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The different ways the united states law affects an international manager

The Multinational Corporation The International Environment International managers face intense and constant challenges that require training and understanding of the foreign environment. Managing a business in a foreign country requires managers to deal with a large variety of cultural and environmental differences. As a result, international managers must continually monitor the political, legal, sociocultural, economic, and technological environments.

The political environment The political environment can foster or hinder economic developments and direct investments. As examples, the political and economic philosophies of a nation's leader may change overnight.

The stability of a nation's government, which frequently rests on the support of the people, can be very volatile. Various citizen groups with vested interests can undermine investment operations and opportunities. And local governments may view foreign firms suspiciously. Political considerations are seldom written down and often change rapidly. For example, to protest Iraq's invasion of Kuwait in 1990, many world governments levied economic sanctions against the import of Iraqi oil.

Political considerations affect international business daily as governments enact tariffs taxesquotas annual limitsembargoes blockagesand other types of restriction in response to political events. Businesses engaged in international trade must consider the relative instability of countries such as Iraq, South Africa, and Honduras. Political unrest in countries such as Peru, Haiti, Somalia, and the countries of the former Soviet Union may create hostile or even dangerous environments for foreign businesses.

In Russia, for example, foreign managers often need to hire bodyguards; sixteen foreign businesspeople were murdered there in 1993. Civil war, as in Chechnya and Bosnia, may disrupt business activities and place lives in danger. And a sudden change in power can result in a regime that is hostile to foreign investment; some businesses may be forced out of a country altogether.

International Business Law 101: 5 International Business and Trade Law “Gotchas”

Whether they like it or not, companies are often involved directly or indirectly in international politics. The legal enviroment The American federal government has put forth a number of laws that regulate the activities of U.

However, once outside U. Many legal rights that Americans take for granted do not exist in other countries; a U.

  • The possibility of return trips home;
  • Retain a registered agent in the country s you plan to do business with;
  • This hierarchy helps to define roles and responsibilities across the organization;
  • Clearly, many global businesses and investment banks are finding creative ways to do business with these Islamic banks so that they can comply with Islamic law while earning a profit;
  • A big part of this preparation is understanding the role culture plays in international business;
  • Chinese government control on the Internet, for example, has helped propel homegrown, Baidu, a Chinese search engine, which earns more than 73 percent of the Chinese search-engine revenues.

In addition, some countries have copyright and patent laws that are less strict than those in the U. China, for example, has recently been threatened with severe trade sanctions because of a history of allowing American goods to be copied or counterfeited there.

As a result, businesses engaging in international trade may need to take extra steps to protect their products because local laws may be insufficient to protect them. The economic environment Managers must monitor currency, infrastructure, inflation, interest rates, wages, and taxation. In assessing the economic environment in foreign countries, a business must pay particular attention to the following four areas: Average income levels of the population. If the average income for the population is very low, no matter how desperately this population needs a product or service, there simply is not a market for it.

In some countries, foreign firms pay much higher tax rates than domestic competitors. These tax differences may be very obvious or subtle, as in hidden registration fees.

In some countries, however, inflation rates of 30, 40, or even 100 percent per year are not uncommon. Inflation results in a general rise in the level of prices, and impacts business in many ways.

As the cost of petroleum products increased, a corresponding increase took place in the cost of goods and services. As a result, interest rates increased dramatically, causing both businesses and consumers to reduce their borrowing.

The political environment

Business profits fell as consumers' purchasing power was eroded by inflation. High interest rates and unemployment reached alarmingly high levels. The exchange rate, or the value of one country's currency in terms of another country's currency, is determined primarily by supply and demand for each country's goods and services.

The government of a country can, however, cause this exchange rate to change dramatically by causing high inflation—by printing too much currency or by changing the value of the currency through devaluation. A foreign investor may sustain large losses if the value of the currency drops substantially. When doing business abroad, businesspeople need to recognize that they cannot take for granted that other countries offer the same things as are found in industrialized nations.

A country's level of development is often determined in part by its infrastructure. The infrastructure is the physical facilities that support a country's economic activities, such as railroads, highways, ports, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems.

When doing business in less developed countries, a business may need to compensate for rudimentary distribution and communication systems.