products and lost profits for companies.)

Next: 1 page and half also this section

E-commerce application

Prepare summary

In a separate word document, prepare a summary report consisting of the following components:

1. An overview of government regulations, taxes, and formal trade barriers that affect global business activities.
2. A synopsis of intellectual property rights and regulations.
3. Recommend actions that might be necessary for an existing company (BMW) with regard to factors in the political and legal environment. Provide evidence to support your proposal.

View sample report

The following project segments are examples and sample materials.

Please note: these samples may not be duplicated.

Politically, Peru is currently quite stable. Harbors will give Peru an opportunity for expanded foreign trade giving them stronger exporting ties and therefore increasing political relations with other Latin American countries. Current political risks include the presidential election going on which might change certain tax factors that could directly affect the importing and exporting activities. In addition, the threat of guerilla upheaval on the government is a direct risk the company must consider.

Consumer and Franchising Laws have enabled companies to franchise their businesses more steadily as the government moves toward an unregulated, free trade economy. The Real Plan has resulted in a significant increase in the real income of poorer Brazilians as they were no longer forced to bear the inflationary burden. The Real Plan has effectively lowered the annual rate of inflation, reformed social security, taxation, and public administration. Therefore, the demand for consumer goods and services has expanded in Brazil.

Politically, Bolivia has had its share of instability, having gone from dictatorships to democratic rule. The military rule was in effect until very recent years, from 1964 until 1982. After this, Bolivia became a democratic country. Today, the government of Bolivia is a republic that is very active in foreign trade. The government is especially cooperative with educational resources, and they strongly support educational institutions (like El Coche Libro), and services.

Government regulations that our company will have to deal with include Peru’s current system of tariffs and taxes. Currently, Peru has a two-tier tariff structure with a duty of 15% on the vast majority of imports and 25% on the rest. However, Peru does have in effect a simplified drawback scheme, which allows small exporters to claim a flat 5% rebate.

Since the beginning of 1991, Peru has applied surcharges (in addition to the 15% tariff) on numerous agricultural products, including wheat, rice, corn, sugar, and milk products, but recently these surcharges have all but become extinct. Peru is also involved in free trade agreements, which grant tariff preferences to most Latin American countries.

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A positive aspect of operation in Peru is the elimination of non-tariff barriers, including subsidies, import licensing requirements, import prohibitions, and quantitative restrictions.

Costa Rica has a stable democratic political system. “Bilateral relations between the United States and Costa Rica remain excellent, reflecting shared democratic values and traditions” (www.usatrade.gov). In February 1998, national elections voted in Miguel Angel Rodriguez of the Social Christian Party over Jose Miguel Corrales of the National Liberation Party.

In 1983, President Luis Alberto Monge announced Costa Rica’s permanent neutrality creating a demilitarized country, in which their constitution prohibits armed forces, only allowing room for the Coast Guard. Costa Rica is nicknamed the “Switzerland of Central America.” Tourists will be able to feel safe and secure when visiting this country.

Evaluating the Political-Legal Environment

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