Paper Sample: Effect of Political, Economic and Legal Systems on Business Decisions

Political factors in business will determine the extent to which the government will interfere with the country's business activities. Therefore, political factors will determine the business decisions either positively or negatively, depending on the country's political choices. Political factors directly affect the business decisions made in a country since they determine the policies that the country will follow in their economic activities, which will, in turn, result in the businesses having to adjust accordingly. One of the political factors includes the formulation of tax policies in the countries concerned (Perera, 2017). Taxes will affect business decisions in terms of the amounts that the businesses in the states will invest so that they do or fail to fall under a tax bracket, which will have the business undertake different business tactics to help them adjust to the new policies. Fiscal policies will also affect business decisions. This is because the government will formulate fiscal policies financed by the revenue collected from the businesses. Therefore, if the country prepares tough budgetary policies, the companies will be affected and adjust their business dealings to survive.

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The economic position of a country will have a direct effect on the business activities in the country. Economic stand and activities in a country will have both long-term and short-term effects on business activities. This is evident from the different business decisions that organizations have had to deal with the different economic conditions that rock different countries. For example, the rate of inflation in a country will affect the pricing of the companies' products in the country. This is because inflation will bring forth the need to meet the prices that match the percentage growth of the country (Perera, 2017). This will result in the business having to adjust its business activities since it would mean that the money that had previously been used in production will have to be matched to the current needs and value of money. Additionally, inflation will directly affect the demand and supply of the products available in the market. This is because the consumers' purchasing power is affected by the rate of inflation, whereby the money that would have bought product x in the past will purchase less of the product in times of inflation, resulting in reduced demand for the said goods and services.

Legal systems and factors in a country affect both the businesses' internal and external operations in an economy. Factors such as adjusted consumer-protection laws affect the business's internal and external aspects, whereby the companies will have to adjust their operations to meet the prescribed standards of products that they offer to the consumers. The safety standards set by the concerned parties that govern the industries that the businesses operate in will affect the business's internal operations, whereby the businesses will have to adjust their internal affairs and environments to meet the required standards from which the workforce can operate (Perera, 2017). Labor laws will have both an internal and external effect on the businesses.

The businesses will have to adjust their salaries and wages and the workplace environments to meet the labor requirements. This will mean that the organizations concerned will have to change their normal business operations to meet the country's legal needs, which will result in the business having to change their ways of doing things to meet the legal expectations of the land. The legal systems and standards of a country regulate businesses and protect consumers, resulting in ethical business environments.

Ethical Considerations of Minimum Wages

An instance where the activity is legal and ethical yet may be unethical in other settings is the payment of minimum wages over time (legal requirement), but failing to adjust the payments over time may be considered unethical. Minimum wages have been considered an ethical or moral issue. The businesses have to decide whether or not they should offer a minimum flat salary or adjust them over time to meet the different needs that come up over time. The adjustment of minimum wages is also a way of meeting the changes that come with inflation in the economy (Sümer, 2018). Therefore, employers must consider adjusting the minimum wages they offer to their employees since it is an ethical way of improving their welfare.

However, the organizations must consider the ethical issues that may arise due to raising the minimum wages internally. The minimum wages will result in the organizations having to reduce the number of employees it can take into its workforce and still offer the adjusted minimum wages (Hill, 2008). This will present an ethical issue for the people in society and the country's organizations, whereby society will experience massive unemployment. Massive unemployment will result in the people in the society being in worse problems than those that would have been if the employees were given the minimum wages prescribed by the government.

Some considerations should be given when making minimum wage considerations. For example, the minimum wages given to the prisoners who offer their labor while serving their sentences will have to be reconsidered. The minimum wages given to the prisoners will result in extra pressure on the economy due to the economy's payment load.

Additionally, the minimum wage will affect the demand and supply of the products that the organizations produce. While the main aim of businesses should be making profits, they should also ensure that they also consider the employees' welfare. If the organization undertakes intensive profit-making endeavors, then it will not take care of the needs of its employees, resulting in the organization only offering minimum wages. While it is ethical for them to offer minimum wages, they will also be failing in their duty of providing fair wages that reflect the financial performance of the organization (Sümer, 2018). Therefore, organizations should analyze the role the employees play in the achievement of the said levels of performance. Therefore, employees should be paid according to the contribution they make towards organizational success, not just the minimal legal expectations laid by the government.

If the employees contribute towards the success of the business, it would be unethical of the businesses to pay them low wages, since it would mean that the organization is keeping much of the income for themselves yet the employees are dedicated to their success. Therefore, the contribution of employees to organizational success should be reflected in the remunerations that they receive. It is ethical for businesses to have the wages they offer their employees match the organization's economic performance, the employees. Yet, the union and the legal directives concerning the subject matter.

The Role of the Government in the Regulation of Businesses

Tariffs and quotas are ways through which the government regulates business activities within their borders. Tariffs refer to the government's regulations to help manage the pricing of the products in the country. Through tariffs, the government ensures that the producers give the best prices for the products. Tariffs also refer to the taxation placed on imports and exports. Through tariffs, the government provides frameworks within which trading activities can occur (RAKHMAWATI et al., 2020). Tariffs also regulate the demand and supply of imports and exports in a country through the taxation placed on the products. Favorable tariffs will result in increased demand for the products in the market, which will result in more supply.

In contrast, negative tariffs will result in decreased demand and supply for the products in question. On the other hand, quotas regulate exports and imports in a country during a given period. Through quotas, the business activities within a country will be regulated, since the businesses will rely on the quotas to determine the direction to take in their endeavors (Hill, 2008). Quotas will determine the intensity of production activities since higher quotas will result in the country having to engage in intensive production. In comparison, lower quotas will result in relaxed production processes.

The government will also regulate business activities through regulation of the exports and imports in the country. Regulation of exports and imports will result in the country's businesses adjusting their business activities to meet the government's expectations. Openness towards import and exportation will result in the countries concerned engaging in more business activities since they will meet the demand and supply.

The export and import will serve different needs (RAKHMAWATI et al., 2020). The government will also regulate the businesses in the country through the businesses' licensing requirements in the country. When the government makes all the businesses in the country to be registered and licensed, they will formulate minimum requirements to be fulfilled by the businesses, and in the process, help in the regulation of the business activities of the country. Therefore, through regulation, the country ensures that the businesses are within the requirements laid on them by the government, hence having achieved a state of regulation.

Workplace safety and the setting of minimum wages will regulate the businesses in a country. This is achieved through the laws and policies that the government puts in place to protect the workers in the country's different businesses. The minimum requirements of workplace environments will mean that some businesses will be unable to meet the needs and, therefore, will have to leave the industry, hence enabling the government to set the standards to be followed by the businesses in the economy (RAKHMAWATI et al., 2020). Minimum wage expectations will also result in the businesses being regulated since the firms that do not meet the requirements will have to leave the market.

Therefore, the government can control the number of businesses it needs within its borders by setting favorable or unfavorable minimum wage requirements. Thus, from the points discussed above, the government will help regulate the businesses within its boundaries through the approach it takes in providing enabling business environments.

Foreign Direct Investment

Foreign direct investment is the investment made by people from one country in a country other than their own. The general idea behind foreign direct investment is that the investors inject their investments into foreign countries or make an acquisition in the foreign countries and carry out their business transactions there (Hill, 2008). Foreign direct investments work in instances where the investors' home countries do not provide for their investment needs, and therefore, they have to look for states in which they can invest and gain sensible outcomes (Alvaro et al., 2017). Most of the foreign direct investments occur in instances where the foreign investors come from developed countries that have competition, thereby raising the need to invest in the less developed countries that have lesser competition and the possibility of the people involved making more profits compared to if they invested in their home countries.