Importance of the legal environment for business in Asia
Business in Asia is influenced by many different environmental factors. One of them is the
legal environment. This essay will discuss the statement:
“Of all the business environments, it is a manager’s understanding of the legal
environment that contributes most for success in Asia.”
Therefore the statement will be analysed and definitions for key elements will be provided.
In
a second step, other important environmental factors for business in Asia will be named
and
defined. After that, their importance will be discussed. This discussion will be backed up
by
examples as well as academic research. In the end a new statement will be provided based
on the findings of this report.
Analysis and definitions
The statement implies that the legal environment is the most important factor for doing
business in Asia. In order to be able to discuss this statement, common ground is needed.
Therefore definitions of the terms legal environment and Asia will be provided, as they are
key phrases of the statement.
The legal environment includes the laws, regulations and directives that affect a company’s
business activity. The legal environment can be divided into different levels if the company
does business internationally. These levels are named domestic, international and target
country level. In this paper the term legal environment will be used as a general term,
covering all levels. It also covers unwritten rules for business, but not unwritten rules of
behaviour in groups or codes of conduct, which are part of the social or cultural
environment.
The second key phrase in the statement is Asia. The definition of Asia varies; often the
border between Asia and Europe as well as Asia and Oceania are disagreed upon. In this
paper the term Asia is used to refer to a much smaller region, covering Southeast Asia plus
parts of East Asia, namely China, South Korea and Japan. North Korea and Mongolia, also
part of East Asia, are not included due to their isolation; respectively their highly different
culture and relative unimportance for business in this region (except for the mineral
industry
in Mongolia).
Other interesting business regions in Asia as the Middle East or India are not included due
to
high cultural and economic difference.
Environmental factors in Asia
The following paragraph will analyse the countries in Asia and point out differences and
similarities in these countries.
To an outsider, Asian countries might appear very similar, but upon closer examination
many
differences can be found. These differences involve culture, religion, governance, market
system and legal system (Kim & Olsen, 1993; Ward, Duray, Keong Leong, & Sum, 1995).
