4.7 Political Factors which impact on Business operation in global markets and legal systems Flashcards
Big Question
How does politics affect businesses
what does political factors have an imapct on
- how businesses operate and
- whether they choose to enter or stay in a foreign market.
examples of Political factors that influence Business
- government policies,
- political stability,
- trade regulations,
- tax policies, and
- international relations.
Political factors which impact on business operation in global markets, including:
-
Stability of foreign governments **
2. Relationship of foreign governments with the Australian Government **
Define Political stbility
The condition in which a governmet operates without significant disruption or violent upheaval ,maintaning consistent policie and functioning institutions
Political factors affecting business
1.Stability of government
2.the relationship of the foreign government with the Aus Gov
3.Gov legislations and polices ,particularly with regard to product requirements or protectonist measures
when Planning Business Growth ,companies should consider what?
the political environment in the foreign markert
Lack of political stability affects Business operations in countries such as …. .
- Manufacturing
- Supply chains and distribution
- Packaging
- Selling of goods and services
- Pricing Stability
Politically unstable countries may have riots, protests, looting and general disorder which causes the above stuff
key summary of politcal stability in a country
- Lack of political **stability in a country impacts business’ ability to operate.
** - **Unstable countries may experience unrest and general disorder. **
- **Frequent changes in government means that business does not have clear laws and regulations they must comply with.
**
**- Instability is often a product of poverty, corruption and warfare, which creates an environment that does not support business. **
image on examples of political instability
what happens during a period of Low POLITICAL INSTABILITY
- Inflation Rates are very stabel
- GDP Experiences growth
- Foreign Direct investment is relatively stable
During a period of High political Instability what happens to an economy?
- Inflation rates skyrocket
- GDP contracts due to economic mismanagement and failling oil production
- Foreign Investment declines as investors flee from the unstable environment
what are the results of an economy increasing their political stability and questions to ask when considering expansion into a foreign market.
- How stable is the government?
- How drastically will the rules for business change, if a new party comes into power?
- Is there a constitution and clear structure for government?
- How transparent is the government’s decision-making process?
Political instability summary
Businesses operating in foreign markets are at the mercy of complex government stability factors, and can be placed in compromising positions if there are sudden changes to the political stability of a region. Businesses must consider the degree of risk (e.g. high and low risk markets) before entering a foreign market.
Define international relations
The interactions and relationships between countries ,including diplomacy ,trade,and conflict resolution.
TIP on discussing of international relations
You could talk about good relations and negative relationships between foreign relations
Economic restrictions that may be placed on trade:
- Tariffs-a gov may impose higer tariffs on imports from the other country to make the goods expensive and** less competitive in the domestic market.**
- Sanctions -A gov can induce sanctions to** reduce trade,investment and financial transactions with the other country**.Also **limits &prevents foreign business from trading with their market and exercise Political pressure **
- Export controls -A gov might restrict the critical goods ,tech or resources to the country.This is Political pressure to foreign market to encourage them to take action that will benefit the domestic market.Hindering thetargeted country’s acces to esse
This one is big needs time but got this
Bascically political pressure is the main key point here think about zim sanctions that a implemented by America
These lead to decreased tradeand economic strain on a country’s industries
The positive side of” Relationship of foreign governments with the Australian Government ”
- Free trade agreements -They make trade easier between countries and are more likey to be agreed with countries that have good relationships
- Providing foreign to developing countries can create trade partners in future ,when their economy and standard of living improves
impact of legal systems on business operation in global markets -““differences regarding competition regulation “
- patent registrations(what will protect me
- product liability(comply with
Define Competition Regulation
legislation that restricts, controls or manages the level of competition within a market
IT’s a process that makes sure there is healthy competition
If Intellectul property is protected
no Competitors can imitate the product and take sale/market share from the business, as they cannot compete directly with your product or services. An important tool for IP protection are patents.
patent Registrations
** Registered documentation that is designed to protect an invention, system, process or unique asset of a business, preventing direct imitation**
A healthy market protects competitve advantage
What’s the next step after a patent registration
legal frameworks
such as
1.Legality of contacting infringing business as well as the permitted legal actions in civil lawsuits between companies .
2. Furthermore, additional layers of protection or risk come from the level of court that hears disputes, as well as specialist training and experience of judges who hear patent dispute cases.
define product liability
“Laws which refer to the set of rules concerning who is responsible for **dangerous or deffective products sold in the market’
**
Operating in different countries with different laws and regulations makes managing product liability risk complex.
When managing product liability, the different policies and regulations in all the countries where a business operates must be considered
Product liability risk:
1.Fines and penalties for breaching laws and regulations
2.Civil damages from losing cases
3.Boycotts and negative social media campaigns
4.Costly court actions
5.Product recalls
6.Loss of market share
7.Loss of sales
8.Damage to the business’ public image in the event of a product failure.
Liability is a risk to a business as it can cause financial strain on a business
A business can be held liable for a faulty or dangerous product in one of three ways:
Negligence: a business fails to take reasonable care to manufacture, supply and sell a safe product or provide adequate warnings and instructions.
Strict liability: harm or injury is caused by using the product.
Breach of warranty: does not meet the legal requirement of being fit and suitable for its purpose.
what can help a business to maintain liability?
Product insurance protects you in case a product causes harm to a customer, their property or the environment. Insurance is recommended for every business that manufactures a product.
The level of insurance required depends on:
How likely it is for the product to cause harm
The severity of the harm that it could cause
liabiity in prodcuts can include
defects and manufacturing defects.
