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Posted: March 5th, 2020
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a) According to the U.S federal law, companies should not operate within certain countries. But the list keeps on changing with time. This is in accordance to the Treasury Department`s Office of Foreign Assets Control (OFAC). The countries that are listed include Cuba, Burma, North Korea, Iran, Sudan, Liberia, The Western Balkans, Zimbabwe and Syria. The penalties for violating this law are a fine of up to $1,000,000 and or 20 years imprisonment. The U.S is entitled the right to forfeit and seize goods of the company. b) The American employment laws still apply to American employees and employers in foreign countries. It is imperative to note that the law does not apply to non-U.S. residents who are working outside the United States. The company ought to adhere to the local jurisdiction. II. Assess the legal implications of moving business abroad specific to each country (Mexico and Japan). What are the advantages and disadvantages of each? a. According to the free traders, United States companies should leap to the Mexican band wagon. Mexico has undeniably low costs of labor and its local companies have been privatized over the last five years. This has offered an array of new investment opportunities. Any company that intends to move to Mexico needs to assess some of the legal implications. Mexico has created a more open free-market economy and is also a member of NAFTA, which is the largest free trade area in the world. This has enabled it to attract investments from U.S. and other parts of the world particularly in chemical, automotive and food processing industries. Despite these advantages, Mexico has great inequalities between poor and rich, some sectors of the industry are still underdeveloped and a lot of drug trafficking that is accompanied by violence are deeply rooted in the Mexican society. Mexico offers a low-cost location due to close access to the United States market but stands on a dividing line between underdevelopment and development in economic sense and its location between Central America and United States. III. What are the ethical implications involved in this business decision? a. Human Rights- Human rights ethical implications can arise because in most countries basic human rights are not respected. For instance, several rights are taken for granted in developed countries. For example freedom of speech, freedom of association, freedom of movement are by all means universally accepted. Therefore a company that makes the decision of operating internationally needs to enquire about the responsibility of multinational when operating in a country where human rights are trampled upon. b. Corruption- Corruption has been a great problem in any society in history and still continues to be today. International businesses have gained economic advantages by making payments to government officials. The U.S. has passed Foreign Corrupt Practices Act (FCPA) to fight corruption. In 1997, United States adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions that obliges states to make bribery of foreign public officials a criminal offence. IV. Explain how other domestic companies have managed to comply with the U.S. laws related to this business decision in the past. a. No two countries share the same legal and political systems. The key is to understand that once the company is in a foreign market, the employees have to abide to the laws and rules in that country. The domestic companies have managed to comply with the U.S laws by avoiding trouble by not imposing U.S standards on the local employees. It is worth noting that these companies are aware that they should not allow practices within their overseas branches, partners’ offices or franchise that would be considered illegal or unfair in the United States. V. How did these companies address potential compliance issues? Many U.S. laws regulate the international business activities of U.S. companies. For any international business to be successful, it needs to put an updated compliance program to address legal issues that could arise from these activities. United States companies are governed by two categories of laws. The first one entails laws that can also be applied in a domestic context such as employment, antitrust and economic-espionage laws. The second one entails laws that are targeted precisely to the international business such as FCPA. The companies address the compliance issues through comprehensive risk assessments of the company`s vulnerability to unlawful conduct in coordination with the company`s internal audit. The companies also address this by enlightening the employees about the compliance risks involved with each joint venture, subsidiary and country. Lastly they have achieved to address these issues by developing effective compliance procedures and policies to prevent, detect and punish misconduct in the firms to prevent such compliance issues from recurring in future.College students want the best grades in their courses and that’s our FOCUS
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