The Political Legal Environment

The Political Legal Environment

Incredibly, in a moment of “political correctness”, the Human Rights Commission www.ohrc.on.ca/ agreed to hear the case AND paid a lawyer to represent the smoker. This forced the small business owner to hire a lawyer to defend himself, and he spent (until February 1, 2008) over $100,000 on legal fees and expert witnesses to “defend” himself against this discrimination lawsuit. The owner of the business says it is not “discriminatory” at all, he simply defended customers who did not want to smell the Majrijuana smoke coming in and out of the bar. The political and legal environment focuses on a company`s ability to easily enter a particular country or not, or will the company encounter political and legal obstacles. The main example of a political barrier is the boycott of a company or country, as is the case with the Arab League`s boycott of Israel, which forces companies to decide whether to serve the Israeli market or the markets of Arab League members. The other type of boycott is unofficial, but its effects could be just as effective as the official boycott, when a large number of organizations in the Muslim world boycotted Danish businesses because of cartoons depicting the Prophet Muhammad. The legal environment deals with the need to apply or not Sharia law (strong or weak implementation in Muslim countries and various forms of adaptation to positive law in other countries) and the issue of standardization and certification. For at least two industries (Islamic finance and halal food), harmonization of standards and mutual acceptance of certification bodies are a prerequisite for market expansion. The social and cultural environment in which a company operates can be an important factor in the success or failure of the business. The social environment includes many dynamic factors such as social traditions, cultural influences, values and beliefs that prevail in society, social stratification, etc.

A country`s political climate is another critical factor that managers must take into account in their day-to-day activities. The scope of government activity, the types of laws it passes, and the overall political stability of a government are three components of the political climate. For example, a multinational like General Electric assesses the political climate of a country before deciding to set up a factory there. Is the government stable or could a coup disrupt the country? To what extent are the regulations applicable to foreign companies, including foreign ownership of business property and taxation? Import duties, quotas and export restrictions must also be taken into account. The political stability of a country is essential to the stability of the economy and the stability of the stock market. Various political groups also have great influence on business and trade unions. The political environment of a country is therefore an essential factor for the success of a company. The stoner had no legal fees! The joint smoker simply filed a complaint with the Human Rights Commission, and the Commission provided the lawyer with the stoner`s defence free of charge.

China`s political stability affected the level of foreign business activity in China after the Tiananmen Square massacre which significantly declined in many areas, including tourism and foreign investment. While companies not yet operating in China are cautious about investing in China, countries already involved in investment activities seem to be waiting for a quiet period when economic progress resumes, believing that China will not expel foreign investors in the meantime. Existing joint ventures and foreign production facilities are unlikely to be closed under the current regime, but political stability remains a big issue for foreign investors. At the same time, China`s economic growth and reforms since 1978 have dramatically improved the lives of hundreds of millions of Chinese, increased social mobility, and expanded the scope of personal freedom. This meant much more freedom to travel, employment opportunities, educational and cultural activities, choices of work and housing, and access to information. In recent years, China has also passed new criminal and civil laws that provide additional guarantees to citizens. Village elections were held in more than 90% of China`s one million villages. See also witiger.com/internationalbusiness/politicalenvironment.htm See also witiger.com/internationalbusiness/politicalrisk.htm See also witiger.com/internationalbusiness/politicalriskcontingencyplanning.htm See also witiger.com/internationalbusiness/politicalriskdefensiveintegrative.htm See also witiger.com/internationalbusiness/personalrisk.htm See also witiger.com/internationalbusiness/6environments.htm In at least two Western countries (Singapore and Muslims enjoy a constitutive element of society based on racial harmony in Singapore and “ancestral culture in Mauritius”, so marketers who specifically target them would have no political problems.

On Mauritius, see: Patrick Eisenlohr, “The Politics of Diaspora and the Morality of Secularism: Muslim Identities and Islamic Authority in Mauritius” in The Journal of the Royal Anthropological Institute, vol. 12, no. 2 (June 2006), p. 12. 395–412 Some important factors influencing a country`s cultural and social environment are: The main political structure of the People`s Republic of China consists of two vertically integrated but interlocking institutions: the Communist Party of China, headed by the Party Politburo and its Standing Committee; and the State machinery of government headed by the Prime Minister, who heads the Council of State, a de facto cabinet. Throughout China, Party and government structures are closely parallel, with Party committees and representatives represented not only in government agencies, but also in most organizations and institutions, including foreign universities and enterprises. This is a non-market factor, but it can still have a strong impact on a business. The political-legal environment is a combination of many factors such as the current political party, the degree of politicization of trade and industry, the effectiveness of the current government, government policy, the current legal framework, the attitude of the public towards the economy, etc. The bar owner said it might be legal, but that doesn`t mean you can smoke it outside my bar door and let all my customers come and go. As we have seen, a company has no control over the different elements that make up its macro environment. But it`s important to study them, as it allows companies to prepare for change.

Let`s find out a little more about the political-legal environment and the social environment and its impact on a company. Companies, especially international companies, always study the cultural and social environment of a country before entering the market. It is important that your goods and services correspond to the social environment of the country. Otherwise, the company could face backlash and losses. China is particularly dangerous in terms of political risks.

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