Erica A. Murray
Although it is readily apparent that the globe is shrinking in terms of conducting business, the standards of law in many aspects are still worlds and worlds apart. Despite the influence of globalization, entrepreneurs and business owners must remain focused on the various legal systems that they will encounter when conducting business abroad. The legal systems in most countries have an extensive impact on the various aspects of the business activity that takes place for both domestic and foreign companies. For example, local business activities and cross-border relations are both affected by national laws; additionally international treaties and conventions will most likely govern transactions that are cross-border, but this should always be confirmed. With that stated, the day-to-day business operations may be challenged by legal regulations, which in-turn will challenge business growth. Entrepreneurs must acknowledge the existence and correlation between these two elements, which translate to a crucial impact on business growth and development for multinational enterprises (MNEs). Furthermore, these regulations can also impact the competitive business environment…long term. The goal of a private enterprise for the most part is to create a consistent cash flow portal for the sustainability of the business. Thus, there are a few operational matters that business owners should be knowledgeable about when considering foreign legal environments and business.
Consider the following as the 4 Steps to Alleviating Legal International Business Disasters:
- Understand the complexity of developing an international business entity;
- Endorsing contracts….Be careful what you sign;
- Establish the right workforce;
- Quitting can be a costly process in international business.
Understand the Complexity of Developing an International Business
Starting an international business is sometimes not quite that simple. One must ensure that they are aware of the efforts that it will take to start up a business internationally. In some regards, it is a relatively easy process to start a business, but on another note, it can be difficult as well. To establish a business in Australia, Canada, Ireland, New Zealand, Jamaica, or Sweden, these countries require that you complete a three step company registration process at most. Australia is best at two days if your paperwork is in proper order. However, on the contrary, Chad, Columbia or Barbados may require twenty or more procedures. You must understand all of the legal aspects of starting a company in a foreign land before you leap!
Endorsing Contracts….Be Careful What You Sign
Erasing your signature from a contract in international business may not be an option for a multinational enterprise once executed and business owners must not be careless when endorsing an agreement. There are certain guidelines established by the United Nations Convention of Contracts for the sale of international goods, which forms the rules for the enforcement of contracts amongst the signers. Depending on the legal systems and structure, contracts may be required to be more precise and/or detail by other governing bodies. The more details, the better, as it removes ambiguity! Keep in mind, signing contracts domestically or internationally is not a union that should be entered into lightly or unadvisedly and proper due diligence will always prove to be less costly for the future. Most importantly, engage an attorney that specializes in international law and contracts for your protection.
Establish the Right Workforce
Hiring international workers abroad is not difficult for foreign investors, however, depending on the region, terminations can be a dire process for MNEs. It is imperative that business owners and entrepreneurs investigate thoroughly the laws for hiring and firing in a foreign land! The quality of a worker is always better and far out weighs cheap labor! Cheap labor can backfire and the cost to terminate an employee could end up costing more than one bargained. Quality is the better choice!
Quitting Can Be a Costly Process in International Business
If by chance your business doesn’t survive the international market for any reason, deciding to dissolve it can prove to be more stressful than establishing the company. Not every region embraces bankruptcy protection and these laws vary from country to country depending on the type of legal system that governs the territory. In some instances, these laws may fail to exist at all, leaving the business owner at a disadvantage, financially. Be certain to understand the laws surrounding dissolving a business, before you establish your international enterprise.
Although there are legal risk involved in cross border expansions, international business is important because of the interdependence that it fosters for growth; however, business owners must be aware of the legal ramifications of indulging in cross-border expansions. MNEs should be careful to always have a cost effective exodus from a foreign market if necessary and this begins with understanding the rules of engagement before entering the game!
Erica A. Murray is an International Business Consultant who has worked diligently consummating many business transactions and establishing an impressive clientele (government officials, former prime ministers, municipalities, international airport authorities and SMEs) around the world (Caribbean, Asia, Canada, and Europe). She is also the author of “CEO to the POWER of YOU” which has been identified as a transformational masterpiece, one that is certain to educate, inspire, motivate, and move people and organizations forward, immediately. Erica A. Murray is the owner of a boutique consulting firm, Erica A. Murray Consulting and may be reached at 800-580-2113 x 2200 or you may visit her websites (www.ericaamurray.com or www.ceotothepowerofyou.com).
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Erica A. Murray is an International Business Consultant and is the owner of a boutique consulting firm, Erica A. Murray Consulting and may be reached at 800-580-2113 x 2200 or you may visit her websites (www.ericaamurray.com or www.ceotothepowerofyou.com).
