In addition to the basic system of government and the laws promulgated by the system, the policy environment could include issues such as the oversight of government policies on income tax, the relative influence of trade unions, and policies regarding the use of natural resources. Governments intervene in trade for a combination of political, economic, social and cultural reasons. Colombia is a democratic country, which means that the nation`s governors are presidents; The governor, the assembly and the mayor are elected by the citizens. How do political and legal realities affect international trade and what should companies think about when developing their global strategy? Governments have long been involved in international trade through various mechanisms. First, let`s briefly discuss some of the reasons for these interventions. Political factors tend to be broader issues such as tax policy, trade policy or foreign trade policy, while legal factors tend to be more specific and relate to issues such as discrimination laws, antitrust laws or intellectual property protection laws. However, they overlap. Take, for example, labour law, which we consider a political factor, and occupational health and safety laws, which we consider a legal factor. Common LawA legal system based on tradition and primacy. In this system, judges interpret the law and court decisions can set precedents. is based on tradition and precedence. In common law systems, judges interpret the law and court decisions can set precedents. It doesn`t matter if you consider the factor to be legal or political.
It is important that you take these factors into account in your PESTEL analyses and consult a lawyer if necessary and appropriate. It`s also important to remember that these legal (and political) factors vary from country to country, state to state, and even city to city. The following table lists only a few of the laws that could be taken into account when analyzing legal factors: The most direct effects on business can be observed in Islamic law, which is a moral rather than commercial legal system. Sharia has clear guidelines for aspects of life. For example, in Islamic law, the economy is directly affected by the concept of interest. Under Islamic law, banks cannot charge or profit from interest. This provision has given rise to a whole range of financial products and strategies to simulate an interest – or profit – for an Islamic bank, when they are not technically classified as interest. Some banks charge a high upfront fee. Many are allowed to sell, buy back or lease an asset. For example, if a company wanted to borrow money from an Islamic bank, it would sell its assets or products to the bank at a fixed price. At the same time, an agreement would be signed for the bank to resell the assets to the company at a later date and at a higher price.
The difference between the sale price and the redemption price acts as interest. In the Persian Gulf region alone, there are twenty-two Shariah-compliant Islamic banks that had assets of about $300 billion in 2008. Tala Malik, “Gulf Islamic Bank Assets to Hit $300bn,” Arabian Business, February 20, 2008, accessed December 21, 2010, www.arabianbusiness.com/511804-gulf-islamic-banks-assets-to-hit-300bn. It is clear that many global companies and investment banks are finding creative ways to do business with these Islamic banks so that they can comply with Islamic law while making a profit. Companies that intend to establish themselves in foreign target markets must acquire a thorough knowledge of the functioning of government, the stability of international and domestic trade policy, and the political philosophy rooted in the country. Although globalization has influenced the political ideology of most developing countries and advanced liberal economic and diplomatic policies aimed at combining international affairs with local markets, political interventions are inevitable for foreign companies. On the other hand, the governments of some developing countries do not effectively meet the standards of conduct of international affairs. B such as the enforcement of intellectual property rights, which can raise serious concerns for multinational companies wishing to do business in target markets. With this in mind, this chapter discusses changing political ideologies and business growth, policy interventions, political risk assessment, international legal perspectives, host country laws, arbitration, and intellectual property protection concerns in target markets.
Political and legal issues at the local, national and international levels all have a decisive impact on how you can and cannot run your business. Their industry association, the Chamber of Commerce, and the Small Business Ombudsman (a service of many local and state governments) are excellent sources for keeping abreast of changes in the legal and political landscape. The most relevant are the political conditions in Venezuela, which are considered a disaster, a country where most of its income comes from oil, and with a crisis like the one we live with today with a barrel of oil at nearly $30, shows that the country has major problems in the internal economy. a country with inflation of 141% in 2015 and the increasing addition of issues such as political problems in parliament, the confrontation between the two parties MUD and PSUV, with a massive budget deficit financed by the central bank that prints money, we can conclude that the most relevant political conditions in Latin America are Venezuela. A Political Action Committee (PAC) is an interest group formed for the sole purpose of raising funds from their members and donating them to each candidate and political party. The National Electoral Centre (CEN) is the body responsible for registering and taking into account the number of PACs in Colombia. The most important government measures include: regulation, taxation, spending, takeover (creation of a state-owned company and privatization). The differences between local, national and international sub-sectors of the political environment are often quite dramatic.
Political instability in some regions subjects the form of government itself to revolutionary changes. What companies need to focus on is how a country`s political system affects the economy, as well as that business and industry. Companies need to assess the balance to determine how local policies, rules and regulations affect their business. Depending on the expected duration of a business in a country and how easily it enters and leaves a country, a company can also assess the political risk and stability of the country. A company can ask several questions about the government of a potential country to assess potential risks: The study of political systems is vast and complex. A political systemThe system of politics and government in a country; It regulates a comprehensive set of rules, regulations, institutions and attitudes. is essentially the system of politics and government in a country. It regulates a comprehensive set of rules, regulations, institutions and attitudes. A major distinguishing feature of political systems is the philosophy of each system on the rights of the individual and the group, as well as the role of government.
The philosophy of any political system affects the policies that govern the local economy and the business environment. One. This tax will apply from 2015 to 2018 and will be responsible to legal, physical and corporate taxpayers, as well as other individuals. The chargeable event for this tax is the ownership of assets on 1 January 2015 in the amount or more than 1,000 million pesos. The price paid for this tax is not deductible from income or CREE; nor are they deducted from other taxes. In this series on the importance of preparing a PESTEL analysis, we have repeatedly mentioned that political, economic, social, technological, environmental and legal factors often overlap. Overlap is good because it helps ensure that leaders don`t miss out on anything when considering critical strategic decisions. .