Please use Canada and Brazil and the Hotel/Resort Industry as a reference.
- Understand the background of your candidates’ political and legal environments.
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| Political and Legal
Characteristics |
Facts, Details, Annotations
(most recent year) |
|
| Country A (Advanced) | Country B (Emerging) | |
| Political Background (PRS or EIU Country Report) | ||
| Official Country Name | ||
| Type/Form of Government | ||
| Head of State (name, main political ideology) | ||
| Head of Government (name, main political ideology) | ||
| Administrative Subdivisions (governance states, subdivisions, districts, etc.) | ||
| National Legislature (structure and political party breakdown of major branches) | ||
| Suffrage (age and requirements) | ||
| National Elections (frequency, next election date, etc.) | ||
| Key Elected Political Parties (name, leaders, and their ideology) | ||
| Key Nonelected Organizations (name, leaders, and their ideology) | ||
| Gender Breakdown of Elected Officials (% female, national government only) | ||
| Legal Background (PRS or EIU Country Report) | ||
| Type Form of Legal System | ||
| Judicial Branches (national level) | ||
| Use this space for additional notes:
|
||
| Tax Rates (PWC World Wide Tax Summaries Online) | ||
| Corporate Tax Rate | ||
| Personal Income Tax Rate | ||
| Sales Tax Rate | ||
| Social Security Rate | ||
| Social Security Rate for Companies | ||
| Social Security Rate for Employees | ||
| Labor, Manufacturing, and Product Regulations (PRS Country Report) | ||
| Briefly list any unique labor-related regulations (hiring, firing, benefits, etc.) that may affect your subsidiaries compared to the U.S. HQ | ||
| Briefly list any unique product regulations or standards that may impact your subsidiaries compared to the U.S. HQ | ||
- Research the legal and governance effectiveness in your candidate countries compared to the U.S. environment.
| Country Risk Measures | Legal and Regulatory Efficacy
(Most Recent Year; Value, Ranking, % Change) |
|||
| Country A (Advanced) | Country B (Emerging) | United States | ||
| Corruption, Rule of Law, Intellectual Property Rights | ||||
| Corruption Perception Index Transparency International (ranking)
Alternative: Trace International Bribery Risk Matrix (score) |
||||
| Rule of Law Index
(World Justice Project) |
Overall (global rank, trends) | |||
| Constraints on Government Powers (global rank, any trend) | ||||
| Absence of Corruption (global rank, any trend) | ||||
| Open Government (global rank, any trend) | ||||
| Fundamental Rights (global rank, any trend) | ||||
| Order and Security (global rank, any trend) | ||||
| Regulatory Enforcement (global rank, any trend) | ||||
| Civil Justice (global rank, any trend) | ||||
| Criminal Justice (global rank, any trend) | ||||
| Rule of Law Resource Alternative One: Freedom in the World Report (Freedom House); Alternative Two: World Governance Indicators- WB | ||||
| International Property Rights Index Country Report – Property Rights Alliance (global rank, any trends, MRY) | ||||
| Freedom of the Press – Freedom House (status, ranking, any trends, MRY) | ||||
| Freedom on the Net – Freedom House (status, ranking, any trends, MRY) | ||||
| Index of Economic Freedom – The Heritage Foundation (status, world rank, any trends) | ||||
| Global Terrorism Index –Vision of Humanity (global rank, any trends) | ||||
| Bureaucracy and Ease of Doing Business | ||||
| Ease of Doing Business Index -WB (world rank, overall distance to frontier [i.e., best performer], any trends) | ||||
- How do each candidate’s elected governing party’s ideologies compare to those of the U.S. government? How likely is a shift in government policies through the next election cycle?
- Characterize the governance quality within each candidate. Consider indexes and metrics addressing areas such as government transparency, capacity for civil oversight, perceptions of stability, control of corruption (public and private), or chances of confiscation and expropriation of business assets.
- Using global and industry indexes and metrics, evaluate the relative efficiency and ease of conducting business due to government regulation and oversight in each candidate country. Does it help your firms if the government intervenes on market forces affecting your industry less often or more predictably?
- How strong is the rule of law within your candidate’s judicial systems? Use indexes and metrics to characterize the extent to which agents have confidence in and abide by the rules of society. Are there differences in the legal systems of the candidates that U.S. firms should understand?
- There are no incentives for individuals or firms to invest or perform at elevated levels if property, ideas, and profits are not protected. How important are property rights to your industry? Which candidate country will best preserve the property rights of firms and their employees?
- Would a new expat be surprised at the level of basic freedoms afforded to firms and individuals while visiting a candidate? How does it differ within each candidate country?
- What is the relationship between political freedom and economic freedom?
- Considering the political and legal risks you have uncovered, place each candidate’s name in any viable internationalization strategy quadrant of the integration-responsiveness framework for your industry’s strategic goals to be met. Remember that is OK if your present research narrows or expands your viable strategy-type choices. There may be several best strategies at this point. Please note the most compelling political and legal pressures justifying your recommendations in the rightmost column.
| Global Integration Pressure
(Weak) (Strong) |
Global Strategy
|
Transnational Strategy
|
Government/legal factors pressuring global value chain integration:
· · · · Government/legal factors pressuring local responsiveness: · · · · |
| Home Replication Strategy
|
Multidomestic Strategy
|
||
| (Weak) Local Responsiveness Pressure (Strong) | |||
- Which candidate market would best serve as a target consumer market, as a platform for manufacturing, and a sourcing or distribution destination? Be sure to consider how government and legal environments are contributing to the industry’s need to “think globally and locally but act appropriately.”
- Consider your logic for using the I-R framework in Questions 1 and 2 above. Knowing that “structure should follow strategy,” how centralized do you think corporate governance should be to successfully execute an internationalization strategy within each candidate country? How might the various measures of freedom inform your decision framework? Can national cultural characteristics refine your decision framework even further?
- How does political stability impact the type, allocation, and managerial independence of organizational assets you would be willing to deploy to each candidate? Which of the six alternative organizational structures currently seem to be the best matches between your industry’s needs, international strategy, and each candidate environment?
- Given what you know to date, would you favor indirect (e.g., export/import), contractual (e.g., licensing), or direct (e.g., merger or greenfield) entry modes as your top recommendation for each of your candidates? How did the ease of doing business and rule of law inform scale of the necessary trade-offs between, risk, flexibility, control, and profit in selecting the viable entry modes?
Reflection
Briefly reflect on your learning during this module:
- What were the most challenging concepts for you this week?
- Did this material contribute to your professional capabilities or expected career roles?
- As your instructor reviews this submission, is there anything you would like additional feedback to focus on?
References
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