Political 2012). In each country there are different laws

Political factors help aid the decision of whether to expand
globally, and the economic and legal systems are shaped by the political system
also (Hill, 2012). In each country there are different
laws and regulations that affect a business’s ability to enter and succeed in a
market (Czinkota and Skuba, 2014). Doing business in a democratic system
provides political stability for investment, resulting in less corruption,
because of the freedom of communication which helps the monitoring of public
officials (Montinola and Jackman, 2002).
In addition to this, the possible turnover of power suggests that laws may not
be long term, thus minimising the amount of bribery (Montinola and
Jackman, 2002). Democratic countries also tend to have greater support for
free trade and entrepreneurs, and enable growth of a higher quality (Rodrik, 2000). These free markets offer
economic opportunities for investment and studies show that democracies have
more trade than autocratic markets, have lower tariffs and are more likely to
have liberal trade agreements (Kono,
2006). Furthermore, consumers have more power with democratic governments
being more responsive to popular pressures (Kono,
2006). All consumers want higher wages and lower prices, thus by supporting
and increasing trade in order to gain the higher wages and lower prices,
competition between rival businesses is forced to become more competitive,
creating a further need for a competitive advantage. Government stability is
vital in the success of a business and aids the country to have a desirable
business environment. Disruptions such as a financial crisis would result in
lower disposable income, leading to lower sales especially with income elastic
products. This would mean that businesses may have a reduction in profit and be
forced to close. Unstable governments and the probability of a government being
overthrown may cause breakdowns in trade and the flow of goods which ultimately
slows down the development and growth of the market. This interrupts the businesses
ability to trade in the foreign country, and therefore choosing a secure and
stable government would allow a better, legal trade.

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