IMPACT OF POLITICAL AND

LEGAL ENVIRONMENT ON
INTERNATIONAL BUSINESS
PRESENTED BY
SNEHAL GHANATE
INTRODUCTION
POLITICAL AND LEGAL ENVIRONMENT

 System: It includes structure, processes and activities by which a nation governs itself.
 Policies: It includes Taxation, countries always have some sort of system for tax
collection purposes.
 Stability: A stable government is one that is able to maintain itself in power, have
predictable political policies which are not subject to radical and sudden changes.
Political And Legal Factors Affecting IB

 Political and Legal differences

 Political and Legal forces

 Trade and investment restriction

 Restraining forces

 Government Policies and regulation

Political and Legal differences

 The political and legal environment of foreign market is different from that of
domestic market.
 The complexity generally increases as the number of countries in which a
company does business increases.
Political and Legal forces

 The most important considerations for global business firms are the political and legal
forces operative in the countries in which they plan to conduct business.
 Some foreign governments are unstable, that is, there maybe frequent, dramatic and
unpredictable regime changes.
 When this occurs industries may be nationalized; private property maybe seized or
destroyed; normal business operations may be suspended, the workforce may go on
strike.
Trade and investment restrictions

A government imposed restriction on the free international exchange of goods or services.

Trade barriers are generally classified as:
 Import policies reflected in tariffs and other import charges, quotas, import licensing,
customs practices.
 Standards, testing, labeling, and various types of certification.
 lack of copyright protection.
 Restrictions on franchising, licensing, technology transfer.
 restrictions on foreign direct investment, etc.
Restraining forces

 The factors which hamper globalization are

 External factors:
It includes government policies, & controls which restrain cross-boarder business,
social and political opposition against foreign business etc.
 Internal factors:
Organizations‘ internal factors
Government Policies and regulation

 Government policies & regulation may also motivate internationalization.

 Many governments offer number of incentives 7other positive support to domestic
companies to export and to invest in foreign countries.
 Several countries give a lot of importance to import development & foreign investment.
 Some companies also move to foreign countries because of certain regulations like the
environmental laws in advanced countries.
 Government policies which limit the scope of business in the home country may also
provoke companies to move to other countries.
THANK YOU!!