When a business performs well in a country, the owners tend to consider expanding it globally. Some companies may also consider foreign markets if they offer higher profit potential than their home markets. While such expansion is an excellent endeavor, it is often possible to find that the ethical frameworks and legal structures are different in those foreign markets from the home market. In this regard, as the business strives to understand its mission, policies, and vision, it should take into consideration such differences in legal and ethical issues for it to succeed. This essay addresses the legal and ethical constraints faced by businesses as they attempt to enter foreign markets. The essay further elaborates on the strategies adopted by the companies in making decisions based on these constraints.
The current wave of globalization has prompted the major corporations and other potential businesses to operate at international levels. This means that a business should operate in another country, and hence, some legal and ethical challenges affect such moves. The significant ethical constraints that a company may face in entering a new market include outsourcing, workplace diversity, trust, religion, human rights, the environment, and corruption (Alon et al., 2016). The businesses are expected to comply with state and federal safety regulations, fiscal and monetary statutes, environmental laws, and civil rights laws. In this regard, various constraints are discussed below.
Ethical Constraints
Ethics, in this context, are the good morals that govern business. Every country has some ethical behaviors which are considered to be morally right to maintain a good relationship between the employers, employees, clients, and the society at large (Crane et al., 2019). Therefore ethics are good business practices that sustain it in a given society, and these differ from a country to another. Businesses may find some ethical practices in foreign countries challenging to adapt to, because of the vast differences from the ones they practiced in their home countries. Some of the constraints include:
Cultural Differences
Culture is a fundamental aspect valued in every society, and those that fail to follow the regulations end up facing social challenges. The success of business entirely relies on understanding the cultural differences in various communities. Producing a product or service which is not valued or desired by the local markets is of no value and poses great losses to the business (Alon et al., 2016). Therefore, it is essential that companies have an intimate understanding of the local community and what they value. Companies face the challenge of understanding how people in foreign countries interact and their social life. Going global forces a business to assimilate into new cultures of the people who are the target customers. Therefore such challenges need to be addressed to enable to business succeed and capture new opportunities. Some businesses address this challenge by sending some of the employees to the target countries in advance to explore and learn the cultures (Crane et al., 2019). As they interact with the foreigners, they gain ideas on the expected business conduct in that country and also seize new opportunities.
Another challenge based on culture includes the language barriers. Every country has a different language, and venturing into the foreign market will prompt the business to rely on translators to communicate with customers and business contacts. Such a need comes with extra time for speaking and translating, and costs to be spent in paying some translators (Alon et al., 2016). Understanding body language is also very critical. Body language is used to express different messages in different countries. For example, giving thumps up in the United States is usually a good thing, but it may be perceived as unacceptable behavior in another country (Crane et al., 2019). Therefore, it is important to strike a triad and create a rapport with the citizens. The business owners have to embrace the foreign countries’ culture positively and avoid perceiving them as mediocre. In the past centuries, English is socially accepted as the standard international language, and people aiming to trade internationally have invested in mastering the language. This has been aided by the colonialism and belief of supremacy in business on the American side (Dutt et al., 2016). However, considering this myth has been surpassed and swept away by the current global dynamics of cultures and the demand for the respect of each other’s values and norms, business people are forced to embrace the cultures and communication aspects in every society they engage with. In addressing this challenge, some companies set policies that appreciate language diversity. Communicating with people in their local or preferred language earns a business the potential to succeed and learn more about the needs of the target community (Alon et al., 2016). In this regard, the companies invest in training their staff the local languages and also make advertisements to promote their products and services using them. In this case, it is easier to do the business understood by the target market and hence gain potential customers.
Source Effects
Another challenge faced by businesses in entering foreign markets includes source effects. Source effects refer to the influence on people based on the presentation style of the salesperson. The presentation style consists of the dialect spoken, the attractiveness level of the person, and the kind of humor used (Alon et al., 2016). Speaking a standard dialect in a particular country makes the salesperson generally more listened to and accepted. People tend to appreciate the sense of humor made based on their cultures, and hence a business entering a foreign market should invest time in learning the local language (Alon et al., 2016). The salesperson also has to be more interactive and willing to learn from the foreign people to win more potential customers.
Legal Constraints
Legal constraints have significant impacts on businesses. These are the constraints imposed by the government to regulate businesses. When considering to operate globally, there are legal challenges to be addressed, which include tariffs and export fees. Every country has some taxes imposed on goods entering the country. Failure to master and incorporate them into the financial plan of globalization may affect the business negatively. The different kinds of fees paid for shipping and logistics based on globalization laws also pose a challenge to the companies (Dutt et al., 2016).
Further, incidences may occur in the international markets that prevent the promotion of products and services brought in from other countries. Such occurrences may happen when a country’s home productivity is very low and opts to encourage the consumption of local goods. On this note, the international businesses would incur massive losses as potential customers choose to consume locally produced products under the direction of the government.
Another challenge concerns the legal documents required to operate globally. A business that operates internationally needs more legal documents such as the passports for the business operators and others. Regulatory policies for both home and host countries may also create barriers for international trade (Dutt et al., 2016). Either of the states may have prolonged bureaucracies that tend to involve corrupt dealings to get them. Such poses as a demotivating challenge for international players. In this regard, the global operators have to comply with several legal formalities for various countries they wish to operate.
Additionally, the working conditions and standards pose challenges to the entry of businesses in the global markets. Business people may opt to expand their businesses globally, where costs of production, including labor, are relatively lower. While they consider the cost-benefit that comes with such factors, the working conditions may be poor, requiring them to work for long hours with inadequate protection. Some businesses, such as banks, operate under legal standards, including regulated timelines (Alon et al., 2016). In this regard, expanding globally forces the business owners to adjust to such restrictions, which may seem unfair to what they are familiar with within their home countries. However, some countries like the US have implemented the Occupational Safety and Health Administration, which regulates the working conditions. In this regard, international businesses may apply and accept such standards to succeed in their operations.
Generally, companies attempting to enter new countries and markets are faced with legal and ethical issues. Although the initiative to move a business to the international market may seem promising, it is essential to address such problems as they pose as constraints. The essay has featured some ethical issues such as cultural differences, communication challenges, and source effects. The legal restrictions include tariffs, lengthy procedures for operating internationally, and government-regulated working conditions. However, there are some strategies that companies rely on in making decisions while addressing such constraints. Companies should invest time and money to learn the cultural perspectives of the countries and communities they aspire to set their businesses.
References
Alon, I., Jaffe, E., Prange, C., & Vianelli, D. (2016). Global marketing: contemporary theory,
practice, and cases. Routledge.
Crane, A., Matten, D., Glozer, S., & Spence, L. (2019). Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press.
Dutt, N., Hawn, O., Vidal, E., Chatterji, A., McGahan, A., & Mitchell, W. (2016). How open
system intermediaries address institutional failures: The case of business incubators in emerging-market countries. Academy of Management Journal, 59(3), 818-840.