Analyse the ways in which both Political and Legal Factors Affect an Organisation Looking to Enter in a New Market

Irina Cheltuiala

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Essay from the year 2007 in the subject Economics - International Economic Relations, grade: 56, University of Nottingham, langua...

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Essay from the year 2007 in the subject Economics - International Economic Relations, grade: 56, University of Nottingham, language: English, abstract: The aim of this essay is to demonstrate how political and legal factors affect an organisation looking to enter in a new market. For this purpose I will use as an example the biggest German utility company, E.ON. Normally, Multinational Firms are more comfortable investing in markets with a good political environment and law transparency, in order to assure game rules will not change dramatically making them to pay more money for those changes or even loose their investments. Within the external environment a company deal with, the most changeable factors are the political and technological. The technological issues could be led by the firm itself with R & D, but the political factors can just be followed, maybe, if the firm is big enough they can make them a little more flexible for their convenience, but they would never be able to set their own rules or path. It gets even harder when at the end of the government period a new government is form, even if it is from the same party. New people are seated in the presidential chairs, prime minister, parliament or secretaries places. Firms have to deal again some issues like it was the first time, because they have to be inside the "Government's grace". Political factors are so important because they affect a company in the whole sense, from their approach to do business, operations, short term and long term objectives and even their grand strategy. That is one of the reasons European Countries voted for a common market with supranational rules, making easier and safer to invest foreign countries inside EU territory.