How Political And Legal Systems Affect 
How political and legal systems affect International Business
Introduction
Political and legal systems play a major role in the International businesses for the companies that source, produce, market and export products in foreign countries. They pose a big challenge to the companies and the companies need to overcome the factors to become successful in the international stage. We will see the various political and legal environments available and how they would affect the international business.
Political Systems
The political system is essentially the government, rules, norms and the political factors that run the country. The political systems play a major role in the business decisions of the firms. The different political systems that are present in the world today include
1. Individualism or Anarchism: In this system, individuals control the political activities and public government is rendered as unimportant and do not play any role in any of the activities including the international trade and business. The government may intervene some times to deal with the market defects but otherwise will not affect international business in any other way.
Risk associated:
The government is powerless and hence the international trade cannot be monitored or regularized. This will increase competition and also there will be no trade laws.
2. Democracy: This is the system where people elect the government and thus indirectly participate in the decision making process. This is the most common form of the government and is present in more than half the countries of the world. Most businesses prefer the democratic government to do their business as the political system is most stable in such countries. The companies need to take care of the change in the leadership during elections which might affect the policies of international trade and businesses. Also, the companies should decide the duration of their businesses in those countries and assess the political risk and
Introduction
Political and legal systems play a major role in the International businesses for the companies that source, produce, market and export products in foreign countries. They pose a big challenge to the companies and the companies need to overcome the factors to become successful in the international stage. We will see the various political and legal environments available and how they would affect the international business.
Political Systems
The political system is essentially the government, rules, norms and the political factors that run the country. The political systems play a major role in the business decisions of the firms. The different political systems that are present in the world today include
1. Individualism or Anarchism: In this system, individuals control the political activities and public government is rendered as unimportant and do not play any role in any of the activities including the international trade and business. The government may intervene some times to deal with the market defects but otherwise will not affect international business in any other way.
Risk associated:
The government is powerless and hence the international trade cannot be monitored or regularized. This will increase competition and also there will be no trade laws.
2. Democracy: This is the system where people elect the government and thus indirectly participate in the decision making process. This is the most common form of the government and is present in more than half the countries of the world. Most businesses prefer the democratic government to do their business as the political system is most stable in such countries. The companies need to take care of the change in the leadership during elections which might affect the policies of international trade and businesses. Also, the companies should decide the duration of their businesses in those countries and assess the political risk and
References: 1) Bergen Community College (2005, March 3). How Political, Legal, Economic and Technological Systems Affect International Business. Retrieved April 30, 2013, from http://www.bergen.edu/faculty/rangiello/global3.html 2) ConneXions, & Dr. Donald J. McCubbrey (2010, October 6). Political and legal risk in international business. Retrieved April 30, 2013, from http://cnx.org/content/m35597/latest/?collection=col11227/latest 3) FAO (n.d.). Chapter 4: The Legal, PoliticalTrade Environment. Retrieved April 30, 2013, from http://www.fao.org/docrep/W5973E/w5973e08.htm