Legal and Ethical Issues in International Business - Coursework Example

Legal and Ethical Issues in International Business Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction One sure thing every investor must be aware of is that, each country is different from the rest of the world based on their political, cultural and legal ideologies which inform their values. This clear to those businesses that have global touch and that interact in different markets across the world. Different countries have different policies and legal systems regarding the ways of doing business and which all corporations have to comply to. One major reason to have legal and ethical policies is to ensure that any uncertainties that may arise from the changing patterns in the business environment. Since not all organizations are local, multinational companies are the ones greatly affected by the prevailing laws (August 2002). It therefore emerges to be a very important thing for the business to take into account the various issues related to legal and ethical while operating in foreign markets. The intention of this discussion is to present a detailed review of the different legal and ethical issues facing multinational companies and also establish if the affected companies should be bound by domestic or interactions legal and ethical issues. Legal issues There are three major legal issues that face multinational corporations today and they include operational issues, strategic issues and intellectual property issues. Operational legal issues According to the legal issues, companies are expected to comply with domestic laws on starting, operating and closing down the business. This can be expanded into the requirement that such activities like recruiting employees, acquiring credit, paying taxes, enforcing contracts and protecting investors as well as trading across borders, be done according to the existing legal standards (Kobak et al 2002). As a principle, it’s at the expectation of the investors that the existing business legal policies are efficient and take into account the changing patterns in the business world. In other words, the regulations should be well designed, readily available and clear and precise in implementing them (August 2002). In actual business context, business regulations, tend to vary from one country to another. Take an example of business registration process for foreign investor in Brazil and the united states. In the case of Brazil, a foreign investor trying to register a company, may take up to 150 days while in the Unites States, the exercise would only take one week and this is because of the variability in protocol and document verification process before allowed to start a company. As a matter of fact, the latter scenario is a little bit fair and can easily be accommodated while the Brazilian’s case remains a bit more complex. Virtually almost all countries have specific regulations in regard to registering businesses, determining the most appropriate structure and getting licenses as well as permits. However, while other countries are good expediting this process, the reverse is through in some other countries. Take an example of Australia and Chad from Africa. While the process of starting a business in Australia can take just one registration process that encompasses taxation and administration as well as labor declarations, the process in Chad entails 19 different procedural requirements and takes up to 95 days as opposed to Australian’s. These are example variances that takes place in different countries and in different aspects like hiring and retiring employees, enforcing contracts, getting out of business and even relationships with institutions in terms of operations (Kobak et al 2002). Strategic issues Operational issues are important in determining the day to day operations of the business. It is the strategic issues that redirect the managers’ attention to long-term plans. It is from this point that it can be argued that the country’s legal system, plays a very significant role in the business’ strategic decisions on where a product or service should be made available, the process to be followed and the important features to be protected. Strategic legal issues cover five important aspects in relation to international business namely: the market behavior, local content and country of origin, product safety and cost, legal jurisdiction and arbitration. For instance, in the case of arbitration, companies increasingly prefer to use the arbiters to solve their disputes (Winestock & McKinnon 2002). In this case, both parties must agree to engage an impartial third party to arbitrate upon the existing dispute. However, even though, arbitration process may be administered differently by different countries, it still remains that the process is governed by the international standards that had been instituted in 1958. In other words, the standard criteria put in place is to ensure neutral settlement of disputes and also limit the chances of appeals (Kobak et al 2002). Intellectual property rights From agriculture prowess by many different countries, the next stage has been at industrialization where different countries are using brain power to create mighty and prestigious products through invention and technology. All the output of this effort can be termed as intellectual property where creative ideas are applied emerge, innovative expertise comes into existence and insights that give a company a competitive advantage from the rest. In a nutshell, the problem with intellectual property whether a book, software, film and alike is not conceiving but copying. In this case different countries have different regulations in regard to the same and the primary purpose is to ensure that the owner of the product has the legal right to determine who may copy or access the product (Kobak et al 2002). Ethical issues in international business Different ethical issues apply in international business and they include employment practices, human rights, environmental regulations, and corruption. Employment practices Working conditions vary greatly from one to the other. It is expected that a company that is multinational, is likely to experience two major scenarios where the working conditions in the host country are either inferior or superior to home country. In such a scenario, it is the responsibility of the company to choose which working standards should. In that case there are three major options. The first one is to apply the standards used at home. The second one, is to apply the standards of the host nation or a hybrid of both. The bottom line is to have minimum and acceptable standards to safeguard basic human rights and their dignity (Kobak et al 2002). Human rights While different human rights such as freedom expression, speech, assembly and movement are universally accepted, they are always taken for granted by many countries. This is to mean that basic human rights are yet to be respected by different nations. Some of the commonly infringed human rights include the limitation to speech, association, assembly, movement and political expression. It therefore remains the work of the investing multinational company to work towards improving the rights of the people. This is especially important in situations where some governments are repressive (Winestock & McKinnon 2002). Environmental pollution When variances in regulations in regard to environmental management between the two countries exist, ethical issues comes a subject of debate. The tragedy environmental pollution is when a resource that held in common get overused and degrades and that the prevailing laws on the same are inferior to the home nation. In that case it will be a moral obligation to engage in practices that do not cause more harm to the environment (Winestock & McKinnon 2002). Corruption In the united states, corruption is highly prohibited. For example with the enactment of the Foreign Corrupt Practices Act, the practice of paying out bribes to the foreign government officials in order to get business was completely outlawed. Further, the Organization for Economic Cooperation and Development (OECD) had adopted a convention on Combating Bribery of Foreign Public Officials in international business in order to criminalize the act. It therefore remains ethical for a foreigner to comply with this law irrespective of the country of origin’s policy (Winestock & McKinnon 2002). Conclusion This concept has covered the concept of legal and ethical issues that face international businesses. It has been established that even though some of the legal and ethical issues may be universal, some variances still does exist. This makes it very difficult to uniformly apply the practices at home in a foreign country. It is in this regard that it has been concluded that in many occasions, the legal and ethical issues binding the company at home may not apply in another country and therefore the need to be bound to host nation’s regulations and more especially where they are superior for the overall good. References August, R. (2002). International business law: Text, cases, and readings. Englewood Cliffs, NJ: Prentice Hall. Simpson, G. R. (2002). U.S. firms’ overseas transfers bring an intensifying backlash. Wall Street Journal, p. A4. Winestock, G. & McKinnon, J. (2002). EU gets approval to impose tariffs on U.S. products. Wall Street Journal, p. A3. Kobak J. B. Jr., Landers, P. & Warner, M. A. (2002). The globalization of competition law in the new millennium. Global Economy Quarterly, II, 149–164. Read More