Before than acting towards collective goals. It is found

Before
a business decides to expand and operate in other countries, the manager of the
business must be mindful that no single country is the same which means that
they must be aware of the different social, political, economic and legal
systems that exist in different countries. These factors are what what causes
more diffuiculty for international businesses to make business transactions in
comparison to domestic businesses as international businesses must adapt and customise
market strategies to meet the conditions in specific markets. In this essay, I
will discuss the several factors that international businesses consider which
determines the foreign markets overall attractiveness of operating in that
country.

 

Political Systems

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Political
system refers to the system of politics and government in a nation and the type
of political system operating in a country is determined by the following:
individualism, which considers the interest and goals of the individual to be of
greater importance than acting towards collective goals. It is found that those
nations who encourage individualism tend to be more democratic, the ‘concept of citizens governing themselves is a
defining characteristic of a democracy’ (Anderson, Page 6, 2004) or through elected representatives. Therefore, ‘democracies are built
on institutions that help to foster an environment conducive to
enterprise, where citizens and businesses are able to voice their opinions and
contribute to the development and enforcement of laws and regulations’
(Stroker, 2012) as government do not hold
absolute control unlike states with a totalitarian political system where authority
has complete control. Therefore, before deciding to expand internationally, a
business should consider the political factors of the country they wish to
operate in as this has a significant impact on the way the business will operate.
For instance, a democratic nation is more attractive due to the greater freedom
which encourages free trade where the prices of products and services
offered are determined by the open market and consumers rather than by the
government. Furthermore, the restricted participation of the government means
that operating in a democratic state is less risky than in a totalitarian state
because in a totalitarian state, government is more likely to impose restrictive
rules and regulations, limiting levels of business activity and movement which
inhibits business development or even worse, there’s the risk of being taken
over by the state.

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‘China’s recent success stands as a counterpoint to
the idea that democracy is better for business and economic development. 
Multinational corporations as well as local companies have fared extremely well
over the course of China’s last 30 years of economic development, which was
accomplished under an autocratic regime’ (Stroker, 2012). However, it
could be argued that Chinas growth is due to China relaxing ‘its strict
communist economic policies and embracing economic reforms and free-market
principles’ (The Guardian) which is related to democracy thus, although China take an
anti-democracy perspective, they are taking a more democratic approach resulting
in their economic growth. Therefore, it can be argued that business operating in
a democratic state is the best for business success.

 

Economic System

Economic
system refers