International Business Endeavors
You have excellent theoretical points in this section, which I would definitely keep for the final draft. Note, though, that it is important to identify specific companies that have addressed compliance issues, state what those issues were, and explain how they were resolved.
What pertinent aspects of U.S. law should the company be aware of in its goal to do business internationally?
As stated in the laws governing the United States of America, there are Exclusive Economic Zones in which only certain businesses such as those involving natural resources, fisheries and other economic activities which are overseen by the National Environmental Policy Act (Murphy, 2003). Besides, the United States of America’s federal law agents also came up with specific rules which were signed and stamped by the Cuban President, Clinton to prevent American companies from operating within Cuba. The reason for such decisions is because the government of the United States of America was seeking to uphold a top-notch reputation for its investments in Cuba. Thus, associating the U.S citizens with Cubans through business activities would sabotage these plans. In attempts that the citizens of the United States of America break the law, the victims will be subjected to expensive fines which they will pay to the government and even worse taken to jails for many years.
In addition to that, the companies in the United States of America are also urged to keep off business deals with countries practising terrorism such as Iran, McAdams et al., (2015). The law was passed after some U. S citizens were killed in an explosion when they were using road transport in Iran for purposes of doing business. The bomb blast saga was defended and covered by the Iranian government (Murphy, 2003). Thus, firms founded in the United States of America are warned to stay away from countries like Iran if they want their international businesses to grow since such nations thrive in retarding economic success for foreigners in their markets.
Moreover, there are also laws in the federal system of the United States of America which prevents companies from associating their businesses with foreign countries wallowing in constant political conflicts such as Zimbabwe (Murphy, 2003). When there is political instability, the success of local business waver, and it gets worse for foreign entrepreneurs. Therefore, the U.S federal laws tend to warn companies interested in international markets against such countries so they can resort to choosing other economic markets where there is perpetual peace and cohesion for their startups to thrive.
Assess the legal implications of moving business abroad specific to your chosen country. What are the advantages and disadvantages of such a move?
When a trader decides to relocate their business to Mexico, they should have in mind the legal implications such as taxation, high labour costs when hiring employees, culture shock, consumer tastes and preferences to mention a few.
Advantages
First of all, when entrepreneurs relocate to Mexico, they incur cheap labour costs (Maranto-Vargas & Rangel, 2007). It has attracted many investors from the United States of America hence making their businesses to grow and expand internationally. Also, Mexican workforce has always proven top-notch productivity which makes it easier to operate different manufacturing and processing companies in the economy. As compared to other countries such as China where the minimum wage per worker is high, it is advisable for traders to strike business deals with the Mexican government. Mexico has also benefited from this move in that they have secured some of the most lucrative investments since they declared the economy an open-free market. Therefore, it has developed various sectors such as automobile industries, mechanical and food processing and manufacturing companies which are sprouting all over the economic markets.
Another advantage is that there are few logistics involved when entering the trading markets thus reducing the excess paperwork that traders who opt for other foreign countries such as China go through. Mexico also exhibits a diverse market owing to the ease of trading with other countries through the Mexican borders (Maranto-Vargas & Rangel, 2007). The numerous cultures present a ready market for different kinds of goods hence attracting many investors. With this, the entrepreneurs can easily raise huge profits from their business activities when they choose to operate in Mexico.
Disadvantages
One of the drawbacks is that the Mexican government has continuously faced the problem of inadequate financial resources hence preventing people from expanding their businesses (Maranto-Vargas & Rangel, 2007). What usually happens is that the investors are unable to access financial institutions where they can borrow money for their startups. Also, Mexicans face a lot of underdevelopment in some of their sectors thus limiting the operation of certain business activities. There have also been numerous cases of drug trafficking which has always been the cause of violence between the citizens and the law thus resulting in chaos within the country. Therefore, having such a business environment is likely to scare away investors and customers who would have engaged in business activities with the foreigners.
Most of all, the traders will face a threat and constant competition from markets in the United States of America considering the proximity of the two countries. This is likely to leave Mexican entrepreneurs with no demand for their products which is likely to result in losses. The worst case scenario is the high taxation rates which will be a setback to foreign investors. Language barrier is also a challenge to many, and this has made it hard for clients and seller to connect. With this, it becomes difficult to foster and build relationships the business owners and their customers. As a result, a lot of time is wasted trying to retain these few relationships.
What are the ethical implications involved in this business decision?
The ethical implications include the violation of human rights. The citizens have always experienced cases of abuse of their rights especially by the government of the United States of America. Therefore, having U.S citizens as foreign investors in Mexico makes it look like they are taking advantage of the cheap labour in the country to benefit their companies. Mexico is underdeveloped, and hence workers will take any job to sustain their livelihoods. In light of this, the foreign investors may take this as an advantage thus resulting in the exploitation of these individuals. But the investors operating international businesses can come up with multinational regulations which govern the labourers as well as a way of protecting their rights.
Another ethical implication is the illegal entry into different niches in the economic markets. When this becomes rampant, the foreigners will automatically replace the local traders thus resulting in losses for these small-scale entrepreneurs.
Corruption between governments is another ethical issue facing many international businesses. This happens when an investor who has the interests of his/her country at heart ventures into the market but fails to meet the ethics required for the startup to thrive internationally. The government officials will then pay bribes to the country where the business will operate globally. This provides foreign investors with a competitive advantage over the local business persons.
Furthermore, cultural diversities can also result in mismatches in conducting successful business activities. This can happen when the global traders deal in commodities which are considered a taboo or unclean by the foreign country. They will, therefore, make losses and waste other resources used in setting up the business.
Trust and integrity can also be an ethical issue for a business which is operating globally. This happens when the manager of the venture employs people who steal from the company or who cannot be accountable for the mistakes that arise during business operations. It will take time for the foreigners to build trust even between the company and the clients. Such practises are likely to slow down the smooth running of the economic activities in the industry.
Explain how other domestic companies have managed to comply with the U.S. laws related to this business decision in the past.
Every country out there has a set of different principles which govern their political, economic and legal entities. For these reasons, there will always be conflict, but domestic companies from foreign countries have still managed to follow the law that governs the United States of America since time immemorial for the sake of peaceful coexistence. The citizens of the United States of America have also been modest when carrying out their business activities abroad by upholding the values that govern their country. With this, they manage to stay within the standards set by the United States of America’s federal law system in the past. Also, they have been treating employees in foreign countries with respect and dignity to avoid ruining the reputation of their home country. The laws set by the United States of America condemn any illegal practices by their citizens in foreign countries, and these acts are punishable by law. So, the domestic companies have opted for respectful dealings to avoid rubbing shoulders with the United States of America’s legal system.
How did these companies address potential compliance issues?
Every business which is operating international but still has affiliations to the United States of America are under their regulation and therefore must commit to a particular form of legal agreements. These are the compliance programs which these international companies use to solve any legal issues that they may encounter when operating their businesses. The compliance programs ought to be updated regularly to keep them within the legal standards within which companies in the United States of America should work. There are also laws which govern internal business factors which can be implemented in case of compliance issues. They include employment laws governing employees, ethics and values which employers should foster for transparency and quality running of the business. So, the management can educate the employees on the benefits of having knowledge about these aspects of operating companies under the law as a way of empowering them to avoid the occurrence of compliance issues. Moreover, they can as well conduct regular assessments of the company’s activities while working towards eliminating the risky behaviour which might prevent the industries from being ranked as operating lawfully.
References
Maranto-Vargas, D., & Rangel, R. G. T. (2007). Development of internal resources and capabilities as sources of differentiation of SME under increased global competition: A field study in Mexico. Technological Forecasting and Social Change, 74(1), 90-99.
McAdams, T., Neslund, N., Zucker, K. D., & Neslund, K. (2015). Law, business, and society. McGraw-Hill Education.
Murphy, S. D. (2003). United States Practice in International Law: Volume 1, 1999–2001. Cambridge University Press.
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