In a short essay, describe how the political and legal systems of a host-country can both harm and benefit a foreign firm
What will be an ideal response?
In terms of political and legal systems, managers must be able to navigate difficult regulations and practices and avoid unethical or questionable conduct. At the same time, the political and legal context can present opportunities. Preferential subsidies, government incentives, and protection from competition reduce business costs and influence strategic decision making. Many governments encourage domestic investment from foreign MNEs by offering tax holidays and cash incentives to employ local workers.
On the other hand, political or legislative actions can harm business interests:
-Laws and regulations unfavorable to foreign firms
-Inadequate or underdeveloped legal system
-Bureaucracy and red tape
-Corruption and other ethical issues
-Government intervention, protectionism, and barriers to trade and investment
-Mismanagement or failure of the national economy
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A) comply with legal and regulatory requirements. B) by identifying the best ways to keep the details of compensation plans out of the hands of external parties. C) avoid paying excessive amounts of "perks" to executives. D) distribute information regarding how well each executive is performing their job.