Question

Compare between the main components of international business investment, give examples for each and show which of them strongly affect the business environment.

Answer 1

international Business Law and Trade Agreements.

International business law focuses on the law as it relates to finance and international transactions. It varies by jurisdiction and expands basic business law concepts to the international arena. Before starting a global business, the entrepreneur should learn about his or her jurisdictions and analyze the specific laws for each. This will tell them which jurisdiction is best for a given transaction.Two or more countries may join together for a trade agreement that defines a specific aspect of trade or commerce. Many trade agreements exist among countries and must be considered before selecting a jurisdiction for commercial transactions. Tariffs and taxes as well as other mechanisms also need to be negotiated according to jurisdiction.

These international and trade issues can become “gotchas” if you’re not careful. Become knowledgeable about these items before you become an international business.

For example, the famous $1.26 billion award against PepsiCo in 2009. A Wisconsin state court made this judgment on behalf of two Wisconsin plaintiffs who alleged that Pepsi “stole” their trade secret to make “purified” bottled water. The reason for this huge judgment: PepsiCo neglected to name a registered agent in Wisconsin. “Gotcha.” A simple required task overlooked by the mega corporation cost them dearly.

Property Rights.

The intellectual property of one company may be licensed to another company in different countries. Each license needs to be individually negotiated, so the rights of the intellectual property holder are maintained by each company in their commercial transactions. Each jurisdiction will also have laws connected with how intellectual property is negotiated.

Private property includes all things tangible and intangible that a private individual or entity owns, and over which the owners have absolute property rights. Examples include buildings, land, copyrights, patents, money, etc.

Find a Partner.

Many business owners find partners in the international jurisdictions where they want to do business. If you need investors and lenders to take your business global, you may need a management team that has experience in international business.

In most countries, companies can approach the government department responsible for trade for information and resources. Trade departments will offer advice on exporting and other market entry strategies and will have databases of trade, investment and technology counsellors abroad.

Finances.

International business finance includes foreign exchange markets, global financial systems, corporate finance and foreign investment policies. Some of the risks include:

• Currency exchange rate
• Central bank policies
• Political environment
• Foreign investment policies

The foreign currency exchange rate for a particular country, where the currency can be bought or sold on the open market, may change the cash flow between the two countries. If the value of a currency declines, foreign investment may also decline.

The International Monetary Fund and central banks regulate money on the global level. When policies change or new measures are enacted, markets can be disrupted, for example, if they fail to give a loan to a certain country. You need international business finance monitors watch the global financial systems to protect your business from impending changes or take advantage of them.

You’ll be well protected and be able to take advantage of global financial changes if you partner with an international finance and law professional. He or she will be able to help you with legal services for foreign investments and commercial arbitration as well as taxation, labor relations, civil and commercial litigation, corporate consultation and other legal fields.

When selecting a jurisdiction, look for a monetary system that acknowledges the interdependence of the economies or each country and promotes growth, fairness at a global level and stability. It is important to avoid producing in a country of high inflation and then selling to a country of low inflation because the input costs are going up but the revenue stays basically the same.