International business environment: UK vs India (Term Paper Sample)

International business environment Student’s Name University Affiliation Date Political, legal and economic environment differences between UK and India India is chosen as the foreign company under consideration for investment because of its potential as a burgeoning economy. The nation stands tall in the global eyes as the place for international investments because not only it is the largest economy, but also among the largest nations in geographical terms. Recent years has seen India lauded as the next global economic frontier, but the country lags behind the Western world. Perhaps, this is because India has been making profound transformation in various sectors of its economy in terms of policies. In fact, India shows marked differences in others spheres as well including political and legal. The paper explores the manner in which political, legal, as well as economic environment and concludes that engaging in international business requires an awareness of cultural differences. Political India is among the largest democracies of the world and the country runs on a federal government system. The country’s political environment is defined through such characteristics as politician’s interests, government policies, as well as the ideologies of major political parties. The implication is that India’s political environment is influenced by multivariate political factors that may have influence of socio-cultural characteristics. In addition, the country’s taxation system is considerably well developed as evidenced through services tax and sales tax policies, which are imposed through the Union regime. In recent years, India political landscape has markedly shows transformation towards stability and investors are increasingly gaining confidence about the nation’s future. Yet, some Achilles heels remain in India’s political system including the threat of terrorism as well as poor relations with neighboring nations –most notably Pakistan. The frequent fighting over the region of Kashmir threatens the political stability gains of recent years. The precarious situation is evidenced the fact that Kashmir remains one of the most militarized territories throughout Asian region (U.S. CIA, 2010). In addition, the threat of corruption remains and the government is renewing its effort to fight the bane that usually draws in powerful persons in the regime. It can be said that the political environment in India is moderately suitable for foreign investment and any business venturing into this market must be prepared to take the risks. Conversely, the UK political system’s strong position is evidenced through the fact that the nation is widely viewed as an ideal model for the world. The political landscape is anchored in the ethos associated with mature democracy as well as a stable governance system, which ensures that a level of consistency required for business in terms of policies is maintained. Since the world wars, the political landscape in the UK has been relatively calm and the country has never experienced turbulence even during election period. The UK market is relatively matured and the citizens in the country know democracy. The democratic parliamentary system of government is referred to as the Westminster system, which increasingly calls for power distribution between the executive arms of the government headed by a Prime Minister, the judiciary and the bicameral legislature as well as a system of checks and balances. Recent findings indicate that the UK is among the successful countries in terms of the application of the laws, corruption control, government effectiveness, as well as regulatory quality. The powerful position of UK’s politics is underlined through global politics in terms of permanent membership of the United Nations Security Council, G8 and NATO membership, as well as British Empire legacy. It can be said that the UK is relatively stable in terms of politics and investors in the country are increasingly likely to have confidence. Yet, the threat of terrorism in UK due to the country’s involvement in global wars has seen political temperatures rise. More so, tensions in the ruling party and decreasing popularity of the government has seen rise in resentments. What is more, tensions stirred by the debate over the nation’s position in UK has somewhat created political instability and investors are watching out the performance of the economy. In fact, there is increasing antipathy of British citizens towards increased integration with Europe and the regime is facing challenges to stabilize the ship. Potential political risks can be minimized through increased engagement with the Indian government to ensure that pitfalls are avoided. It must be noted that the Indian government is increasing its effort to iron out longstanding political risks that have threatened the stability of the environment. More so, the regime is displaying an inclination to enact stronger laws and rules to avoid issues such as government corruption, improved democracy, as well as relationship with the neighbors. It follows that the best way to minimize potential political risks should involve engagement and support of the government. Legal India’s legal system is increasingly comprehensive including taxation policies that encourage foreign direct investment, which makes the country increasingly viable for investors. In fact, the country’s judicial system is equitable, fair, as well as transparent by design. The country’s framework for governance of business environment is rooted in enactments passed by the assembly or legislature under the federal structure. As a constitutional republic, the legal framework characterizing the country is developed based on constitutional requirements and this has played a vital role in overall progress in business landscape. As the country tries to catch up with increased foreign investment due to globalization, the enactments are amended from time to time. Nonetheless, business regulations in the country involve such areas as corporate laws, exchange control laws, operational and contract laws, intellectual property laws, as well as tax framework (Hathi 2013, p 13). The implication is that the legal environment in India is still under development and changes are made to ensure emerging concepts are covered. On the contrary, UK’s political environment is considerably organized, efficient, as well as efficient. The outcome is that the country’s legal environment comes across as conducive to business because legislations are passed in rather practical way through keeping all stakeholders in mind. What is more, the legislations are enforced in a fair manner through various agencies that have been set up to monitor specific areas. The strong legal environment is mirrored through the government’s decision to bring in general tax avoidance regulations, which is intended to make evasion increasingly difficult in the UK. It must be noted that legal environment in the country is characterized by laws that are increasingly designed to help businesses to prosper and contribute to the economy. This is seen from the fact that foreign as well as domestic players have demonstrated an ongoing commitment to make investment in the UK. In fact, the majority of multinational firms based around Europe prefer to control business operations from the UK (Lefebvre, 2011). Additionally, effective enforcement of legislation has considerably contributed to creating conducive environment to do business. The only challenging legal aspect associated with UK environment involves the issue of tax evasion. In fact, the country has been forced to make its overseas territories sign a treaty to enhance tax transparency. This includes signing treaties with such territories as Bermuda, the Turks, and Anguilla to share tax-related information, and the step has been widely hailed as a vital step to stopping tax evasion. Economy India and the UK also differ in economic environment terms. More so, India’s economic environment is rather fertile and the country recorded significant economic growth even as the Western nations suffered dips during the global recession. Such a situation denotes a relatively stable economy, which has been fuelled through the introduction of reform policies in political as well as legal spheres. This includes reductions in industrial licensing with the aim of creating a favorable environment. Yet, the country’s deficit has continued to grow due to increased expenditures in areas such as government workers pay. In 2009, for example, India’s budget showed revenues of approximately $132 billion whereas expenditures exceeded $216 billion (U.S CIA 2009, p 4). Such information reveals that the economic environment of India remains precarious even as the country if lauded globally for achieving what is seemingly a good economic state. In fact, an ailing Indian economy is mirrored in such areas as the government slow pace to make the huge capital investments required to improve core infrastructure including the ports, roads, and railways. The economy is faced by several challenges such as bottlenecks that are created through slow customs clearance processes, which usually forces businesses in the country to maintain relatively large inventories. What is more, the electrical power delivery systems are often unreliable and business owners are required to install back up power units that are costly to operate. The implication is that India’s economic environment is still plagued by some longstanding challenges, but the government and other stakeholders are increasing their effort. On the other hand, the UK economic environment is increasingly stable as the country boasts a relatively high per capita GDP as well as a favorable investment climate. The country is not only one of the largest economies in the European region, but also globall...