Foreign Direct Investment and International Political and Legal Environment
Foreign Direct Investment and International Political and Legal Environment

Summary/Abstract: In addition to understanding policy and law, both of the country of origin and the host country, the manager in charge of international business must also consider the political and legal environment as a whole. This is important because policies and events that occur between countries can have a profound impact on companies doing business internationally. The global international political environment has both positive and negative effects on international affairs. For this reason, the competent manager will tend to keep informed on the global political trends and seek to anticipate changes in the international political environment so that the firm should not be taken by surprise. Some international agreements are in place to ease the burden of the rights of intellectual property in those countries where the company wants to conduct business or to be protected. In many countries, a major political risk is represented by conflict and violent political changes. A manager will seek to think twice before running investment in a country where the probability of such a change is high. If a conflict breaks out, violence directed towards the property of firm and towards the employees is very likely. To succeed in a business trade or investment, the manager in charge of international business needs more than sheer knowledge in business management. S/he has also to do with the maze of national policy and laws. Although rarely can the political system of another country be fully understood, a competent manager will be aware of its importance and will work with people to understand how to handle the system.

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