Contractual Risks Overseas

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Contractual risks overseas

Business 601: Global Management Perspective

A firm that is looking to delve into the global arena will need to have its management team and attorneys to do diligent research into governmental, local and societal issues that could affect the company’s expansion and overall profitability. There are many factors that could play a role on where and how a company goes global. Some countries have strict environmental, employment and societal requirements that have to be met by all companies doing business within their borders. With proper research, a company can take the necessary steps to increase their footprint in the right location and continue to keep their shareholders content with management’s decisions. While making these decisions, contract negotiations will have to be done with local and governmental officials and these negotiations can be somewhat disconcerting to management but they will be worthwhile when they protect all assets of the company. There are six elements that make international business contractual process different than the domestic process: 1. The parties must deals with the laws, policies and political authorities of more than one nation. 2. The presence of different currencies means that issues may arise due to that contractual payments may vary and many governments want to control the flow of domestic and foreign currencies across their national borders. 3. The participation of governmental authorities could pose problems because of the rigidity of caused by governmental bureaucracies and the sovereign immunity can create other legal complications into the contractual process. 4. Vulnerability to sudden and drastic changes to international circumstances for example; war, changes in government and devaluation of currency. 5. Different ideologies, countries will have a…...

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