- Describe the impact of legal differences on global trade
Governments around the world maintain laws that regulate business practices. In some countries, these laws are more heavy-handed, and in others, the business climate is less regulated and structured. Some laws and regulations, such as ones governing property rights and contracts, are designed to create a stable environment for business (both domestic and international)—by establishing and enforcing property rights and contracts, for example. Others are designed to protect consumers and the environment, requiring businesses to adhere to responsible, safe, and ethical practices. Still other laws and regulations privilege domestic businesses and protect or partially shield them from foreign competition. There are even laws and regulations that affect what marketers are allowed to include in marketing communications, although these are more strict in some countries than in others. And of course, some laws and regulations deal with taxation and other costs of conducting business.
Businesses must understand and conform to the legal and regulatory environments of the countries and regions in which they operate. The following is a short list of common regulatory areas that affect businesses globally:
- Contract law governing agreements about the supply and delivery of goods and services
- Trademark registration and enforcement for brand names, logos, tag lines, and so forth
- Labeling requirements for consumer safety, protection, and transparency
- Patents to enforce intellectual property rights and business rights associated with unique inventions and “ownable” business ideas
- Decency, censorship, and freedom-of-expression laws to which marketing communications are subject
- Price floors, ceilings, and other regulations regarding the prices organizations can charge for certain types of goods and services
- Product safety, testing, and quality-control
- Environmental protection and conservation regulations and permits governing acceptable and responsible business practices
- Privacy, including laws governing data collection, storage, use, and permissions associated with consumers and their digital identities
- Financial reporting and disclosure to ensure that organizations provide transparency around sound business and financial practices
In some cases, international laws and regulations designed to simplify these issues among regional allies and economic partners may also apply.