Question

In: Operations Management

in international business, Discuss political, economic, and legal criteria to assess the attractiveness of doing business...

in international business,

Discuss political, economic, and legal criteria to assess the attractiveness of doing business in different country-specific locations.

Solutions

Expert Solution

Here are the political, economic and legal criteria to assess the attractiveness of doing business in different country-specific locations:

Legal, economic and political environmental factors are important for International business and while doing an assessment of specific location as it impacts the growth and progress of the company. They play an important role to influence the marketing and strategic decisions for the various organisation that are competing globally.

Legal Factors & related criteria

  • The legal factors mean adhering to all rules and regulations so it helps to define the means of production and also gives direction to distribution strategy in the country.
  • The per capita aspect helps to define a nation's overall wealth and helps to determine marketing strategies to target a potential market. The class structure helps to define the distribution of wealth in a country and shapes the marketing effort depending on what percentage is upper, middle and low-income families in the economy.
  • The supply and demand analysis helps to position the marketing mix in the best manner and gives proper results.
  • The rules and regulations offer a lot of advantages to the MNC. The tariffs and duties on important defined the operations within the country.
  • Currency conversion, risk and safety regulations also define the marketing mix of an MNC in a country.

All these legal factors become important for selecting a particular economy, country or market for International business.

Role of Political Factors

  • The political and legal factors influence the marketing efforts globally as the interest of the government, ideologies, interest of pressure groups and legal laws governing the system has to be analysed.
  • These factors are important as they impact the production capacity, cost, design & marketing of the product.
  • Licensing and various permits and approvals required for operating in a country define the importance of such political factors.
  • Various taxes, fees and tariffs have to be assessed to plan & implement the business model and marketing efforts. Various governments have different policies and all have to be taken into account while operating & marketing internationally.
  • The currency risk as a political factor plays an important role to plan marketing efforts as a wrong decision can lead to massive losses.

Role of Economic Factors

  • The economic factors have a macro-level impact on company operations. It helps to define the means of production and also gives direction to distribution strategy across the globe.
  • The per capita aspect helps to define a nation's overall wealth and helps to determine marketing strategies to target a potential market.
  • The class structure helps to define the distribution of wealth in a country and shapes the marketing effort depending on what percentage is upper, middle and low-income families in the economy.
  • The supply and demand analysis helps to position the marketing strategy in the best manner and gives proper results.

Other Economic Factors:

  • One of the important factors is the stability of the political situation and related policies as it directly impacts the development of the economy.
  • The economic and legal factors help to bring reforms and transformation in the International Business. Various rights and privileges related to contractual system and properties help to differentiate the growth between various economies.
  • The culture of innovation and entrepreneurship is also a major factor that contributes to the economic growth of any business. The investment and support for research and development, building a culture of innovation and providing a healthy environment for entrepreneurs helps to contribute towards long-term growth.
  • The planning of the entire economy helps to define goals and makes them measurable. It helps to focus on a certain key aspect of policies leading to efficient resource utilisation.
  • The domestic and local market having an external orientation to operations helps to bring economic development. It helps to compare with competition and makes it export friendly.
  • All the factors involved in the production process like land, raw material & resources, labour, technology and quality of management helps to create a great environment for economic growth and sustainability.
  • Support and focused growth of the industrial sector is another important factor. Economies having specialised focus and resources for industrial sector creates opportunities and leads to optimal resource utilisation.
  • Privatisation and globalisation confidence for state/government owner enterprises helps to bring innovation and modernisation in the economies. Privatisation brings new technologies and better results in terms of productivity.

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